It’s often said that 90-95% of restaurants close within a year of opening their doors. However, this scary statistic might be misinformation. According to research published in Forbes Magazine, only 17% of restaurants close in their first year. This number is especially interesting because our industry has a lower failure rate than other service industries. For instance, 21% of real estate offices close within one year, as do 19% of landscapers. Restaurant operators should take heart: it seems that our businesses have the potential to be more successful – and more stable – than we thought.
Secrets of Success
One surprising benefit of this misinformation is that new restaurant owners are extremely cautious in reviewing industry best practices. With a catastrophic rate of failure hanging over their heads, these entrepreneurs have invested more and more time and energy into choosing the very best tools for the job. Restaurant technology, for instance, has developed extremely quickly in order to keep up with the demand for powerful, reliable tools. Experts agree that better tech means better business. This is especially true in the fast-paced food service industry, where running out of lettuce might just mean losing a customer for life.
What else helps restaurants succeed long-term? Tom Spurling, a long-time restaurant owner, says that staffing is key.“You have to have the team that works together to enhance performance,” he told one reporter. “That’s the challenge of all business. If you get that, it gets easy.”
A Fresh Focus
As guests’ palates become more discerning, restaurants are starting to focus in on a few perfect dishes. By serving slimmed-down menus with only the very best ingredients, businesses appeal to a niche market, and can improve long-term guest loyalty. As Kay Logsdon wrote, reporting for The Food Channel, casual dining is shifting its focus toward “doing fewer things and doing them well.”
We’re also starting to see celebrity chefs moving more quickly from one project to the next. These high-end restaurants may have shorter lifepsans, but that allows their leaders to grow and try new types of cuisine. Some of America’s most famous chefs – like Guy Fieri – have failed spectacularly, only to go on and find more success in other kinds of food.
As restaurants focus in on the food that guests crave, it’s important to decouple the idea of success from the hope for longevity. A world-famous restaurant might only stay open for a few years – but it can still be extremely profitable, and bestow the renown that the owners need to go on to a brand new business venture.