restaurant employees, employee management, restaurant industry

Reasons why Restaurants fail

According to a study, 60% of restaurants shut down within the first year of operations. Upto to 80% of restaurants closed their operations in the first five years of running their business.  Although the whole restaurant business seems lucrative from afar. Smoothly running a restaurant business is quite a challenging task. The lack of information and knowledge about the industry is the primary reasons why restaurants fail. In this scenario, in-depth knowledge is the foremost thing that you need to put your focus on. Thus, proper market research is an important factor to measure the mortality rate of a restaurant.

restaurant employees, employee management, restaurant industry

Furthermore, its well said that prevention is better than cure, so in order to help you avoid the failure in your restaurant model, we have found out some of the main reasons that lead a restaurant to shut down its operations-

reason why restaurants fail


Internal or external thefts are likely to take place in a restaurant where inventory management is not given much importance. So, as a restaurant owner, you need to be alert around the clock – In order to know which things are present at the outlet or how much quantity of groceries is supposed to be used in a month. Install CCTV Cameras or hire a restaurant manager if required. Also, always keep a tab on what things are being used and how much inventory is getting drained.

Poor Location & High Rentals

If you are seeing a sudden drop in your restaurant sales then maybe, it’s time to stay Alert! Since location is the prime factor that can either break or shine your restaurant, you need to reconsider your restaurant location. So, think about the type of customers, their demography and needs, so that you can relocate your restaurant where you are likely to get a high footfall.

Poor Customer Experience

In case your customers are not coming back to your restaurant. Then you need to put exemplary efforts to win over your customers’ trust. Try to involve your customers in campaigns and contests which would not only keep them engaged but would also offer a chance to connect with your brand. So do whatever it takes to make that first-time visitor your permanent customer.

No Involvement of the Owner

If you are the kind of restaurant owner who blindly trusts the staff and managers you need to transform your thinking. Because your business operates on your money, thus you are the one who would be the most affected during a shortfall or a crisis. Therefore, make sure that you are present at the outlet around the clock and if that’s not possible technology can come into play. Thus, CCTV cameras trusted staff and your presence plays an important role in running a successful restaurant business.

Poor marketing and Branding 

In the current scenario, where people prefer to order online rather than visit the outlet itself. Branding and marketing become the need of the hour. Since you won’t get a chance to attend to your customers on the restaurant floor. You can promote your restaurant online via social media by running a plethora of marketing campaigns. This way you would pave a path to build a strong brand image for your restaurant. Restaurants that don’t have a strong image & don’t know the reasons why restaurants fail tend to fall apart within the 1st year of their operations. So a brand image can be a stepping stone for your business.

Do you wish to save your restaurant from falling apart? then always take care of the above things by taking special care of your inventory, operations, and branding.

Take the initiative today to keep your restaurant on track! YumzyX offers turnkey solutions to streamline your operations and inventory at Zero setup costs.


Radha Seth

Radha Seth is a writer and a marketing geek. With her penchant to weave words and communicate with people, she has amplified her knowledge by making writing, communication, and media relations the fulcrum of her professional career.

View all posts by Radha Seth →

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