Numerous restaurants fail to discover the full potential of their business. Certain surveys done over the time have found out that the possibility of failure in restaurant industry is quite high. Many of Australian businesses are “small” level; actually 97% are small businesses. Australian Bureau of Statistics have found out that more than 60% of them are shutting down within the first year to first three years of starting. On the other hand, when they are survived for more than one year, restaurants are found out to be more resilient.
Why they fail?
Obviously cashflow issues are a possible and more than a probable reason for these closing downs. Even a business that is a total cash cow can have cash flow issues. One reason is your sales are not actual sales but just money on books and another is your spending is very much higher than what you earn. In a way, a business like a restaurant can overcome this first issue as it is a place where people will pay money and buy food. Or if they have a liquor licence Melbourne and sell the hard drinks, it is even easier to raise money as you can charge corkage and whatnot. But, in spending department you got to be more careful. This is one area where research comes in handy. Study the places that were forced to close down due to cashflow issues. What has happened there? Suppliers paid more than needed? Too many employees? Learn a lesson from them.
Train your people
Something people seem to miss nowadays is the service. It is a surprise as it is clear that a place with a high quality service will no doubt be the top restaurant or shop in the town. When you come in the maître de is all smiles and after a while when people start piling in, they lose their patience. A good employee at a restaurant has to be able to face any sort of pressure from anyone. Hence, training your employees is of utmost importance. In this digital era if the reputation is lost, it will take eons to build back up and sometimes even be impossible to come to the spot where you were earlier.
Designs and reputation
Based on what your business stands for, there will be a sort of market you attract. If you manage to bring in high caliber people, remember they expect a high caliber service. Most restauranteurs face the issue of setting the bar so high and not delivering. Did you do a research before marketing to the high and mighty about what they expect? If you buy cheap alcohol without talking to liquor consultancy services, you may face the music when the “posh” segment comes to feast there. As said before, once your reputation is lost because of something as such, it won’t be easy to build it back up. It must be remembered that just because someone has had prior experience employed at a particular business, say a restaurant, that doesn’t mean they are well-equipped to start and run a similar venture. If someone jumps in to the bandwagon just because of having worked somewhere, without planning and with a small capital, it will be only worse than starting a business without doing any research. So, take care to avoid these mistakes.