40% of new restaurants, bars and cafes fail: Here’s how your food and drink business can survive and thrive

Thinking about opening a new restaurant, bar or café? Although the future looks bright for the food and drink service industry overall, there are no guarantees in this business. In fact, recent studies show that only 6 out of 10 new restaurants, bars and cafés make it past the five-year mark. But don’t let cold stats like this discourage you! Keep reading to find out the top 5 reasons for restaurant, café and bar failure and get some easy-to-digest tips to keep those stats down.

  • Low start-up capital

  • One of the most common reasons for restaurant, bar and café failure is not having enough capital behind them when starting their venture. When entrepreneurs attempt to start-up their business, sometimes they don’t account for the first potentially slow months; and capital is only enough for them to open their doors. When opening a new restaurant, bar or café, you should have enough cash in reserve for the (at least) first 12 months, to make sure that you are prepared for all the uncertainties you‘re going to face in the initial period of operation. It’s important that you have enough money to keep your premises alive until you begin making a profit. Pay special attention to unrealistically high rents and keep control over finances, paying attention to food quantities, purchase costs and wastage. You could also save money by purchasing used equipment and furniture.

  • Once again… Location, location, location!

  • Another common reason for food and drink service businesses’ failure is bad location, with factors such as accessibility, number of parking places and visibility having a huge impact on restaurant, bar and café success. When opening a new premises, it is very important to do your market research and take into account any other buildings, offices, universities, schools or shops around your restaurant, bar or café. Consider competition, accessibility, parking facilities, public transport and visibility; and think about your potential guests, their needs and purchasing possibilities.

  • No marketing or advertising

  • The lack of investment in marketing and advertising for the new business, which are absolutely key to get ahead, is another reason for restaurant, bar and café failure. There are many ways that a new restaurant, cafe or bar can be promoted and advertised. You can find some great ideas here.

  • Bad service and low quality of product

  • Bad customer service, along with low quality food/drinks are some of the biggest (if not the biggest) reasons for food and drink service businesses’ failure. People are more likely to share bad experiences on review sites and social media, which may result in a large number of people avoiding your business in the future and have a negative impact on footfall and profits. How can you avoid that? Make sure you gather customer feedback and operate loyalty schemes to encourage your customers to come back. Word of mouth is one of the most powerful tools you could use, so make sure the quality of your products is high and your staff provides excellent customer service.

  • Not taking advantage of technology

  • We all know how annoying it is to queue during lunch or wave our hands to catch the waiter’s attention when dining at a restaurant, especially during peak times. No wonder queuing and slow service are some of the most common reasons for restaurant, bar and café complaints. Promo Pads is ready to solve these problems, by introducing the first custom tabletop ordering system in Europe. A digital menu is located on each table and linked to our main tablet behind the counter, so customers can order directly using the tabletop menu without leaving their seat. When using our ordering system, the time taken to place an order is being shortened, leading to shorter queues. By freeing up the staff from taking orders from customers, Promo Pads allows them to become service “ambassadors” and better attend to other customer requests. Sounds good? Find out more here.

    Now that you have become familiar with the main reasons why food and drink service businesses fail, you have an opportunity to do research into your market and concepts and make sure your business will be in the successful 60%.

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