Opening a restaurant could be a more promising undertaking than it seems. Owner.com CEO Adam Guild states that the purported 90% rate is not an accurate assessment. The U.S. Bureau of Labor Statistics (BLS) provides more heartening statistics. These statistics indicate that 17% of restaurants do not succeed past their initial year. Another statistical finding is that 51% of eateries are successful beyond year five of business.
Creating a relevant menu is one way to help your establishment succeed. Another is paying attention to creating a brand that customers respond to. A third way to set yourself up for success is through relationships with returning patrons. Overall, creating a plan before starting to run your restaurant business is key.
Rumor and Reality of Restaurant Success Chances
Adam Guild co-founded Owner.com, a technology company that helps restaurants. In addition, Guild is the company’s CEO. Adam Guild wrote a blog post addressing realities and misconceptions about restaurants’ chances of succeeding. Guild states: “You might have heard that 90% of restaurants fail in their first year.” The blog post is dedicated to moving beyond that misleading statistic. Whether applied to the first year or the first five years, 90% is inaccurate. Guild surmises: “Apparently, this number was originally generated on a TV advertisement.” Source information was not provided in this television ad.
In the blog post, Guild provides a different set of statistics. For research, he reached out to the U.S. Bureau of Labor Statistics (BLS). Guild reports: “Only 17% of restaurants fail in their first year.” He also presents a statistic for restaurants making it past their fifth year. He offers the percentage of 51%. Guild provides a pragmatic yet optimistic view of the restaurant business. The enterprise takes work and dedication. However, the success rates are higher than rates for small businesses in general.
Factors Causing Eating Establishments to Struggle
Guild states that one reason a restaurant may face difficulties is not finding “menu-market fit.” He defines this as a menu’s effectiveness in meeting the interests of potential clientele. According to Guild, ideally, the goal is to find “an unmet need.” For instance, you can look at other eateries located near your business. They may be missing the chance to meet the expressed needs of customers. Finding a need not met anywhere else can be a good way to stand out.
Another possible reason Guild offers is not building a distinctive enough brand. Guild explains that an area of concern could be not being “known for anything.” A restaurant can become appreciated by customers for specific reasons. It can be a place people recommend to one another. It can also fall into what Guild calls “the messy middle.” In this case, the establishment does not stand out from other places in the area. A streamlined menu can help with this. It can help an establishment have a themed or focused set of offerings.
A third reason Guild presents is not finding ways to encourage customers to return. Statistically, customers who frequent an eating establishment contribute greatly to its success. Guild reports that loyal customers can account for “65-80% of a typical restaurant’s profits.” Tourism can bring a steady stream of new customers. Generally, though, it is important to have a place people want to frequent. One way to bring people back is to stay in touch. You can communicate with people who have eaten at your establishment. You can provide suggestions about menu items or information about upcoming promotional events.
Getting Started on Strong Footing
In general, making sure to think through details before opening a restaurant is essential. Oregon State University discusses the importance of the planning process. Oregon State explains: “To set the foundation for success, you should develop a strong business plan.” By brainstorming and researching in advance, you can ensure that your establishment’s brand is memorable. You can take time to get to know the interests of your customers. You can then gear your restaurant to provide intriguing options.
