Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24
US House Prices Trend Forecast 2024 to 2026 - 11th Oct 24
US Housing Market Analysis - Immigration Drives House Prices Higher - 30th Sep 24
Stock Market October Correction - 30th Sep 24
The Folly of Tariffs and Trade Wars - 30th Sep 24
Gold: 5 principles to help you stay ahead of price turns - 30th Sep 24
The Everything Rally will Spark multi year Bull Market - 30th Sep 24
US FIXED MORTGAGES LIMITING SUPPLY - 23rd Sep 24
US Housing Market Free Equity - 23rd Sep 24
US Rate Cut FOMO In Stock Market Correction Window - 22nd Sep 24
US State Demographics - 22nd Sep 24
Gold and Silver Shine as the Fed Cuts Rates: What’s Next? - 22nd Sep 24
Stock Market Sentiment Speaks:Nothing Can Topple This Market - 22nd Sep 24
US Population Growth Rate - 17th Sep 24
Are Stocks Overheating? - 17th Sep 24
Sentiment Speaks: Silver Is At A Major Turning Point - 17th Sep 24
If The Stock Market Turn Quickly, How Bad Can Things Get? - 17th Sep 24
IMMIGRATION DRIVES HOUSE PRICES HIGHER - 12th Sep 24
Global Debt Bubble - 12th Sep 24
Gold’s Outlook CPI Data - 12th Sep 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

5 Problems All Restaurant Owners Will Face

Companies / Sector Analysis Sep 25, 2018 - 10:17 AM GMT

By: Dylan_Moran

Companies Owning a restaurant is a common dream for millions of people—but it’s also a dangerous one due to the simple fact that owning your own restaurant is complicated, expensive, and incredibly risky. It is a fact that about 80% of restaurants will not last more than 5 years, costing their owners hundreds of thousands—if not millions—of dollars in debt.

 Let’s take a closer look at 5 common problems that all restaurant owners will face in order to give you a more realistic idea of what it takes to own your own restaurant business.




Problem: One small problem can ruin your business

It’s no secret that sometimes problems arise in a restaurant that could cause sickness or injury to customers. A bad batch of meat may make a customer ill, someone may slip on a wet floor that didn’t get mopped up in time, or a customer may accidentally cut their fingers on a knife. Unfortunately, all it takes is one of these issues (or anything similar) to create serious liability problems for a restaurant owner. Depending on how many people were affected and the severity of the incident, your restaurant could be responsible for financial damages. There are a few ways to help mitigate the costs of this risk, such as restaurant insurance, but even if that covers the financial risk you will still have to manage the PR fall-out.

Problem: Running a new restaurant takes some serious initial investment

Restaurant owners will need to have some serious capital in order to start-up their restaurant, which includes costs related to leasing the building, renovations, hiring staff both inside and outside the kitchen, stocking ingredients, marketing, and much more. The median cost to open up a new restaurant is $275,000 for a leased building, and $425,000 for an owned building—and that’s just the opening cost, which does not include the cost for ingredients and labor once the business is running. Due to the high amount of capital required to start up, most restaurant owners will not see much profit for minimum a few months if not a few years. As an owner, you need to be financially stable enough that you can go without major profits until you’ve paid off your capital investments.

Problem: Difficulty finding a selling point in the restaurant location

One of the biggest problems restaurant owners face is seemingly simple: a selling point that makes them stand out among the competition. Depending on the location and type of restaurant, owners may face very little (or even practically zero) competition—or their restaurant could be competing with dozens of restaurants in the area. Owners often find it difficult to find a unique selling point that makes their restaurant stand out from the competition in the area. It is not enough to have tasty food and good service; owners must be able to carve out something unique in order to create a selling point. Examples of selling points that make restaurants stand out include Sonic restaurants, which play on nostalgia with their drive-in locations and 1950s-inspired menu, as well as Mod Pizza, which lets customers build their own pizzas with unlimited toppings.

Problem: Poor quality food or menu planning keeps customers away

Restaurant owners need to ensure that their restaurants serve good food—that’s a given. Food needs to be prepared safely and cooked professionally to ensure a great taste that will have customers coming back for me. If the food doesn’t taste good—whether it’s burnt, undercooked, oversalted, undersalted, etc.—then the restaurant’s reputation can dive as quickly as it takes for people to post some online reviews. Likewise, a poorly planned menu will either turn off customers who do come into the establishment or keep potential customers away due to the confusion of the menu. Menus should not be too big; they should be planned with a food theme in mind to ensure that customers have a reason for coming in—and to ensure that the cooks in the kitchen can actually make everything promptly.

Problem: High employee turnover causes a trickle-down effect

Staff at restaurants are an essential component of its success, which is why it is important that the staff is well-trained, work well together, and know how to operate in a professional restaurant environment. As restaurant owners soon find out, however, employees don’t always stick around. And if a restaurant ends up with a high employee turnover rate, they will soon find that every area of their business—from the quality of the food to the customer service to cleanliness—will suffer. This in turn will result in poor reputation, lost sales, and the failure of the restaurant. Owners need to be aware of their employee satisfaction, and ensure that steps are taken to reduce employee turnover as much as possible.

By Dylan M.

© 2018 Copyright Dylan M. - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in