Top 10 Reasons Why F&B Businesses Fail

The F&B business is always an exciting venture for anyone looking to get into it! Although it is time-consuming, it is just as rewarding. However, there are many aspects to running a restaurant that most people forget about. Making these mistakes may end up costing your business. In the worst case, this means total failure.

Below are 10 reasons why F&B businesses tend to fail.

1. Your Restaurant Location Matters [restrict]

Ensuring that your restaurant is in a visible or well-populated area is important. Who cares about your amazing dry-aged wagyu steak if they don’t know it exists? Like any business, a restaurant’s location is important, especially if you’re new to the business.

Ideally, your restaurant should be able to fit into its’ area without offering direct competition on your neighbours. This means that if you’re opening an Italian restaurant, try to open in a location that does not have other Italian restaurant’s in the area. Direct competition will stunt your growth and is no fun for anyone.

2. What To Do When You Lose Your Head Chef

If you ever lose your head chef, don’t lose your head! Losing your chef is a big deal that could costs you hundreds to thousands if not addressed ASAP. Sometimes things don’t go according to plans, but that’s okay. It’s open to keep a clear mind and push on.

The first thing you should do is start looking for someone who can fill in the position immediately. Even if it is only temporary, some compromises need to be made. If you can cook, consider filling in during busy hours.

3. Customers Tell You Your Food Sucks

Every restaurant has their bad days. Sometimes the cook calls in sick, or you’re just unable to secure the right quality ingredients. However, if you receive a series of complaints on your food, then you can be sure that it just sucks. So what do you do?

Serving bad-tasting food is not an excuse in the F&B industry. If you don’t do well, someone else will. This is why most hawker stalls are unable to have two chicken-rice stalls in one outlet. There is only so much garlic for the chili, and one is bound to outshine the other.

Sometimes, this may be the issue. Perhaps your customers are comparing you to a similar outlet nearby? If so, find out what your competitors are doing that you are not. You probably can’t outdo them at their dish, but you can find a signature dish that people will remember you by. Stop sucking.

4. Your Restaurant Business Is Running Low On Cash

Running out of money is a common problem for startups and small businesses. That doesn’t mean it’s a good thing, as it is the worst. Without money, you can pay your staff, suppliers and bills. Unless the problem is addressed, you could be out of business soon.

Cash flow issues are not exclusive to failing businesses. It usually happens when a business is doing too well, and they end up taking on more costs than they can manage. Expanding slowly but surely is the way to go. Don’t get greedy!

5. Failure To Drive Off-Peak Demand Costing Your Business

Most restaurant owners are familiar with their operating hours: when your get the most business and when your business is quiet. Certain days of the week are less happening than others, but are you doing anything about it?

While fancy lighting and interiors are great, they should be saved for busier hours. The cost of operating your restaurant needs to accommodate off-peak hours. This means saving on electricity, water and staff costs!

6. Can’t Hire or Motivate The Right Staff

Employee motivation is tricky for many people. There are so many types of characters and management styles. Of course, there is no one-size-fits-all, but there needs to be rules. After all, your employees are the backbone of your restaurant operations.

Not all of us are good at psychology or human-relations. However, not motivating your employees will end up costing a business. Usually, when a person decides that they won’t come back to a restaurant it’s because of poor service. Service is handled by staff, and poor service is a result of poor management.

7. Failure To Manage Inventory After Expansion

Expanding too quickly is a problem with most restaurants. While more business is always great, it is important to maintain what you already have before moving on.

Failure to manage your inventory comes down to those initial stages. When you don’t take the time to sort things out during your developing stages, you are setting yourself up for problems in the future.

One of the problems with inventory in the restaurant business comes from over-estimating. When you purchase too many ingredients but are unable to store them properly, they will go bad. This will end up costing you a lot in the long-run, especially if you do not take steps to make sure it doesn’t happen again.

8. Lack Of Quality Control and Taste Consistency

QC is a must in the restaurant business. Why would any restaurant owner want to serve anything that is below a certain standard? Well this happens when restaurant owners don’t check on their kitchen staff often enough.

Consistency may be an issue with temporary staff, but the problems can be eased with good management. However, there is no excuse for a lack of quality. You should set certain standards and be sure to meet them no matter the cost!

9. Your Business Is Not Ripe For Expansion

We mentioned how expanding too fast is a problem, but how do you know when you’re ready to expand? The thing is, most restaurant owners consider this but are unsure, so they take the risk of expanding. Too often, this results in failure.

Being ripe means having regular customers and having consistent profits every month. But it’s not always about you. Sometimes it’s the location. Are you sure that expanding is the right move for the industry and location you’re in? Market timing matters.

10. No Customers

Marketing can make or break your business. You summarize your restaurant, food, services, prices and location in a neat and tidy package. Then you need to get word out there. It doesn’t matter if the food you serve is worthy of three Michelin stars, if no one tastes it, then what is the point?

Actionable Takeaway:

For the month of August, SKALE will be featuring the Top 10 Reasons Why F&B Businesses Fail series!

This article outlines some of the things we will be highlighting in our series. Check it out and stay tuned for things to avoid when managing your restaurant!


1 comment

  1. Non of the above matters except only No. 8
    If your food is the best, people will find you even in some distant corner. You will be flushed with cash, need not worry about service. I would drive a hundred miles to eat at your place even if it’s expensive, lousy service and wait one hour, if your cooking is the best!!
    You can have the best location, beautiful decor, excellent service, Low price and advertise all you want. If the food don’t taste good, I assure you will fail!!

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