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Running a Restaurant is a risky business! Here are the mistakes you shouldn't make

By Nishtha Gandhi

Updated - May 9, 20245 min read

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Being a restaurateur is very difficult especially when it's a proven research that most of the restaurants fail in their first year of business. We can look at the best of best reasons why restaurants fail in the first few years of business so that we can avoid further failures. Because there are still countless successful restaurants opening each year and making it big. We will also jot down the reasons and the key factors that lead these restaurants to make it BIG, that will help us to do the right things. From owners of cafes to owners of lavish and exclusive luxury restaurants, everybody has pitfalls and make mistakes if they are new to the hospitality industry. If you avoid these mistakes early-on, you might see your restaurant becoming the next BIG thing.


1) Choosing the wrong location

A quintessential prerequisite for a successful restaurant is a good location. Choosing a good location is of vital importance. If your restaurant is located at a place with no footfall, no parking space, and really poor visibility, it is inevitably going to fail. The rent of the restaurant and property taxes are going to cost you a bomb anyway, so you'd rather spend that kind of money on a well-researched good location so that there is a return on the investment. The environment of your restaurant matters a lot. The kind of audience that comes there, If your restaurant is in a commercial area, or around a university or a college will determining its menu like it will determine the design and concept. 

restaurant mistakes location


2) Bad Marketing

A good marketing and promotional strategy is everything to make a restaurant business work. It is very important because everybody in this century is overwhelmed by so many choices with stark marketing that they can easily choose to go to a restaurant different than yours and it won't make any difference to them but it WILL make a difference to your success. A customer has to be the god, obviously. Reaching out to more customers plus retention of the existing ones should be the main idea behind marketing your restaurant. Advertising by word of mouth is losing its charm by the day with digital marketing and a world of information about everything on the internet. A strong campaign will definitely help your name to get out there and will attract new customers in. Don't save money on marketing. Hire a very good PR or marketing team for your restaurant to succeed. Participating in a local food festival will also get you a lot of audiences.

restaurant mistakes marketing


3) Inexperienced owners and low research

People who enter this industry without prior experience do not realize that it is a complex machine with many moving parts. A lack of understanding of this industry leads to major failures. If you are inexperienced, partner up with somebody who's been in this industry for far too long to guide you well and make sure you don't do mistakes.

restaurant mistakes research


4) Lack of Unique Ideas

There has to be a way your restaurant is better than some other restaurant serving the exact same cuisine and located in the exact same areas. This difference does not necessarily have to be in the form of different food, or design or concept, but this difference can also be visible in your marketing techniques that appeal to your customers or in the way your staff is dressed or how you serve your customers. 

restaurant mistakes ideas 


Also Read: Hacks To Increase And Retain the Customers of your Restaurant


5) High Upfront Costs 

Cost of opening a restaurant may actually exceed your expected costs or your budget and you will get overwhelmed even before the place opens. This over budget maybe due to different factors like licenses or construction costs. So, keep a buffer in mind while opening a restaurant that there might be extra unanticipated expenses. 

restaurant mistakes costs


6) Bad Customer Service

Exceptional customer service is necessary to have a stable and loyal clientele. Make sure you define your customer service policies much before your restaurant starts functioning and also make sure that your management understands your vision and values. The guests who have any kind of woes with respect to food, service or any other issue feel respected if they are attended by a higher authority figure of the restaurant like the owner or the manager. You have to tend to their needs as much as making sure every other aspect of your restaurant is on point. 

restaurant mistakes


Read: The Greatest Instagram Guide ever made for Restaurant Marketing


7) Cash Leaks

Stay away from bad accounting as much as possible. Make an accurate assessment of all your budgets, food costs, tip pools, comped items, spillage, breakage, and order errors. All these little details mean you can easily start to see cash leaking out the corners of your business. Hire someone who's really good at handling and adept with proper accounting because it's easy for you to get distracted and not know why your income is dwindling. 

restaurant mistakes


8) Strained Partner Relations

If you are in business with a close relative, friend, partner or anyone in your kinship, we all know there are problems that can arise. Sharing financial risks and profits can be pretty stressful both for the business and on your relationship with the respective person. Resolving conflicts should take the top priority when it comes to business, otherwise, your business can be doomed. Objective reviewal of the situation and the dispute is necessary to make sure that it doesn't have an effect on the restaurant. 

restaurant mistakes relations


Suggested Read: 8 Restaurant Menu Hacks That Will Tempt Your Customers To Spend More