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5 Reasons Why Restaurants FAIL To Survive | Small Business Advice Cafe Restaurant Management 2020

Today we’re going to be talking about the Top five reasons why restaurants, food and beverage industry has failed. These are the five common pitfalls which you If you know can avoid More than 60 %, okay of restaurant owners, Within the first year of operations, fail That means that six out of 10 people that Run restaurant that has a beautiful idea who wants to be able to bring their dreams? Into reality, fail within the first year And a lot of the reasoning behind why they Fail can be avoided if only they know about these five common pitfalls Make sure you guys stay tuned and paid attention.

The number one reason why businesses fail: Is because of location? Okay, What I mean by that is location in terms of Not understanding the difference between destination, location and high traffic location, If you guys have an opportunity, definitely Check out this article, where I break that down in terms of what they truly mean In essence, what high traffic means is not A lot of people walk by and in turn, has the potential for more customers and whereas destination Is someone that actually has to drive over specifically for your restaurant and having A really high intent, A lot of people mistaken the fact that “, Hey You know what I want to pay $ 10,000 in rent and in turn, I’m going to be making $ 100,000 in revenue because I’m paying so much money for rent And this high traffic place.

” High traffic only means higher potential for Customers coming into restaurant Does not equate to more customers. You still need to be able to do the work. You still need to have a product market fit. You still need to have high visibility for Your food and beverage restaurant – It doesn’t make sense for a lot of people. Who? Actually pay super high rent and have this expectation that their business would Survive just because they have a lot of foot traffic Now, on the other hand, if you are running A destination location, people don’t understand that you need to do the right amount of marketing.

You need to be able to appeal and market And bring your food offering in front of your core and the ideal customers minds and eyes: In order for you to be, and actually entice them to come over here to your destination, Location Which, at the end of the day, if you understand The concept between the two and understand the different variables and elements that Come into play whether it be visibility, crime rate accessability, then you’re going To be able to prep yourself much more for success and you’re, going to avoid much more Pitfalls, So if you guys have not had the chance, definitely Check out this article, where I talk specifically on these elements of two different types of Locations Second reason: why fail within the first year, Is because of the fact that they don’t manage their team properly? What I mean by that is, first of all, you need To make sure you hire people that has the same aligned values? Okay, Because if the way you do things and the ways That they do things don’t align then you’re in big trouble, because you guys are not speaking.

The same language – and you guys are always going to butt heads, Okay And they’re not going to have that accountability They’re not going to have that common sense. Which you expect from them And in turn you guys, cannot work towards A better and the vision that you’re trying to create In this article we talk about. How do we actually Train, how do you retain? How do you create the right culture in order for you to be able To bring in and build an all star team Now, a lot of people also neglect treating Your staff like humans, And what I mean by that, is giving them a fair Wage giving them proper schedules so then that way they can actually do things outside.

Of work, Especially in the food and beverage industry, The schedules are so whack Whenever there are holidays, they’re working Whenever it’s happy hour, they’re working And they’re basically working hours that a lot of people don’t And at the end of the day, we as owners need To be able to take care of them because at the end of day, if we do take care of them, They are going to be able to take care of our business And in turn it helps us out right.

So in this article we talk about the five different Ways in order for you to be able to train them properly in order for you to be able To align with them and in turn have them run your business for you and not. Have you Being able to run your business day in day out and getting burnt out Some of the poor examples that I see with An initiative is that owners treat their employees like trash And what I mean by that is giving them minimum Wage always cutting on the benefits not giving them development opportunities, not Trusting them always looking over their shoulders and micromanaging them and, in turn, just think About it, If you’re on the other side of the table, How would you feel if you’re not treated with respect, How would you feel if you’re not empowered, To take actions, How are you actually able to actually take Any accountability if there is no trust in you, which is a reason why we need to empower Our staff For us at 720, Sweets, we have a $ 10 rule And what that means is anything below $ 10 Our staff has the ability to void to comp to actually give out products for that amount.

So then that way they can actually bring a Pleasant experience for customers, And on top of that, our staff feels like that. They have trust that they have power, that they can make a decision. They don’t need. To go through us and in turn allows them to be much more accountable for our business. Treating it like their own right Now for those of you that think that oh You know what what if that stuff ends up abusing this $ 10 rules, And I can tell you that for a fact that people Do abuse it, but those people they don’t align with us, because their values are different, They’re, not high in integrity.

They are not High in empowerment, And because of the fact that we, whenever We hire has this really strong sense of alignment in terms of values we know – and we already Vetted 90 % of those bad apples away from us, which is the reason why this $ 10 works very Well with us at 720 Sweets, And hopefully by me, sharing some of these Strategies with you you’re going to be able to actually bring back to how to treat your Team properly to empower them and to actually give them proper training.

So then you can build an all star team who’s. Going to be able to take care of your business while you’re away traveling taking care of Your family, The third reason why restaurants fail within The first year is because of ego, And what I mean by that is it’s: okay, if your Food sucks and that there is room for improvement. It’s okay, that your customer service is not The greatest It is okay, because customers are willing to Give you a chance if you have the right attitude, if you’re willing to improve And if you’re, putting in the resources for Development and constantly creating and nurturing that relationship and molding your offering Until it fits your customer’s palate, okay, People are okay with that, because we’re all Human, We all understand that, if you’re, genuine and Putting in the work and actually improving your food offering, then people are much more Likely to support you along the journey Why a lot of people fail is because of ego, And what I mean by that is, if I’m given a Feedback that my food sucks – and I just take it personally and I think that you know what These guys don’t know their stuff.

These guys just don’t understand my offering Well. If one person tells me that it’s not A problem, but if 10 people tells me that my food sucks, then I should better take action. To improve and tweak it, But a lot of business owners, their ego gets Into place and the ego gets into their own way and now they think that everyone is picking On them, The world is not fair and they’re, not willing. To adopt and change because they have this idea about their recipe is amazing.

Well, that’s the reason why they fail Same thing with customer service. They can take it personally. They think that you know what My customers are picking on me. You know what My process. This is something that I’ve been Doing for the last 20 years, It’s okay, because it’s been working for the Last 20 years Well, sad to say it. This is the reason why they’re failing because Their ego is in the way of them improving, delivering better customer service, better Food offering So, if you want to succeed, make sure your Ego is not in play, Make sure you’re able to take in that constructive Criticism and actually do something to improve upon it And that way you’re going to be able to actually Bring your customer along the journey with you for this whole development and in turn, Create an amazing experience for your customers.

The fourth reason why restaurants fail is Because they don’t know their numbers And what I mean by that is, do you really Know the costs of goods sold for your restaurant? Are you keeping tabs on the percentage that You’re, actually spending on labor And do you know how much rent actually accounts? For your total revenue, If you don’t know these numbers, these golden Metrics and these golden margins you’re not going to be successful, Because if you don’t know the numbers, how Can you know if anyone is stealing from you? How can you know how much you’re making? How can you manage your cashflow properly? For expansion, You can’t do any of this.

If you don’t know, Your numbers At end of the day numbers would allow you To actually manage your food costs properly So, for example, if you’re throwing away tons Of food because they go rotten because they get stolen, then at the end of the day you Know this I’ll give you an example: If your costs of goods sold So, for example, the burger costs $ 3 to make And you sell it for $ 10 and all of a sudden, your cost of goods sold raises to $ 5 and you’re Selling it for $ 10, you know for a fact that somewhere in between something is wrong: okay, Either you have been throwing away and wasting A lot of ingredients because you’ve just over ordered and now they’re expired.

Now you have to throw everything away or someone Is stealing from you because you’re buying, let’s say $ 500 worth of burgers, but in turn You only have $ 400 worth of ingredients What’s going on. That’s the reason why you need to know your Numbers So that way you can actually work on you Know what better delivery system to ensure least amount of spoilage Or you can work on hey. You know what Are people stealing money away from me? These are all things that you need to work.

On and that you can work on, if you know your numbers Same thing with scheduling, Are you working at the most efficient labor Force right, Can you stagger the amount of people that Comes in, Are you maximizing the amount of revenue that People can bring in And if you don’t know, your labor costs, you’re Not going to be able to control any of these elements, Which is a reason why a lot of businesses Fail They do not understand their golden margins.

So if you want to be successful in the restaurant Business make sure you understand and know your golden margins In this article we talked about. How do you run? And open a successful restaurant check it out here and understand your golden margins. The fifth and final reason why restaurants Fail, it is because they keep running promotions And what I mean by that is we see someone Being super successful running promotions, Our competitors are having lineups around The block, because of their big promotion, It’s buy one, get one free And then in turn you run the same promotion.

And as you’re running that promotion people are buying yet you’re, not making money and You’re, like “ Wow, I can’t survive if I keep running this promotion, but yet my competitor Is doing it.”, So that’s why you copied them And in turn you’re running yourself to the Ground, because you don’t understand why they’re doing the promotion At the end of the day, you need to really Truly understand the foundations of your business before you run any promotions at all, And what I mean by that is, if you’re running A promotion what’s the objective: Why are you running it? Is it to gain awareness for your business, Some franchise stores they have the budget.

To run these promotions to gain the awareness, It is a marketing cost and they’re. Okay with It But for your small business, is this something You can afford and is this a strategy you want to employ for your business, Whereas, if you’re running a promotion for The sake of gaining profit, then the type of offering would be different completely Different from a buy one get one free, It could be an upsell.

So, for example, if you create a meal bundle, And push it out to the market, then you can actually optimize the amount of people that Are buying from these things So, at the end of the day, having an understanding The foundations of how you run your promotion is key when running it. Do not just go blindly in offering copy of Competitors just because they’re offering something that you’re not So there you go off the top five reasons that You should absolutely avoid when it comes to running your restaurant.

Okay, The first one is bad location, not understanding. The fundamental of choosing the right location for your offering And second is mismanaging your team, not aligning With their values and not incentifying them not treating them like human beings, okay, Then, third, your ego and make sure that your Ego’s in check be receptive with people’s suggestion And fourthly, we are talking about the numbers, Know your numbers, So then that way, you know which lever to throw In order for you to maximize the amount of profit that you can make And, finally blindly, following what your competitors Are doing and running promotions without understanding the fundamentals Make sure you avoid all these pitfalls so Then that way, you can run a successful restaurant business.

If you guys want to learn more about how we’ve Started our business to now we’re becoming an international food chain, make sure you Check it out in the link below, because that’s where I share with with you all the resources That we’ve learned throughout the last 10 years We’re talking about finding the right location, Negotiating free rent, finding and assembling the right team understanding what our customers Want offering them what they want, knowing the numbers, crazy marketing strategies raising Funds all these types of information are all on the link below check it out in the Link below, I really hope you find value in this article If you do just smash the like button, If you want to show some more love comment: In the section below Otherwise subscribe along the journey for Weekly articles that is going to help you improve and start an amazing restaurant business.

I’ll see you guys next week.

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