Data Intelligence

The Top 5 Reasons Restaurants Fail

While there are over 624,000 restaurants in the U.S, there is a lot of room for growth according to a study published in the Restaurant Startup & Growth magazine. However, the industry also faces a myriad of challenges. 

A Bad Location

Location should be your first consideration when opening a new restaurant. The location of the retail space you choose will determine how visible your business is to your target customers. If there is limited foot traffic or insufficient parking you can’t expect to have customers flocking to your restaurant. 


One of the biggest reasons restaurants fail is inexperience. There are many investors who are well meaning but they have no experience in the industry. This leads to poor decision making and reactionary strategies which cost you customers. It is important to hire the right people for the job early on before the ship starts sinking.

Poor Customer Service

The food service industry is highly demanding. You have different customers with varying tastes and you need to manage their expectations. Teaching your staff how to interact with difficult customers is a challenge, but one that has to be undertaken. It is your challenging customers that post reviews and can drive more business your way (or the other way). 

Poor Accounting 

The restaurant business is tricky when it comes to bookkeeping. There are a myriad of accounting items to consider including ingredients, labor, day to day operations, and advertising among many others. Proper accounting procedures can help overcome many cash flow challenges that might otherwise sink your business. 

Lack of Advertising

If you don’t get enough customers in the door it is hard to be succesful. Advertising is an essential tool for all restaurants. Using social media channels to engage with your target customers is more important than ever. Social media and advertising take time but with a well laid out plan it can be very manageable. 

As we look forward to 2018, don’t let these common mistakes hold you back from your succesful new venture.  



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