Why 6 out of 10 restaurants shut down every year?

From a study, more than 50 to 60% of restaurants shut down every year, and more than 70-80% hardly lasts for up to 5 years!

The figure seems quite surprising, but it is true! Well, what are those reasons which push a restaurant to close?

In this blog, we are going to uncover some of the prime reasons for this cause! Let's start the content now!

1) Location

From many studies, it has come out that location plays a vital role in deciding the restaurant's success and failure!

Even before starting a restaurant, you can better predict whether you are going to make a profit from a particular location or not!

Some factors associated with locations are:

A) Renting cost- A high rented property always increases running-expenses!

B) Over Priced Location- Might be the location is good, but you are paying an overprice money for this!

C) Far or not convenient to reach-Hard to reach or right for some occasions - but not suitable for the frequent purpose; in these conditions, you are not going to have enough customers!

D) The place is not safe for women, old age, etc.- An isolated or quite indifferent location is also not suitable!

E) Lack of Parking or quite compact parking!- People prefer to come with their vehicles. Hence have adequate parking!

F) Poor Visibility- Your food is good, but no one knows that~

G) And, other reasons!

When you open up a restaurant or plan to start one, ensure your restaurant location is not only affordable (for you), but also convenient for others to reach and come to taste the food! 

Having a restaurant at a super-prime location can cost you more in the long run, and will be hard for others to reach in super-busy (traffic) days as well. Hence, reducing your sales cost! Thus try to open up a restaurant where people can reach easily and happily park their vehicle!

2) Lack of Management

Trusting and depending upon your staff is brilliant. After all, your staff is the one who runs your restaurant, but running a restaurant with closed-eyes will not be a clapping idea!

Still, as a manager or owner, you must have to keep an eye on all business operations, whether it is billing, orders, taxation, SOPs, inventory, and others, to maintain a standard and quality of services.

Such observation and monitoring can help you avoid loopholes, pilfering, or any issue which can affect restaurant performance.

And, if not done proper monitoring, you can end up with shutdown!

Hence, a very strong, transparent, and disciplined administration is needed to avoid restaurant failure.

3) Poor Customer Support & Service

Might be you have a brilliant food or tempting dish, but if you are not up to the mark in serving customers, you lack the core purpose of your restaurant, which is CUSTOMER SATISFACTION!

Poor customer support & service is going to slow down your business in a period, thus minimizing your revenue, and finally pushing you to either close your restaurant!

4) Absence of Technology

With time, things are getting faster. Nowadays, customers need their food ready and delivered at their table- real quick!

And, to accomplish this task, automation helps a lot if it is powered by technology!

For example, you can manage your inventory, kitchen order tickets, customer orders, billing, taxation, delivery, waste management, and vendors to its fullest with automation like Restro Sense. 

Restro Sense is one of the brilliant restaurant management systems,  which is AI-powered and cloud-based, and helps you manage restaurant operations, 360 degrees! 

When you use such technologies and automation, you add extra hours to your clock by making you free for the same daily tasks! Thus, allowing yourself to explore and work upon the other aspects of restaurant growth and its development!

But, if you are still stuck with the old-fashioned ways of executing restaurant tasks & operations, you are going to face a severe shortage of resources or will hire more than required staff. Thus, increasing expenses and affecting restaurant running cost!

5) Poor Marketing and Advertising

Since people are getting digital, hence you have to take care of advertising & marketing as well because both play a crucial role in your restaurant's success and failure.

Digital marketing is a much cheaper and affordable way to broadcast about your brand than traditional marketing methods!

 With a limited budget and suitable social media platform(s); you can get better visibility with targeted advertisements and attract customers. 

Since many restaurant owners do not believe in marketing, hence miss the opportunity to promote their restaurant through this way! Because of poor visibility, a restaurant loses to generate an adequate output; thus, it leads to shutdown!

6) Uncontrolled Cost and Expenses

If you do not know how to control the costing and expenses of your restaurant- you can not run things for longer!

It is imperative to know the accurate cost of your restaurant's menu and a detailed record of all the expenses. Because once you have an eye on each of the expenses/costs, you can better cut short unnecessary expenses, and try to find the way to minimize running-cost.

This mistake is made by many restaurants owner that they do not put efforts to minimize the expenses or miss to keep a record of it, which in the long run makes your restaurant/ food court shutdown!

There are other reasons as well, which can cause a restaurant failure, but the major of them have discussed here.

Please let us know how did you like the content and if there is any feedback for us, feel free to share as well!

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