UPDATED :: In over 10 years as a key player in more than 40 successful openings and long term success of bars, restaurants and nightclubs, I have seen a lot of competitors fail. As much as I’d like to claim we “killed the competition,” often they actually kill themselves, sometimes before they even open.
Following are the Top 10 key reasons bars, restaurants and nightclubs fail. We are currently offering a free consultation to help in any areas needed!
TOP 10 REASONS FOR FAILURE
(1) The restaurateur/owner does not understand what business they are actually in. Their fantasy does not match the reality of running a successful operation. No one thinks they can hang a sign and have a dental practice with no training because they brush their teeth every day, but many people think they can launch and run a restaurant or bar because they like to go out for dinner and drinks, or maybe they worked in a bar for a while. There’s much more needed to succeed.
(2) Typically when developing the restaurant too much is spent on construction, equipment and decor and not enough on staffing, training and marketing. Many new owners love to spend on “things” and are reluctant to spend on people which are the #1 key to a good guest experience.
(3) Careful research is not done prior to opening on politics in the community, and vital relationships are not forged with people in local power positions (over your liquor license and inspections for example!) Particularly, beverage driven venues can set themselves up for constant trouble from authorities once they are open. “Connected” experts are needed on the team, as no single person or owner knows enough about the various players and issues. This is survival stuff that all too few pay enough attention to!
(4) Concept Development is not led by someone with a successful track record of launching multiple bars and restaurants, so the right concept is not chosen to fit the demands of the market and the team fails to maximize the best opportunities to make money at the particular site and in the various desired target markets.
(5) Four walls marketing (inside the venue) and generating repeat business are given minimal attention when they should be the most important two parts of the marketing mix after opening.
(6) Lights, music, atmosphere (temperature/comfort) are not consistent and appealing. These are simple basics yet hard to maintain. Circling back to point (1), many who open restaurants don’t realize it’s the details that make or break you.
(7) The opening project is under-capitalized due to lack of knowledge about planning hospitality projects. Wishful thinking, deception by contractors, and plain ignorance of costs and likelihood of overruns in certain areas are common reasons budgets run awry and owners/projects run short of money.
(8) The operator fails to effectively identify profitable target customer groups, picks unprofitable groups, or fails to serve the targeted groups adequately. In other words the people aren’t showing up or the people who do show up don’t have enough money in their pockets to pay the bills.
(9) Lack of theft controls, undisciplined operations and unprofessional bookkeeping/accounting lead to failure. It’s nickle and dime business, and those lost coins can add up to put a bar, restaurant or nightclub in a deep hole, even if it seems there is plenty of business coming through the door.
(10) Not staying fresh and current with menus, entertainment, audience preferences, social media and other marketing will make a concept run out of gas. You’re only as good as last week in the hospitality business, particularly with trendier concepts. Keep in mind: Coca Cola still advertises aggressively, so don’t anyone else think they don’t need to!
5 Solutions to avoid the Top 10 Reasons for Failure
(1) Hire experts with proven success in each critical area to help launch and maintain the concept. If you do not have a track record of success yourself, you must work with someone who has.
(2) Use technology everywhere possible to control losses, create efficiencies, maximize marketing and provide the best customer experience.
(3) Prioritize your time and resources toward things that create the most positive guest experience and that means #1 food and beverage quality and #2 nurturing an outstanding staff and #3 creating a fun and delightful environment in the establishment.
(4) Be properly capitalized and add 20% for overages from your original business plan because they will happen more often than not.
(5) Save money and increase odds of success by planning in great detail, researching and running scenarios before the building stage where things get expensive. “Measure twice cut once.”
Interested in learning more? Feel free to contact us for a free consultation to help in any areas needed!
– Tim Borden, A-List Marketing Solutions, Hospitality Development and Marketing Services