8 Mistakes Restaurants Make and Shut Down within a year

Posted by Jim Walker

According to a CNBC report, 80% of restaurants take down their operations within the first five years and 60% shut down within first year. No matter how lucrative their business seems at first, running it constantly is a twisted thing to do. Most restaurant owners don’t know what mistakes they are doing before it’s too late.  There are several reasons behind their failure, such as high rentals, poor locations, and inexperience. 

  • Shoplifting– Staff misuse and thefts are responsible to make gaps that are noticed a bit too late by the restaurateurs. 
  • Failure in providing best customer service – It is important to adopt latest technologies like restaurant POS system to enhance your customer experience before they stop coming back. 
  • High rentals, wrong location – If you have lucrative offers, great deals, and huge range of products to offer but your business is still not doing well, chances are your store is located too far from central location where you can attract your audience. There are also chances that high rentals may be draining your bank balance dry. 
  • Lack of experience – It is another main reason you might be running into losses. It can cause mistakes that can be costlier than a few customers. 
  • Improper staff management – It can cause poor customer experience, high costs, and dysfunction at the end. It also causes labor costs go out of control. It is among the biggest expenses in this business. 
  • Complicated menu – An all-inclusive, long menu may seem like you have variety of meals to offer. But it should not be too long to confuse the customers as it might affect profitability. 
  • Lack of owner’s involvement – If staff has been held responsible for all the operations, chances are restaurants may not grow as it should be. 
  • Improper allocation of resources – If you don’t focus much on the amount of resources you should allocate in various segments, it can cause losses and mismanagement. 

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