Why Do So Many Restaurants Fail? 10 Blunders to Avoid 

Opening a restaurant may seem like a profitable business. But the reality is starkly different. Statistics show that 80% of restaurants close operations within the first five years. Only 39% of independently operated restaurants have run for over three years. 

But why is that the case? The question “why restaurant businesses fail” is natural. Well, one of the leading reasons is the lack of business insights. Most restaurant owners do not realise this issue until it is too late. 

If you’re too planning to open a restaurant, here is a list of 10 common mistakes restaurant owners make. 

Top 10 Mistakes Why Restaurant Businesses Fail to Survive 

The competition is fierce if one thing stands out in the hospitality industry. To help cut through this competition, planning and preparing before you hit a hurdle is a must. Here’s a list of top mistakes and how to avoid them for sure shot success.  

Lack of Business Insights 

Lack of actionable data and reports equals having a shot in the dark. It means you waste time and money on marketing decisions not backed by trends and customer insights. Invest in CRM and point-of-sale (POS) software for detailed information and analytics.  

Secluded Location 

If your restaurant is difficult to find, generating much footfall becomes more challenging.  

Research before opening a restaurant to ensure enough traffic. If you already have a restaurant in such a location, invest in marketing to attract new customers.  

Restaurant Employee Turnover 

Staff turnover is notoriously high in the restaurant industry. Reports indicate that the staff turnover rate is 28% for all full-service restaurants and 34% for those with five or more locations. 

Negative Reviews 

Digital media is everywhere these days. So, if your restaurant gets terrible reviews on Yelp, Google, and social media, it could ruin your reputation among customers.  

Overlooking Marketing 

While word of mouth is the best form of marketing, running dedicated promotional ads also helps boost business. Otherwise, you could fail to attract customers and stay at the top of their minds. 

Failure to Retain Customers 

Did you know returning customers are 10x more valuable than new ones? Studies show that existing customers are 50% more likely to try new products and spend 31% more than new customers.  

Poor Customer Service 

Another reason why restaurant businesses fail is poor customer service. Mixed-up orders, long wait times, payment hiccups and rude or careless servers frustrate guests.  Invest in tools like POS and a restaurant billing machine to reduce wait time.  

Rising Food Costs 

If your food prices stay the same for long, you may not earn enough to run your restaurant due to inflating food costs. While it’s crucial to remain competitive, ensure re-price dishes or reduce portion sizes to gain a profit. Digital menus help update prices often without wasting money on printing. 

Failing to Adapt 

Unable to adapt is among the top reasons why restaurant businesses fail.  Get a POS with a restaurant billing machine to embrace technologies. Further, tech is available for every aspect of the company, so adapt them for more business. 

Poor or Inconsistent Food Quality 

Even if you avoid all the above mistakes listed why restaurant businesses fail, poor quality food can still ruin your chances. Never take food quality for granted. Hire trained chefs and source raw items from reputed suppliers to maintain high quality.  

Ending Thoughts   

Hope you have your answer to why restaurant businesses fail. Avoid the listed mistakes and take corrective measures for your restaurant’s success. A well-planned strategy, quality service, and keeping tabs on trends can help you thrive in this competitive space. 

Adapt to changes and invest in the best tools to improve your business functions. QPOS is a valuable tool that helps restaurant owners succeed. It helps optimise their operations, reduce errors, and enhance customer service.