You love to cook and the question “why isn’t your restaurant open yet?” is all too familiar. Or your interest in eating combined with your entrepreneurial streak makes the food industry a natural selection for business. You know your food, the capital is in place and it is time to throw your doors open! While this is not meant to be discouraging; here is a slight picture of reality in the industry and if you speak to a seasoned restaurateur, they say that taste is not all to keep the business running. Here are the common reasons why food and beverage endeavours fail:
NOT STUDYING THE MARKET
Food preferences are always evolving, as observed by H.G. Parsa which he says the number-one food item in America was steak in the 19th century and in time became hotdog, then hamburger before pizza became huge in 1980s. Always watch for what’s next on the
wheel and if you decide to ride the new wave; how much percentage of the market share will you be able to capture in the location you have decided upon?
The adage is definitely to go where the people are. More foot traffic means enhanced visibility for you but that comes with a cost. In recent years; more entrepreneurs are taking their business to less conventional places but to do that; you should have a very unique product to entice the crowd to visit. The percentage of people willing to travel for food is actually not high compared to those who prefer convenience. Which will you bet on?
WHO ARE YOU?
How do people identify your restaurant? What is the persona you have created and the effort to reinforce the brand? Recognise that it is impossible to attract every person so decide on who you want to speak to. Your identity must be consistent and that can be expressed through food, service quality and even the looks of your outlet.
High investment, high returns? Definitely, but not in a few short months. Ideally, you should have capital to survive 3-6 months without a paycheque (for yourself) and if you can set aside up to 12 months that will give a stronger safety net. A restaurant owner must know what the kitchen is buying and how much it cost this week compared to months ago because prices fluctuate and you need to adjust some areas. How many people are you expecting every day? You have to estimate to buy the ingredients. What is your labour cost against budget and projected gross profits? These basic questions and much more should be playing in an owner’s mind often.
While you can hire a great manager and chef, the idealism that many restaurant owners fall into is that they won’t have to look into things and just collect profits. The sense of ownership does not belong to your staff and they would not think twice about leaving if leadership is not present. Also, how would you make informed decisions if you are rarely in to see what is going on? Management excellence extends to customers as well. In today’s business environment, customers are more discerning and with social media, it wouldn’t take long for the community to know of a poor experience and bad customer service does rank as top reasons for failure.
INEFFECTIVE MARKETING STRATEGIES
True, word-of-mouth is effective but note that restaurants not requiring any advertisements are well established but as the new kid on the block, you need to play your marketing game right. Creative ads, value promotions are all key but if food is nothing extraordinary and service below par; there will be no repeats. However, if you can get both factors on a balanced sheet, you have likely gotten a repeat customer who will not hesitate to spread the word. Statistics has it that “80% of hospitality businesses set up by inexperienced individuals fail in the first 5 years” (Carl Kjellqvist). Even if you are currently in business; what do you have to know and do to stay ahead? Find out how you can get yourself prepared!
Ramy Abu-Yousef, Reasons Restaurants Fail.
Food Network Chef Robert Irvine Shares The Top 5 Reasons Restaurants Fail.
Why Restaurants Fail. H. G. PARSA, JOHN T. SELF, DAVID NJITE, and TIFFANY KING © 2005 CORNELL UNIVERSITY. Volume 46, Number 3 304-322. As appeared on http://www.rsgmag.com/public/135.cfm
“A FOOD BIZ WORKSHOP”
- EQUIPPING YOU TO BOSS YOUR DREAM F&B JOINT!
The “key for anyone considering opening a restaurant is to realise that his dream should not be opening a restaurant, but having and operating one”
- H.G. Parsa (Chair, Dept
of Foodservice and Lodging Mgmt. Rosen College of Hospitality Mgmt)
From concept designs, logical implementation, equipment, technical specifications to regulations, “A Food Biz Workshop” is a first-of-its-kind workshop in Malaysia. Learn from professionals and successful restaurateurs on the essentials of starting your food business and more importantly, staying on course to experience its rewards.
Focus Hospitality Incorporated
Graduating from the International Hotel
Management Institute, Lucerne Switzerland, Carl has 20 years of experience in concept design and consulting with the ability of implementing them operationally. Focus’ expertise in providing technical and conceptual assistance is seen across the Americas, Europe, Middle East and the Asia Pacific since 1988, realising many restaurant dreams or corporations looking to diversify into the competitive food service and hospitality industry.
F&B Facilities Sdn Bhd
Involved in food service facility planning over 26 years, Rick comprehends local culture and regulations and contributes to the industry as a lecturer and advisor to the Chefs Association Of Malaysia. A leading solution provider in Malaysia, F&B Facilities was incorporated in 1991 offering the A-Z of planning a food service facility including consultancy, design and space planning, equipment supply, installation and maintenance as well as fabrication.
Yeast Bistronomy Sdn Bhd
Aiming to offer French cuisine as simple and accessible at Yeast, Christophe has 28 years of experience in developing and operating high-end restaurants that include Michelin-starred ones in Europe and USA. As his first foray into Malaysian soil, Yeast Bistronomy has struck the right chord in location, concept and target audience, quickly establishing itself as one of the avenues for hearty French food in Kuala Lumpur and plans of expansion are in the works.
Beginning in 1996 as a humble neighbourhood café in Mont Kiara, Kuala Lumpur, SOULed OUT continues to be one the of the city’s best loved restaurants. With the growing number of SOULed OUT outlets and 3 new brands under their belt; WIP, TUJO and the recently launched Hubba Hubba, the SOUL Society Group has successfully cemented itself as an establishment that operates signature concept restaurants that symbolises good food, great service with a friendly ambience.
Make Your First Move. Sign-up before 14th November and enjoy early bird rates!
Date : 22-23 November 2014
Time : 9:30am – 4:30pm
Venue : Nexus Connexion, Bangsar South. No. 7, Jalan Kerinchi, Bangsar South City , 59200 Kuala Lumpur.
Price: RM 1280 (early bird) RM 1600 (normal rate) Lunch and tea breaks provided.
Book your spot today! Email us at email@example.com or call 012-807 6091 / 012-209 6091 for more information.
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