Do all these reasons apply to chain restaurants? All the national chain restaurants in my area are always packed on weekends. 45-60 min wait no matter what place it is.
I’m talking about names like
I can only think of 2 that close(chi chi’s and Lonestar), but I forget why they closed.
We passed out hundreds and hundreds of coupons. Same advice: have enough cash to last a year or two.
Poor or too optimisitic planning
Inferior food and service
Despite all that, a few more would survive if they stopped paying crazy these crazy leases.
Hear in Orlando, you’ll see these high rent locations flip every 6-12 month, because the rent is simply way to high, usually 5-10% of the owners most optimistic projections.
I forgot to add. I was actually asking about your initial days when the Wachovia bank guys would be rather visiting Quizno than your shop. A discount plus a smaller queue at your place would mean people would have started taking to your restaurant even quicker and you could have doubled your gross even faster..
Almost all of the arcade’s customers come from Wachovia Bank headquarters across the street, from Duke Energy Co. and Bank of America a couple blocks away.
We found that if you do too many coupons or specials, you get a lot of "mooches" that only come in for the "specials" and don’t order anything else. We knew where the customers come from and a "Wachovia" discount isn’t really necessary. We found that dcent food (Vienna) and killing them with friendliness and courtesy have paid off. Many people have told us that they come to us because of the friendly atmosphere. Oh, cleanliness pays off alos. Our health scores for our 4 inspections so far have been 102, 102, 101 and a 101 earned yesterday. People really notice your health score.
Looks like you shall be a success story pretty soon kensandyeggo. Congrats!
I would like to ask one thing however. Didn’t you try out some kind of market penetration strategy. Like for example, if you find that a chunk of the visitors to the arcade were from the nearby university,then you could be offering an exclusive 5% discount for the uni students. The word spreads like fire right!?
Kind of a repeat, but have enough cash to live for a year or two and enough to be able to pay all the bills, personal and business. If you do everything perfectly and have a good location, still count on at least a year to start breaking even.
I opened my hot dog joint in an indoor arcade with probably thousands of people coming in every day. When I first saw the crowds, I was sure I’d be doing $1,000 per day right from the start. Bad assumption. People are creatures of habit and take a long time to try out a new joint. There’s a Quizno’s 2 doors away that has lines of 15 or more people lined up for lunch. I figured that after we opened, those line-dwellers would try us out so as to not wait so long for their food. Nope, they still waited at Quizno’s because that’s where they were used to going.
We just finished our first year last month, and like overnight, our weekly gross has more than doubled. People are finally venturing in after us being there a year.
Dr of BBQ
Kathryn Rem: A la carte – Corky’s Ribs and BBQ closes
Published Sunday, March 16, 2008
CORKY S RIBS AND BBQ, 3458 Freedom Drive, closed last weekend because of financial problems that owner Barry Hickman attributed to the March 2006 tornadoes that mowed down much of the Parkway Pointe strip mall.
Our guest count feeds off the guest counts of the neighboring hotels, and when they closed for eight months (for repairs), we lost that business. We gave it some time after they reopened, but we never recovered. Corky s opened in July 2001.
Yes, you are all right about UNDER-CAPITALIZED !!! You need enough dough to carry you in shallow times, which could be 2-6 months……
I also don’t believe it takes 5-years to make a profit. Yes, it sometimes takes 5-years to see if a certain type of business will make it or not, but if it didn’t turn a profit in 2-years or less, then in my opinion, get the hell out and do something else.
I am in Sarasota and Maine in the summer, and 6 weeks ago, here in Sarasota a 5-GUYS HAMBURGER FRANCHISE OPENED. There has been a line out the door since opening. They have earned profit from week one.
Whats the secret ? Many reasons, but most important:
–the owner is in the store
–the quality is very good and must be maintained
–do not–I repeat–do not be overstaffed
–employees must be trained and maintained with being friendly, clean,
neat appearing, hard working, and reliable.
–don’t change a recipe unless it begins to fail
–don’t overcharge…. Undercharge if anything to get started.
–sell a product in demand which seems to be food.
I could go on and on, but I am sure you get the drift……
Don’t open a pizza shop unless you have the best in town, at a fair price.
Hope I helped, great success to all, Irwin
The industry standard is that you will need to stay in business for at least 3 years before even thinking of making a profit.
Xoox,Ive been in the food bizz for the better part of 38 years.My Father started a small Italian restaurant many years ago,I grew up in it.He would have to put his retirement check in it every month to keep it going and pay the bills.He died four years ago this May.I wanted to keep the Family Bussiness going so I bought a small Diner off the Island and opened two years ago,I am closed now and in debt over my head.Why?See what Ias61942 had to say.But the main reason I failed was Simply I RAN OUT OF MONEY!Mind you I busted my butt for two years without a paycheck and then I had to buy food with my own money which I did not have and then the bills came and came.So unless you have an desire to work for nothing with little reward I dont reccomend owning a restaurant.I am now working for another place on the beach on the line and happy to be there.
Restaurants as a whole DO have a high failure rate in America. But you have to break out the information to do a proper analysis as to why. One thing to keep in mind, though, is that as a small business start-up, there are far more restaurants started than most other types of small business. That in itself lends to a statistically higher rate of failure than other business ventures.
Restaurants are not equal. There is far less failure with small Mom and Pop type shops than there is with multi-million dollar, multi investor and partner financed high concept restaurants. So, when you wish to properly analyze the failure rate in restaurants — or foodservice business in general — you need to look at the failure rate of the specific type of shop you wish to start.
You need to look at the characteristics of YOUR particular shop, and do a direct comparison with food businesses which share those same characteristics. You may find that the specific type of shop you plan to open actually has a very low risk of failure (everything else being equal) among the entire category of ‘restaurants’ in general.
Also, you must keep in mind that a food shop IS NOT ONLY competing against other restaurants…… it is competing against ALL food. Any place that provides food — homes, grocery store delis, gas stations, convenience stores — are also your competitors. You have to ask yourself just HOW you can drive the consumer to choose you amongst every other food choice.
Really amazing and valuable comments out here. I read through each of them. I guess one reason why my impression about ‘restaurant business’ is different from what most of you think is probably because of where we stay.
I had a chat meanwhile with one of my friends who has been to US and he told me about the various regulations that the restaurants have to abide by including things like how far the kitchen should be away from the serving room, how the waiters serve, etc. He told me that starting a restaurant is indeed a difficult process governed by the Restaurant association there.
Luckily, as far as I know, we do not have so many stringent laws governing restaurant business. However, cash flow is an important factor as many of you have pointed out. I need to work upon this one..
By the way, I intend to also locate my restaurant close to a graduation college with residential students. I have been studying from one such place and I have observed that students tend to frequent these nearby restaurants quite a lot of times, irrespective of the cuisine getting ‘boring’. We had 3 restaurants close to my institute campus and we friends used to frequent each of these so many times. I think it would be a nice plan..
yes, we have BBC out here. But I havent watched this particular programme as yet. Will check it out, thanks for the info 🙂
This has been a real valuable thread. Please put in more thoughts as you get them. Thanks..
Everyone has made really salient comments. Let me make a few more, if I can.
1. If you own a restaurant, you are on stage so to speak. Serve someone a lousy meal and it gets around fast. Before you know it, you’re done. So the pressure is tremendous to do a good job and who are you relying on to do this good job? Yourself? No, if that was the case we would not have so many failures. No, you have to rely on hourly workers and your wait staff (if you have one) to present you in the best light. If they don’t care or don’t have a vested interest or they’re just waiting to get a better gig, you’re in trouble.
2. Under capitalization…You better have enough money to hold you through the lean times in the beginning..Few plan this properly. Do not be deceived by intial success in the first few weeks. Everyone wants to try new..It fades fast.
3. Not realizing how many customers you need to support your restaurant. If you think about it, I come into your new place and absolutely love it. I tell others, too. But, how many times can I come back in say a month? I have other places I already love, too. So, I am sharing my love so to speak. You literally need thousands of people to know about your place, come into the place (better figure only 1 time a month to be safe) and tell others about it. You want to get the word out faster? It’s called advertising and it’s expensive and not nearly as effective as "word of mouth" or a great review.
This is the reason statistics say it takes 5 years to really know if a place will be a success. It takes that long to develop a sufficient customer base to support the restaurant unless it is a high traffic location. If it is, then you have huge rental costs so it’s a half dozen one or the other.
4. Not knowing the business. Too many people don’t even know their true costs. They do not know how to price out a menu properly. They do not understand portion control, etc. There is a lot more to this business than meets the eye. You have to be a good businessman.
5. Too many operators rely on others for their success. One should never create a menu for a chef you’ve hired. Unless, you can produce it yourself if he or she leaves! Big mistake made far too often. You have a friend or you meet a great chef and you hook up and decide you’ll open a restaurant together. Better tie the chef down some way or you lose when he or she leaves. So, unless it’s chef/owner, stick with basic stuff done well and done by anyone who can cook a lick.
I can go on and on, but I think you get the point. Keep it simple and you have a fighting chance. And oh, I totally diagree with the comments that location is a secondary issue to the success of a place. It is far too important, but that’s the sad fact. You get what you pay for and location is critical.
Put you place on a great main street, but it is one way or one that requires you having do go down a block or two to make a u-turn to get to it, you’re going to have problems. Put your place in a location with limited parking and you’re going to have problems unless it’s in a big city where everyone walks. Put it in a bad neighborhood where the rent is cheap, be prepared to wait it out for the neighborhood to change.
Is it any wonder that so many new independent operators, with great skills and ideas, still can’t make it. It is a rough business. For every success you envy, there are far more failures. If you still insist on trying, why not get a good job in the business, learn everything you can while getting paid, and then take your shot.
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