Common Reasons Why Restaurants Fail

Before you can find the reasons your restaurant is failing, you have to know where to look. The most common reason businesses fail are:

  • There wasn’t enough capital when you started to sustain a business.
  • You didn’t do enough research on your competition. There might be a surplus of one type of restaurant in the same area.
  • The restaurant’s location was inaccessible or the area was not well visited. If that’s the case, you need good promotion and positive reviews from customers.


  • Bad partnership relations. Does everyone communicate? Does everyone do their share of work? Or does one person end up unequally burdened with what other people haven’t done at all, or well? Do you know how to stop arguments before they go too far?
  • Not keeping a close eye on inventory and staff. This will cost you financially and in man-hours.

When you’re trying to save your business a big mistake would be to go for all new equipment. There’s a benefit to used equipment, you’ll be able to save money and use that to help keep your restaurant afloat. Running out of working capital before you hit a stride is dooming your business to failure. When you can no longer pay credit rates there’s no way to solve your financial problems.


chef decorating dessert

Pay attention to where you choose to invest. The location may have had rent that was too expensive. A good business plan can alleviate this somewhat but switching location to something more manageable is also a good idea. Now that you know what kinds of crowds you’ll draw, it’ll be easier to decide what a realistic price is.

Keep tight control over your finances, control food portions and drink quality. Pay attention to purchase costs and protect your supplies from theft or going to waste.  Calculate your prime cost weekly and if there is a problem you get that information relatively quickly and can react before it grows bigger.

Your restaurant must be clean from day one. You get one chance to make that impression because it will stick; even after you improve people will still think back to their first experience. Keep the kitchen, bathroom, patio (if you have one), and especially the dining area clean. Make sure your employees follow standard health procedures and any that you’ve come up with. Don’t allow employees to present themselves in a way that isn’t professional. Keeping a clean restaurant doesn’t just mean crumbs aren’t left on the tables. Do the chairs have tears? Do multiple tables wobble because one of the legs is broken?

If you get more than one complaint about a dish (es), it would be in your best interest to listen to your customers. Make sure you have an experienced chef, or an employee you’re willing to train, to avoid inconsistent quality. And when you’re making changes do not touch a dish that’s a favorite. If you have a special menu it may be the place to experiment if you think it can be made better, but make sure customers know it’s a trial run. On the other hand, should it become as popular as the original bring it back on occasion. This may bring customers back to catch these deals. Remember your customers will return if you can show that you will give them great service and food each time they come. Otherwise you’re handing them right into the hands of your competition.


Learn all you can about your business. There’s never a stage where it’s too late to find what business models have worked for others. If you’ve noticed another failing restaurant has made a surprising comeback, find out what they did. This will not only benefit the restaurant but allow you to dig deeper into your own creativity.

I knew from the very start that three things were needed for my success; I needed a great head chef, location, and concept. And they all had to work together.


I knew from the very start that three things were needed for my success; I needed a great head chef, location, and concept. And they all had to work together.

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