Breaking Into the Restaurant Business: 5 Common Challenges


There are a lot of false statistics floating around about the failure rate of restaurants. Right now, the current statistic is that 90% of restaurants fail within their first year. However, this is a big myth. The real percentage is about 30%. After a year, another thirty percent are gone. These numbers are still staggering and quite socking, but what is causing these businesses to shut their doors so soon? Well, a lot of restaurants close because they didn't have the right strategy or didn't foresee some of the most common challenges right off the bat. Here are five common challenges of breaking into the restaurant industry.

  1. Restaurant BusinessPoor location. If your restaurant is in a hard to reach location, there is a good chance that it will be hard to get people to come through your doors. However, it can be a challenge to find a good location, because many of these locations have already been taken. So, you have a few options: you wait until a space becomes available or you rent a much smaller space and incubate until you are ready to grow.
  2. Not enough capital to start. Some restaurant startup costs can enter the astronomical range if you are not careful. If you are remodeling a space, you want to make sure that you have the money to cover incidentals, overtime and all the other unexpected expenses that you didn't include in your budget. One of the best ways to conquer this challenge is to include these unexpected and unforeseeable costs into your budget. You should add at least 20% to your final operating capital to cover these incidentals.
  3. Complicated taxes. Out of all the other complicated aspects of opening and running a restaurant, there are all the taxes you have to account for. If this is your first time running a business, doing your books will be easy, but when it comes time to break everything down in your tax return, it will be a completely different ballgame. So, make sure that you hire a good accountant to do your restaurant's taxes - it will save you time, money and a potential audit. You may also want to join a major group, like My National Grocers, to learn more about the industry and the various tax laws.
  4. Getting customers in your door. In any given town, there are anywhere between 10 and 100 restaurants. This gives people a lot of options. Also, people will usually go to the restaurant that they know and trust the most. So, how do you get people to trust your new restaurant? One of the best ways is to market your restaurant, but you also want to go way out of your way to accommodate patrons. One of the best ways to get people to come back is to offer a great experience.
  5. Inexperienced managerial staff. When you open a restaurant, you need a good manager - someone that has been in the industry for a long time. Without a strong manager, it will be hard for your business to get off its feet. So, make sure that you hire the best when you bring a manager on board, because your restaurant depends on it.

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