Restaurant business is a competitive business no doubt, from the largest chains like Mac D's to Burger King they fight for every dollar in your pocket. In that kind of environment it is hard to compete with these giants, especially if your business is in area where there is one every 10 feet! They have the money and advertisement to bring in the crowds in an almost mindless state to spend money on sometimes less than "value for the money" items.
On the other hand you have the "sit down" restaurants that have menus and you order from your table and the wateriest brings your food too you. But there are lots of these in chain groups too like Cracker Barrel and Olive Garden, Etc. that can be hard to compete with if again your in a n area where they have one every 10 foot too.
But that's not the only reason, cost of food, how many customers you have a day, the pay and overhead of running the business can drive even the best crowded restaurant out of business if it's just too expensive to run or if the management isn't experienced or doing the job of tracking these expenses, all can lead to a good restaurant going out of business.
Lets look at the one restaurant business that I call a CASH COW, cause even in the most remote places it can stay in business and make money. What is it.. the PIZZA joint.
Yes, making and selling Pizza is a cash cow, look at what is involved, bread, sauce, meat and cheese, a friend of mine owned a Pizza joint, he said cause he bought everything in bulk it cost him $1.50 to make a extra large Peperoni pizza that he then sold for $15.00! Now that's a pretty good turn around on cost verse selling price. Of course the real cost to him is more than that, you have to figure in the gas/electric used to bake the pizza, the time a person spent making that pizza (their wage per hour/ time they spent making from start to finish that pizza) and cost of ingredients, which he said $1.50 to $2.00 depending on how closely they payed attention to toppings like cheese and peperoni count (slices per pizza).
Pizza is a cash cow, but you can go out of business in a pizza place too! Bad management or what one man said can make or break a business... Location, Location, Location. If your pizza business is setup aside a road that two cars a day drive alone and the nearest town is 20 miles your not going to do very well. of course you don't want to open shop up next to Pizza hut or domino's too!
The factors in keeping a restaurant open aren't hard to control there are just a lot of them to watch out for and keep track. Location first, cost of operation, kind of food to serve, Operating capital... most restaurants and really most first time business go out of business because of that one simple thing, operating capital, you can have the best business in the world but if you don't have the capital to keep it afloat for one year then you will fail for sure! You have to make sure that if you don't sell one item for one year, that you have the operating capital to keep the doors open and running. That's why it is important to figure out all the cost of running your business for one year and then having the money in the bank to pay all the bills and salary's for that year, not that you wont sell anything in a years time but that first year is the most difficult time for a new business, no one knows your business, it's new, it takes time to build a good relationship with the community to get accepted and to become a "place to be" where you become a land mark a place everyone knows or has heard about, that's when you business becomes a part of the local landscape and will have it's own group of everyday patrons to do business with, after all repeat customers is what every business really wants, and every customer wants a place that is going to be there tomorrow.
Hope this answers some of your question, there are all kinds of factors involved in running a business and any one of them can close a business out if not watched and maintained.
2006-10-15 09:36:48
·
answer #1
·
answered by micflynn_1971 1
·
0⤊
0⤋
The 1st 2 years for a restaurant are the hardest and therefore, many fail. Aside from location and parking, I feel that many restaurant owners don't spend enough on advertising their business. The costs of opening a restaurant can blow out any budget so when the restaurant opens there's little money left to promote it. Word of mouth is good, but it only goes so far.
I know a person who bought an exisiting restaurant and the week before he was to reopen, the Board of Health came in and told him he had to replace his floor and redo the bathrooms.
Say goodbye to your advertising budget. He closed shortly after he opened.
2006-10-15 09:37:46
·
answer #2
·
answered by scourgeoftheleft 4
·
0⤊
0⤋
It's usually a result of not having designed a thorough business plan prior to starting the restaurant. Common causes of failure include:
* Setting an unrealistic price for the location.
* Food waste from buying too much or having too many menu items.
* Choosing a bad location
This is bad management, but more a case of bad strategy rather than bad tactics.
2006-10-15 09:04:01
·
answer #3
·
answered by lizzit 3
·
0⤊
0⤋
Bad food or service could be a reason but most likely and this not only for restaurant but any business is that they don't have enough money or credit to last at least one or two years that usually takes for a business to be profitable
2006-10-15 09:12:27
·
answer #4
·
answered by lm050254 5
·
0⤊
0⤋
before opening a restaurant people must have overlooked some aspact of their business. for example, is that an appropriate place to open a restaurant, are the rates of food according to the locality, are they providing a proper service, can they be consistant in the quality of food especially with reference to availability of raw materials and supplies and also they may not have surveyed if the maximum expanded business condition will give them the expected income. well, there may be a lot other reasons like you said yourself "bad management"
2006-10-15 09:14:29
·
answer #5
·
answered by Anonymous
·
1⤊
0⤋
Yes, bad mangement and location. You have to put your business out there in order for your business to stay booming. other wise it will flop.
2006-10-15 08:58:48
·
answer #6
·
answered by Sinsa 1
·
0⤊
0⤋
I think alot of people go into lots of debt when they start and it takes a while to turn a profit so if you can't support yourself and the business until you start to turn a profit then you are screwed.
2006-10-15 08:52:50
·
answer #7
·
answered by Anonymous
·
1⤊
0⤋
I believe it's because they don't know how to manage it. They probably didn't plan everything correctly and spent more than they should have and then what they were making. It could be TAXES too. Only they would know i guess.
2006-10-16 11:59:56
·
answer #8
·
answered by Karina 2
·
0⤊
0⤋
health board for one..or very little business
2006-10-15 08:51:17
·
answer #9
·
answered by nas88car300 7
·
0⤊
0⤋
It's because nobody eats there.
2006-10-15 08:51:05
·
answer #10
·
answered by pharm937 2
·
0⤊
0⤋