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Top 10 Reasons Restaurants Fail

operations Oct 15, 2017

42,000 new restaurants open every year.
By the third year in operation, 50% have close their doors.
81.4% was due to poor management.
Many of those could have been saved if they had just asked for help.

1. You Don’t Know How To Do Every Job In Your Restaurant

Handcuff Management is the Sure Road to Failure.

Never tell your staff you don’t know how to do their job. If you really don’t, then train on every station in your restaurant starting tomorrow! I have managers in my restaurants do a stage or trail on every position in the restaurant for 4 days each…I don’t care if you ran the best rated restaurant in the world! You work every station and learn what it takes to do every job.

- it shows you want to understand what they do on an everyday basis.
- you get to know them on a deeper level than any team building exercise could ever do
- you’ll gain respect. Anyone can come in, bark orders and be “the boss”, if you want to be a leader, then step in and get dirty with the team.

2. You Hire The Wrong People

Jim Collins Was Right! Get The RIGHT People On The Bus

This is the holy grail of owner mistakes! You want to lower your turnover by 10-15%? Just hire bad people because they never leave!

You number one job as an owner is to guard the doors of who you allow to take care of your guests. Restaurant competition is fierce. I mean brutal. Every time someone walks through your door, they have chosen NOT to spend their money somewhere else. That’s your responsibility to hire and train a team that lives and extends your passion into the food and service.

Bad attitudes and substandard skills are rampant in this industry. Here is a little know secret: it’s not always about the money. Today’s workforce wants flexible hours to follow their other interests. They want to learn, so develop an environment that promotes knowledge…hand out books on the restaurant industry, articles from the Internet, take them to seminars. Most staff do not leave because of money, they leave because they did not feel appreciated, listened to or allowed to learn. Learning is growth and growth is life.

3. You Get On The “Discount” Train

Desperate Times Do Not Call For Discounts!

When you are desperate for business, everyone will try to convince you that THEIR discount program will save you. If you believe that, I also have some very nice swap land to sell you too.

Discount programs sound good only because of two things:

A. They promise more people in the door, however it’s only customers looking for a bargain.

B. You do not have a yearly marketing plan. In my 30 years in the restaurant industry, I have only come across 6% of restaurants that have ANY kind of marketing plan at all and only 2% are yearly plans. Most are only a few months out if that. Marketing is like air….you need air to live. You need a restaurant marketing plan for your restaurant to survive.

Discounts are internal bleeding that most operators do not even look at. $50,000 to $100,000 taken off the table due to discount, could be better used in SO many different ways.

4. NO Budget, Forecast or P&L

This Should Be A Sin Of Restaurant Ownership.

Lest we forget, this is a business and businesses exist for one reason….to make a profit!

Only about 10% of restaurant use a budget, forecast or P&L statement. That is pretty depressing. If I was lost in the woods and you wanted me to navigate out of the deep woods….I would require a map & a compass. You need a M.A.P. too! That is a Massive Action Plan. You have to know where you are before you can get to your destination. Hey, the USAF Pararescue paid me to learn this stuff! The compass is to keep you on track and on target. Use sensory acuity to figure out what is working and what is not, then make adjustment to get yourself back on task.

5. Your Business Culture Sucks!
The Best Restaurants Develop A Culture of Excellence

This is your fault. It’s okay, I know you don’t want to admit it.

Culture flows DOWN not UP! If you have a negative attitude, guess what? Your staff will have a negative attitude. You show up late all the time? Then get upset when your staff is late? Get real. Having a fling with an employee? Do you think your staff really respects you? Sure to your face they will always be nice, however soon as you turn your back, watch out.

You set the tone and values of your business! You do, not your staff and they are not open to interpretation or change. You want to survive in this industry, start thinking “world-class”. What? Are you crazy? I have a little Mexican restaurant….

Yes. Be a “world-class” Mexican restaurant. Be the very best that you can be. Mediocracy is for losers who don’t have the passion to play the game at their highest level. You did hear me say “their highest”? Read books, attend seminars and get a restaurant coach! All high performance athletes and CEO’s have a coach! I have a great business coach! Before I got him, my business had reached a plateau, now my businesses are all thriving and I have more opportunity than ever before!

I want you to adapt a new word to your vocabulary…kaizen. It’s a Japanese term for constant and never ending improvement. It is a concept incorporated by Dr. Edward Deming after World War II to turn the Japanese economy around. Small steps everyday forward towards improving just one thing. If you just improve one thing a day for one year, you’ll have 365 new steps towards a “world-class” restaurant.

6. Never Worked In The Restaurant Industry

I Think I Will Open A Restaurant…Are You Really Sure About That?

You thought it was going to be caviar and dreams….you would be the ultimate host and everyone would rave and throw money at you when you walked through the dining room. Line 1 is for you, it’s reality. Now don’t get me wrong you can make good money in the restaurant business if you truly have a burning passion to serve others and have a solid business plan (see #4).

I have young cooks ask me all the time, “which culinary school should I go to?”. I tell them all the same thing, “it does not matter. They all teach the same curriculum. The one thing they cannot teach is passion.” Getting up early to do a breakfast for 6 people really sucks if you don’t have passion for the business. I routinely pull 14 hours days because I get caught up in the “moment” of service on a busy day and the next thing I know it’s 10 pm. I’ve been at the restaurant early, prepped for an event, do a lunch tasting for a client, jump on plane and fly 3 hours to give a workshop or keynote the next morning and fly back and be in the restaurant, on the line for dinner service. You have to LOVE what you do in order to do that for 30 years.

7. Still Are Using Outdated Marketing Concepts
Someone Must Be Buying This Stuff, Cause They Keep Selling It!

Postcards do not work. Please stop sending me snail mail. Oh and how much do they want now your a yellow pages ad? It’s just a waste of your money.

They are dead mediums!

If you are not ONLINE, then you are OFFLINE and out of touch with today’s consumer.
Here is the very minimum websites your restaurant should have an online presence on…the minimum:
Google Business Places

Get a email service like MailChimp, aWeber or Infusionsoft. These people are pros at what they do. Get a professional web designer from ODesk or Elance to help update your website. And please for the love of all that is more upsetting to your web savvy guests…if you have a menu posted online, please, please, please keep it up to date. Sometimes guests see your menu online and then drive all that way because you planted a seed in their head. They get quite upset when the staff tells them that that menu is from last year.

8. Scared and Too Proud To Ask For Help

The Arrogant Owner Complex

The ego. How many times have we argued with someone knowing they were really right, yet we just won’t give in due to that darn ego. Egos have started wars, ruined economies (the housing bust), and closed the doors of more restaurants than we could list here.

So, maybe you don’t know everything about the restaurant business? You act tough in front of the staff because you don’t want them to see through your charade. Trust me, they will figure it out and then slowly take control of the restaurant and ride the payroll until you finally close the doors. I’ve seen it happen over and over again.

I have said it before and I will say it again…
42,000 new restaurants open every year.
By the third year in operation, 50% ave closed their doors.
81.4% of those were due to poor management.
Many of those could have been turned around if they would have just reached out for some help.

9. Your Staff Has Free Rein Of The Restaurant

Why You Need To Work ON Your Business More and Less IN Your Business

I love a good pirate movie! When does the mutiny always happen? When the captain is downstairs, not watching the crew. As an owner your job is to do two things:

A. Build your business. After you learn every position in your restaurant (see #1) your job is to Promote, Preach and Deliver.

B. Train your team to run the restaurant to YOUR standards, expectations, vision and core values. You manage the managers, they manage the team. You build the people who build your business.

It said in the bible, “without a vision, the people perish.” This is true about your restaurant as well. Everyday you need to affirm with your team what YOUR standards, expectations, vision and core values are. Keep those things at the top of their mind. Repetition is the mother of all learning. I am always reminding the staff with pop quizzes all day long, that is my job to make sure they are committed to the company vision, values and standards. It might be a subtle form of brainwashing….but it’s better than closing your doors and losing everything.

10. Menu and Concept Are Designed Around Personal Egos Not Guests

What We Can Learn From Reality TV

Ever watch Gordon Ramsey on Kitchen Nightmares?

Besides the dramatic effect of treating people poorly, Ramsey does have a formula for the turnaround.
The first thing: cut the menu down.

He does this with a few key items in mind:
- it’s better to pull off 12 items great all the time than 25 item so-so
- develop signature dishes, you want to be know for something special
- listen to the market and not your ego. I love the so called “chef driven” menus that have 12 steps to each plate that ends up taking an hour to get on a busy Friday night dinner service. Ya, that was a good idea….of what NOT to do.

Menu engineering is a big thing! You have to do market research and tap into the local pulse. Just because Grandma had a good meatloaf recipe, doesn’t mean you should you put it on the menu. Plus there are complex psychological visual placement of items where they are on the menu which will make a dramatic difference.

Good tasting food that is seasoned properly with solid cooking technique and clean presentation will win your customers over and over again…a lot more than Asian pear gelato, black pepper-grape foam with a blue cheese tuile. Trust me.

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