Beat the Odds: How to Overcome the Restaurant Failure Rate

To avoid a 9-5 life, it seems many people jump to the same assumption – “let’s open a restaurant!”

While owning and managing a restaurant is exciting, rewarding, and can be fun, those who have experience would argue it’s best left to the professionals.


Because so many people open a restaurant only to see it close within a year. There are varying reasons why, but here are some objective facts about the restaurant failure rate.

Having said that, wages for restaurant workers and the number of establishments in the country are increasing, so this isn’t a bad time to open a restaurant at all. However, you have to make sure you doing everything you can to actively avoid the staggeringly high restaurant failure rate.

Read on for three of our tips to keep your restaurant riding the waves and make sure its doors stay open.

Establish Systems and Maintain Controls

Spend wisely and increase efficiency. A quick Google search of “restaurant cost controls” will result in article after article about how important it is for restaurant owners and managers to understand food costs and menu engineering. You’ll have to know the details of every single dish being served at your restaurant, down to the raw ingredients.

Understand which items are most profitable, or conversely, most expensive to make. Maintain your inventory and keep a sharp eye on product; overportioning the beef in your burgers by just a fraction of an ounce can result in the unnecessary spending of thousands of dollars annually. Now multiply this across all menu items, and these precious fractions of an ounce have a much bigger impact when translated to a dollar amount.

Also, your staff needs to understand how to record items sent back to the kitchen and why. Was meat the wrong temperature? Did the server make a mistake? You need to know these reasons to make the necessary changes in the kitchen or FOH to prevent food waste and minimize loss.

To maintain control over your costs, make sure staff is properly trained to record any waste during service. You should also implement an inventory management system right from the start, take inventory regularly, and make sure nothing in your kitchen leaves unnoticed. With the right system, you’ll also understand when it’s time to remove items from your menu, which items should remain, and which items you should push your servers to sell more frequently, to generate the largest profit possible.

Create your Culture, Manage Your Staff

According to the National Restaurant Association,there will be 100,000 more restaurants in the U.S. by the end of this year than there were in 2005.

It’s more important than ever, especially for restaurants in urban and suburban areas, to remain competitive in this growing market.

While some folks return because they are creatures of habit, the quality, culture, and concept of the restaurant are reasons why the rest of us return to our mainstays. Together, these factors comprise the experience of your restaurant. Make sure that you’re providing guests with an experience that is consistent and unique to keep them coming through the door.

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