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Why Do Some Restaurants Fail?

By March 31, 2016 No Comments
Why Do Some Restaurants Fail?

We all know that a lot of restaurants that open will ultimately fail. In fact, in recent years this concept has even been incorporated into some successful TV shows. Gordon Ramsay’s Kitchen Nightmares sees the famously angry chef take on an advisory role at some of Britain’s failing restaurants where after a lot of shouting – followed by some heart wrenching tears – Ramsay saves the day. And yet according to most reports, even those restaurants that come under Ramsay’s care and council do not last long after his dramatic departure: 60% fail despite his best efforts. Even Jamie Oliver, our nation’s beloved naked chef, was forced to close three of his “Union Jacks” branches in 2014 due to “tough economic circumstances.”

So with some figures suggesting that close to 90% of restaurants fail in their first year, what is going wrong? At Boost Capital, we’re dedicated to helping restaurants succeed, and have rounded up a list of the battles to be prepared for in the fight to succeed.

Striking The Right Balance

This may sound somewhat trite, but running a restaurant involves an incredibly complex balance of business acumen, financial management skills, flexibility and creativity – as well as location, location, location. It is an exceptionally tiring and involved process which involves late nights, high temperatures and working with a number of different staff. Given the odds, it is unsurprising that so many struggle to succeed.

Staff

Restaurant staff are generally not paid particularly well and, whilst they form the cornerstone of your business, they can often be extremely demotivated. Working long hours and dealing with often difficult customers means the faces of your business can often be overworked and fed up. Working with your staff by offering incentives and specialised training may help to ensure a far more satisfactory dining experience and find customers coming back time and time again.

Funding

Lack of funding is the main reason restaurants fail. With incredibly small profit margins, a dependence on customers showing up and exceptionally high overheads (even before opening night), it can feel for many restaurant owners that they are fighting on too many fronts. Not only that, but many restaurants take time to build momentum and create a loyal client base. Much as Rome could never be built in a day, no restaurant achieves success overnight. It is the culmination of positive PR and word of mouth, which essentially requires some time. This means many restaurant owners run out of cash before their fledgling business even has a chance.

Here To Help

At Boost Capital, we provide short term loans to restaurant owners nationwide that offer that little extra support during those early months or quieter periods, giving them the opportunity to improve, adapt, enrich, revamp and flourish.

Speak to a member of our business loans team on 0800 138 9080

More businesses than ever before are looking to Boost Capital for their business financing needs. To learn more about how our UK small business loans work or to explore the business financing options that are available to you, contact us today!
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