Everyone dreams of one day being able to own their own restaurant. In fact, it is such a popular dream that there are entire television shows and competitions based around owning a restaurant such as Hell’s kitchen which gives the best chef and the winner of the competition the opportunity to work in one of the biggest kitchen’s in the world. However, this dream is a dream that rarely comes true for most people and in many cases, restaurant tend to close down within the first few months. A quick look and many start up restaurants will show you that a great majority of startup restaurants fail and will usually show an average lifetime of a few months to maximum a year. We need to question why some restaurants survive the test of that first year and most close down.
What causes restaurants to shut down?
This trend can be seen across different price points, different restaurant classes and different cuisines and therefore it is quite evident that these restaurants shutting down do not have anything to do with the prices of the food or the food that they serve. On closer inspection, it becomes quite clear that the reason that most restaurants shut down is due to lack of planning and more specifically due to lack of financial planning. Most entrepreneurs and restaurant startups will normally spend massive amounts of money on the best built in bbq, the best and most expensive locations, the most expensive and durable kitchen equipment and ingredients with the expectation that the restaurant will become instantly successful but this is not the case in a majority of scenarios.
It is clear that most businesses and restaurants in particular will take many months to make their first profits and entrepreneurs need to be well prepared for this. They cannot afford to invest in a built in bbq Australia and the best of kitchen equipment in those first months but instead need to start off their new restaurant very small with only the basics and with money in the bank to support their business in those first few months until things start to become successful, which they will if the business owner has patience.
In fact, some of the most successful restaurants started out as home based caterers that delivered food to customers houses because this way, these business owners avoid all the massive costs involved with rentals and staff. The key and the secret to success of a restaurant business is to start small and work your way upwards from there on.