Everyone in the Restaurant business knows how tough the restaurant business is. Sometimes opening up a restaurant may be one of the worst investments. Most restaurant fail. According to Cornell University, and the National Restaurant Association, 60%

of restaurants fail within the first three years of operation. After five years, the number might be as high as 75%.

While the risk of opening a restaurant is huge, the reward can also be huge. If you follow the right concept, and manage it well, you could see your investment paid off in few years. All you need to do is to avoid these top reasons behind the failure of a restaurant.

1) No Unique Selling Point: It is not just food that appeals to the customers, they need a reason to come to you instead

of your competition.

Good food and/or service is not

a Unique Selling Point. It does understate the importance of great food and service, but it isn’t the only reason someone is going to try your restaurant. If you want to offer something truly unique, you need to move past food and service. What you need is something original to sell, something other than the best food or the best service. You need a unique selling point which your competitors lack to offer.

A true unique selling point is an emotion you offer to people. If you make a real, emotional connection with your customers, they will remember it for longer, how you made them feel.

2) A Large Menu: This is a very common mistake done by independent restaurants. Large menus create several problems within an operation and also lack focus. When you try to offer everything that your customers like, you aren’t giving them more choices and more reasons to come back, rather you are confusing them. They don’t know what your specialties are, what you supposedly do well,

what they should order, and how to describe your specialties to others. If your message is focused and easy to convey, more of your customers will convey your message.

3) Lack of Analysis: If you think you can cook fantastic food and everyone confirms it, and now you are ready to open a restaurant then you are wrong.

Owning a restaurant isn’t about cooking. It’s not about having good food. While those things are components of a good restaurant, they are not the reason for it’s success. Even if you have the perfect menu , knowledgeable staff , a trained line to reproduce your food, and plenty of stuff to attract your guests, you are just 1/3 of the way there. The other 2/3rds include marketing and managing the restaurant. Beyond making good food and selling it, you need to know how to collect data and analyze your business to make sure you have the necessary information to run a profitable restaurant.

4) No Strategic Pricing: You need to have a strategic method for pricing your menu. Take a look at what your competitors are charging, and then design the financial picture of your business that will be different from others. You need to have a pricing strategy that takes your unique financial situation into account. You’ll need to make important considerations regarding market price point, menu item cost and needed gross profit.

5) Wrong Marketing Tactic: The worst scenario witnessed among new restaurant owners, is that they think they can market their new restaurant only through ‘word of mouth’. The problem with assuming word of mouth marketing is that when you’re new, no one knows you so you can’t depend on word of mouth marketing until you are well established

For this you need a better plan. The best marketing tactic you can employ in your restaurant, is to gather contact information of each and person that comes through your door, and market to them. Marketing to existing customers can bring a greater opportunity for increased sales. These existing customers are a better source for new customers/people who are not yet aware of your restaurant.