08.11.16

10 reasons why bars & restaurants fail!

10 reasons why bars & restaurants fail!

I can’t tell you how many times I’ve been asked by clients and prospective clients why so many bars and restaurants fail. Having worked in this industry for over 20 years, I’ve witnessed a lot of F&B brand success stories, but also a number of failures!  

With an archive of experience noting what has worked and what hasn't, here are the top 10 reasons why I believe bars and restaurants fail – which I hope will a be useful reference for how to avoid this in your business! 

1. The Wrong Location

It's the most obvious reason, but many people seem to miss this crux.

The right location is not just about footfall volume, or visibility. It’s about the right kind of footfall. Footfall that’s looking for somewhere to eat or drink, not marching by on it’s way somewhere else.. The right location is all about knowing your customers, understanding their lifestyle and how your concept fits in to it. If you have the option, know your customers first, then find the location that suits them. Or if you have the location already, make sure you adapt your concept to fit the location’s most likely customer base.

2. Lack of Funding

DOH! We've seen this too many times. So much time, energy and money goes into launching a new concept that many people run out of all three just as they finally get the doors open!  It almost always takes longer to get established than you expect, so it's vital that there are sufficient resources to maintain the business during that time.

3. Poor Timing

If there is one thing that I've learned, it's that being in the right place at the right time is quite simply the one thing that every single success story has in common. However, the catch is that it's only in retrospect that it becomes obvious that it was the right time! Right here, right now - it's far less obvious. It's all too easy to get the timing wrong. So many businesses aim to be innovative, to do something new and exciting, to grab the headlines, to drive awareness through their extraordinary offer. Flip your thinking. Ask yourself what is it the right time for right here, in this market? Or simply put, what is there a growing demand for?

4. Insufficient Marketing

Coming from a branding background I would say this, but at least I didn't put this at number one! All too often we've seen operators open the doors to their new bar or restaurant concept and expect people to start flooding in. Many of the places we've known to fail didn't have a marketing plan; didn't have the right marketing plan for their customers; or were not implementing their plan effectively. Get your marketing right. It’s absolutely essential.

5. Lack of Financial Control

Boring. Who wants to stare at a computer crunching numbers all day? [Oh, you do? Skip this part then!] For everyone else… financial control is vital to any business and we've seen what happens to restaurants and bars that do not master it. The most successful hospitality businesses ensure they have an iron fist clamped around the finance. Often (although not always) it's controlled by someone who is the last person you'd associate with 'hospitality', but if you can find one and keep them locked in a room back-of-house, you'll be rather pleased you did.

6. Unwillingness to Adapt

Nothing stays the same. That's one of the philosophies behind several of the successful operators I've been fortunate enough to work with. Conversely, I believe there's a strong resistance to change inherent in most people. Be prepared to evolve your business. Amend it. Tweak it.  Do anything except keep it locked up behind a big safe wall.

7. Lack of Scale

The obvious point to make about scale is the danger of growing too fast, or losing the essence of what makes the concept or the brand special in the first place. The brand is core to the success of a scalable restaurant and bar business. Without a clearly defined brand the goal of scaling a business is at best delayed and at worst dangerous.

8. Underestimating the Competition

It’s important not to under-estimate your competition. Just because your food, your drinks, your service, your environment and your prices are better, does not mean people will switch. Recognise that competition is coming from so many different places now. Making sure your brand connects with customers in a meaningful way and builds loyalty and rapport is an important step towards protecting yourself from competitors.

9. The Wrong People

What is the Mystery ingredient that creates a compelling restaurant or bar? It's the exact same ingredient that can kill a place if it's missing. Soul. Soul comes from the people in the business.

You have the right people in the organisation and most of the other challenges can be faced and overcome. You have the wrong people and the culture becomes undermined, the soul or the magic that makes it special disappears and the customers go too.

Knowing your brand and being able to communicate it succinctly and authentically to potential recruits and partners will not only help select the best candidates, but also act as a filter for the wrong ones.

10. The Domino Effect

All the elements of a hospitality business are inter-related and if one goes, so do the rest! Our advice is often to look at your own business and write a plan or diagram that shows how the arrangement of all the dominos in your own business are inter-related. This is a good way of ensuring that you have covered all your bases so that you can pre-empt how each element of your business affects the another and can therefore prevent the domino effect.

Running an F&B business is hugely complicated and fraught with dangers and we can’t foresee every potential threat, but if you have taken into consideration all the above key reasons for potential failure, you’ll be in the best position to make your business a real success.

by Dan Einzig