4 Things Restaurant Startups Usually Get Wrong

Restaurants are always in demand. Hence, why a great deal of startups choose this industry. Sometimes, however, even the most experienced of restaurateurs may have to close their restaurant startups and projects since keeping them afloat becomes unsustainable. Roughly 23% of all restaurants fail to survive their first year. This can happen due to factors such as unrealistic expectations or unproven novel business models, among others.


For those who dare and have the means, there are basics which may make the process of growing the business more probable and scaleable. Granted, this is not a template that can be followed down to a tee, but it’s a solid foundation for those who expect and wish to succeed in running a successful restaurant startup.


These 4 things that start up restaurants do wrong are basic, but they are interconnected in major ways. Let’s get into it, shall we?


Improper Business Planning

No business can exist without a plan, and businesses rise and fall with people who conceive them. Location, pricing strategy and mix, rent, bank charges, supply chains, training and retraining costs of employees, marketing expenses and research of client’s persona are just a few items that require inordinate amounts of time to actually get down. More relevant info about business planning can be found here, but we’ll touch upon a few important aspects.


Location and supplies. Make sure to pick one that fits your budget and has enough foot traffic.

Close proximity to business centers will guarantee that restaurant is crowded during lunch time. At the same time, if you’re actually moving in to a place that previously belonged to a different restaurant that went out of business, make sure to examine its history and how long it was able to run. It’ll give you rough estimates of how you’re expected to perform in this place.


Additionally, kitchen supplies. They’re going to be needed around the clock if the foot traffic remains relatively high. Countless restaurant equipment businesses offer their services, like the giants that are Amazon or WebStaurantStore, but utilizing sites with industry-specific knowledge such as McDonald Paper will be a more sensible solution. As a tip, always follow the example of industry-specific businesses.


Second — SWOT analysis. On topic of industry-specific businesses, performing a SWOT analysis of those reveals a goldmine of data. It’s arguably the most effective way examine the competition and get a general sense of how businesses of this type function in this specific market.


Third — menu. Next up, the menu items of your restaurant start up. Menu needs to be focused, at least until the business actually has room to grow and expand. Large menus that lack focus dilute your USP and also add a financial strain (i.e. ingredients and training costs).


Not Having a Unique Selling Proposition

When people think of a place to eat, they don’t necessarily think of the food selection.

Take Starbucks, for example, it provides an experience (And even though it’s not a startup per se, the point does stand).


A business is at a disadvantage if it doesn’t have a clearly defined unique selling proposition. It should be noted that a USP (in terms of restaurant startups, that is) does not mean a unique menu, location, food on the menu or unparalleled customer service. Rather, it’s a feeling or an emotion. Or pizzazz, for lack of a better word.


Lighting, atmosphere, music selection, tech (online booking, tablets instead of traditional menus, etc) employee shtick and garments, and even the titles of food items all contribute to your USP.

Naturally, your USP will depend on the type of crowd you wish to be in your restaurant. Having an 80’s-centric restaurant will no doubt attract crowds of neon-lovers, but are they your crowd? Or maybe your crowd wants healthy food startups?

Find your audience and tread carefully when choosing an audience as it will define your business for the foreseeable future.


Lack of Marketing

This here is the killer of even the best start ups. Majority of restaurants which are cook-owned often go out of business due to non-existent marketing. No matter how good the food is, no one is going to visit your place if they don’t know about it.


This is exactly when marketing comes into play. It helps to bring in new customers and generate brand awareness. Avenues to explore are the staple marketing channels and influencer marketing.


Customer Service

While marketing is essential, customer service is what can make or break a business. Word of mouth travels fast and in the age of the web, people become increasingly aware. User testimonials, no matter their source, will always be a major consideration when it comes to other people checking your business out. Google reviews and Facebook reviews are there for your potential clients, regardless of your marketing efforts.


Maintain a healthy work ethic and friendly personnel. Keep serving times low and food well-made. Make the location convenient and create a cozy atmosphere. These are just the basics.


Parting Thoughts

Best start-ups appear at the right place, at the right time and with the right concept.

It’s hard to get it right from the get-go in this industry. Businesses that have adopted a tried and true model have been known to struggle and with new business concepts appearing out there all the time, uncharted territory becomes more explored.


Despite all this, maintaining and running a startup in the food startup in this competitive industry is definitely possible. A brief glimpse over the competition will most likely reveal that not all players are established and some of them have appeared recently.


To put it simply and to summarize:

  1. Create and iterate on your business plan.
  2. Go small initially and expand once you know you can.
  3. Be unique and be there for your customers.

Obviously, this is easier said than done, but given the vast amount of knowledge that can be gathered from other businesses, any problem that can arise is going to be easily mitigated.



Disclaimer: This content does not necessarily represent the views of IWB.