Why Are So Many Restaurants in India Shutting Down?

भारत में इतने सारे रेस्तरां बंद क्यों हो रहे हैं, यह जानने के लिए अपने फेसबुक खाते से लॉगिन करें

Is your restaurant having trouble bringing in customers? Do they often leave unhappy and with a long list of complaints? Does your restaurant’s management do a terrible job of dealing with day to day operations? Maybe it’s time to face the truth – you are doing something wrong.

In India, restaurants fail at a distressingly high rate. Up to 80 to 85% of new restaurants close shop within the first year.

Even worse, even if you make it past the first year, 80% of restaurants end up going bankrupt within 5 years.

Owning a restaurant is by no means an easy task. Owning a failing one on the other hand is even harder.

When a restaurant fails, it’s never a result of just one problem. Restaurant’s fail when too many problems rise to the surface, creating a recipe for disaster.

So just why do so many restaurants in India die, rather than live and survive for the long term?

1. Inexperienced New Business Owners

A lot of new restaurant owners enter the industry expecting it to be fairly straightforward and methodical. Unsurprisingly, this is the number one contributor to a restaurant’s failure.

Owning a restaurant in India is the furthest thing from a cookie-cutter job, and nothing is worse for a newly opened establishment than poor restaurant management.

Unfortunately, by the time most restaurant operators realize what’s going on, it’s already too late.

2. Poor Leadership in Restaurants in India

In most businesses you’re only required to manage a small group of people In the restaurant industry though, you’re required to manage not only a large group of people, but also a diverse set of skills.

Leadership is the foundation of any good restaurant, and when that is weak everything else will come crumbling down.

The best leaders in the Indian restaurant industry are usually those that have started from the bottom and worked their way up the chain of command. That’s not to say that a newfound restaurant owner won’t be able to handle the task, it’s just going to take a lot more work.

3. Lack of Accounting Skills

Terms such as food cost, labour costs, profit and loss statements, aren’t just words people use to sound smart, they are the bread and butter of the restaurant industry. When you ignore them, you are begging for your restaurant to fail.

Understanding your food costs and learning to manage them aren’t optional when you want to operate a successful restaurant in India. Same goes for all other restaurant accounting practices.

4. Zero Customer Service

The first impression you make on your guests decides whether or not they ever come back. Treat your guests poorly and not only will they never visit again, but they will also spread the word to everyone they know, which in the modern age that means through online reviews.

Once your restaurant develops a reputation for having horrible customer service, it’s pretty much game over. While most of the problems above can be fixed within a short time span, a bad reputation is one that takes a lot longer to repair.

Need some tips on improving the first impressions at your restaurant? Find out here.

5. Bad Food

All mistakes aside, the one thing you have absolutely no excuse for messing up is your food. After all, your food is the main reason for your restaurant’s existence.

Bad food doesn’t always present itself in the form of taste, sometimes its something as simple as poor execution.

When the restaurant management is bad, the chain of command inadvertently suffers too. This means that over time mistakes start slipping through the cracks leading to kitchen staff forgetting key ingredients or ordering sub par quality items.

This affects the quality and taste of your food which will drive your customers away instead of keeping them.

Actionable Takeaway

Realizing you are running a failing business is definitely a tough pill to swallow, but the longer you remain in denial about it, the more money and time is wasted.

The first step to addressing this issue is accept that there is a problem and plan out how to fix it. As restaurant owners, it’s our job to take responsibility in keeping your restaurant running and surviving.



  1. Few things that I would like to share here as I am too planning to start hotel or food business. One has to properly plan about the business and execute accordingly. People take too much of loan to start a food business and unable to repay and they shut down. They need to understand how much is their ability to repay loan till the break even. Also they need to properly identify location where their business can give maximum profit. For example if one wants to start a non veg food business in Kothrud area of Pune which is mostly Brahmin dominated area then they need to understand that there will be already someone with non veg restaurants and starting one more restaurant in that area is going to put more pressure for you to survive. Also the main reason for shutting down of restaurants is due to skyrocketing real estate prices and rents. The owners and local public in that area closely keep an eye on your business and they will increase the rent of their properties every year and they don’t let you to survive. Next thing is the service that matters. most of the restaurants don’t give the same type of service when they started and today which is a period of internet marketing and social media marketing people will easily mock you down they don’t like your service or quality, this leaves a bad impression and you may end up shutting down. These are the few reasons which may lead to shutting download your restaurant.

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