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Nov 26, 2013 12:13 PM

Why do restaurants fail?

Restaurants in my city seem to come and go with the seasons, chefs change around like they are on a Merry-Go-Round, and the service here is considered lackluster in places where it should shine. I have seen well placed, visible rooms dissolve quickly and they chalk it up to the economy or the clientele; though my personal experience with some of these places is the overall experience they deliver is mediocre. I have also seen out of way rooms absolutely flourish, coincidentally, their product is tighter and more polished.

I think some restauranteurs suffer from a lack of clear vision. Maybe they want to open a white table cloth room, but they also provide loud music and allow loud customers to create an overwrought mess of a dining experience for the table cloth crowd. Then, when they go out of business, the owners blame everything, from the economy to the weather, but fail to take a hard look at their business strategy.

OR, same scenario, white table cloth room, the owners hire inexperienced staff, throw them on the floor without training in basic service rules or menu knowledge, so the staff delivers a mediocre show, and again, the room fails.

I worked in restaurants for 10 years. I saw rooms fail for such dumb reasons, DUMB reasons! Hello, owners, when you come in with 10 of your friends, 30 minutes before closing, stay for 3 hours ordering drinks and food, all of which is comped, your bottom line WILL fail. I also saw rooms grow vibrant because the owners had such a clear and precise vision of the experience they produced. A fine dining room was a fine dining room. Men were not allowed to send single female diners drinks with sexual names. The staff did not rally around for annoying birthday songs. Ladies and Gentlemen were not to referred to as "hey guys."

What is your opinion? Why do restaurants fail in your city? Why do restaurants succeed in your city?


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  1. restaurants fail because the margins with which they operate are razor thin, and sometimes, bad things happen.

    4 Replies
    1. re: plaidbowtie

      A lot of good info went into this thread so I wonder why so many people go into this business and/or just invest when the margins are so thin.

      1. re: Jake70

        I think it comes down to a fantasy of what having a restaurant is like, rather than a realistic idea.

        1. re: Jake70

          Everybody thinks they have the perfect idea for a restaurant in the same way everybody is convinced that their life story would make a perfect novel.

          1. re: Kalivs

            Many of us could come up with a few dishes that we think would go over well - I have had this thought many times.

            I'm old enough now to know that the restaurant business is also about crabby customers, unreliable employees, stopped up toilets, 16-hour days, unending cleaning, and on and on...never a break from the treadmill. Can't EVER get sick....

      2. If you have worked in restaurants for 10 years, you know they fail for a variety of reasons. Reasons for success are similarly varied. No single answer.

        1. I don't know why restaurants fail. Reasons are many. Almost too many to list here. Not enough bandwidth.

          But 99 out of 100 times a restaurant does *not* fail because of the food.

          13 Replies
          1. re: ipsedixit

            I don't don't know, I have found that quality / consistency of the food is often a major issue. When an owner / MGR / chef like Ramsey / is standing next to the window making sure every meal goes out properly cooked and hot there seems to be a line to get into the place. When these same people are out on the floor hobnobbing with guests rather than monitoring the quality of what people are there for (Good Food) the quality seems to suffer and the crowds dwindle.

            Purveyors will also tell you the time to pull back on credit is when the owner's start shopping key ingredients to the lowest bidder compromising quality and consistency in the process. Bankruptcy usually follows soon and you don't want to be the salesman who has to tell the District Mgr. they are into us for 25 grand.

            1. re: Tom34

              Spago (Beverly Hills) does just fine without Puck around. Batali is hardly ever at Babbo. Keller doesn't spend much of his time at either Per Se or The French Laundry (not cooking anyway). But really, using anecdotes like those or the one you bring up with Ramsey is just pissing in the wind. Get's us nowhere, and doesn't move the needle in this discussion.

              The sobering truth is that a very small, small percentage of the dining population actually picks a restaurant for the food. We, here, at Chowhound tend to have this myopic and distorted view of the world where people actually care (and I mean really *care*) about the stuff they put in that orifice underneath their nostrils. Most people are not so inclined.

              Many people go to a restaurant because they're courting the opposite sex, and asking for sex before eating is just so gauche (even in the internet age we live in). One needs energy to go at it like rabbits!

              Some people pick a restaurant as a meeting place (e.g. to conduct business or whatever).

              Some people pick a restaurant simply as a place to meet friends and gossip about how their last date asked for sex before dinner. EGAD!

              Then there are those who go to a restaurant simply because it's close to where they live or work.

              Others, like parents, will go to a restaurant because they ran out of birth control (but not self-control) and now they're stuck with a tyke that loves french fries and gloppy sandwiches.

              So given those demographics and, oh yeah, those that actually care about food, a restaurant's viability turns on many many varied a factor -- most of which are very independent of actual food, or quality of cooking.

              Having grown up in the restaurant business, and having worked in the restaurant business while going to school, and now dabbling indirectly as an investor in the restaurant business, I can tell you that food (or the quality of it) was, and is, not a tell-tale marker of restaurant sustainability, popularity, or much less viability.

              For example, if a pastry chef came to me and said, "I am God's gift to the tongue, I can make the best fucking apple pie in the world, and I just found the perfect location for my bakery at 188 Spring St. NY, NY 10012! Will you fund my venture?" I would just as soon wipe my ass with $5 bills and blow my nose with $1 bills ...

              1. re: ipsedixit

                I brought up Ramsey because he hawked the window and sub par food didn't go out of it, period. An owner doesn't have to be there, but a MGR who is 100% accountable does.

                I have been in the business too & your right that people patronize different restaurants for different reasons. Having said that, it has been my experience that family run restaurants in the right location that are properly managed (Everything Bagel Man 01 stated) with good servers placing good quality properly cooked food on the table make money and become staples in their community.

                I think the biggest problem is that to consistently serve a good product in a professional manner with a given % profit requires much more work & hours than most people realize. In recent years the ability to pass on a 100% of the rising costs of doing business has also hurt many owners.

                1. re: Tom34

                  Good food, at best, increases profits.

                  It does not guarantee sustainability or viability.

                  1. re: ipsedixit

                    There is only one guarantee in life & yes the chains have their fans and often times the reason is there is nothing better in the area, but gimmicks, gadgets & doohickeys only go so far in the long run.

                    I know of family run restaurants (not necessarily white table cloth) that span several generations. What keeps people coming back is homemade soups, sauces, & good quality fresh ingredients cooked properly by people who actually care and served by people who care. Its not just their restaurant but their life and if they didn't love it they damn well wouldn't be there 70 + hrs a week.

                  2. re: Tom34

                    CORRECTION: In recent years the "Inability" to pass on a 100% of the rising cost of doing business has also hurt many owners.

                  3. re: ipsedixit

                    "The sobering truth is that a very small, small percentage of the dining population actually picks a restaurant for the food. We, here, at Chowhound tend to have this myopic and distorted view of the world where people actually care (and I mean really *care*) about the stuff they put in that orifice underneath their nostrils. Most people are not so inclined. "

                    And this point is verified by the surprising success of places such as Chilli's, TGI Friday's, Ruby Tuesday's, et al. It is my considered opinion that these type of restaurant-bars thrive because the young twenty-something crowd consider them "hip" and "gourmet".

                    1. re: PotatoHouse

                      And they can actually afford to dine in them:)

                      1. re: PotatoHouse

                        Yes, good point....maybe they think they are "hip" but also likely to choose them because.....they are on the way home from work, predictable food, plenty of free parking, everyone can order something to their preference, easy to share plates, they have a coupon, short waits or no wait in the bar, lots of specials and special pricing, huge mixed drink list, comfy chairs and easy atmosphere to talk, tell jokes, be a bit loud, etc, etc. tons of reasons people choose big chain places.

                        I adore food (all kinds) and consider food exploration a "hobby" but even * I * go out to restaurants for many different reasons, it is not always about exploring glorious food. I suspect "non foodie" types do so even more than I do.

                      2. re: ipsedixit

                        188 Spring Street? Oh that brings up a memory. There is a restaurant just down the street from that address. Very successful now for many years. I know the chef/owners. When they were looking to open it, I got their business plan. Very well thought out. But the space they were going into was one of those haunted spaces that had seen a new restaurant come and go every year or so and nothing would stick despite the location. I hemmed and hawed on the proposal for a while then passed on investing and told them that I loved them, loved their cooking but was concerned about a near 6 figure investment in the restaurant business in NYC at the time. They raised the money without me and opened with a lot of sweat equity. Next thing I know, its packed every night and you can't get a reservation within a month unless you knew someone. Everyone knew I knew someone so I got calls all the time if I could help get a reservation at 8 on a Saturday. They we're always happy to accommodate me even though I had not invested. But they got all the right ingredients. Great food and location. Polished and professional service. Warm atmosphere. I still kick myself for having passed on what turned out to be a real winner. But no way to know that for sure going in.

                        They might want to hire your pie maker.

                        1. re: ipsedixit

                          Yup, exactly. Some people go out to get a senior discount and big portions, or because it is on a bus line, or because they have friends that work there, or, or, or......

                      3. It is my opinion that restaurants either fail or suceed based one one thing only;

                        Management is responsible for everything, capitalization, real estate, decopr, menu, employees, purchasing, hiring/firing/training.

                        2 Replies
                        1. re: bagelman01

                          Unless by "management" you mean "owner" the management usually is not responsible for capitalization. And, really, they shouldn't be if the restaurant is of any notable size.

                          1. re: ipsedixit

                            Line managers (employees) are merely part of the management team. Management, CAPITAL M are the owners/investors and staff managers such as CEO, CFO, COO and they definitely are responsible for capitalization, real estate, initial fitting out and budgets. Line managers execute Management's plans and directives, but ultimat responsibilty rests with Management. To quote Harry S. Truman "The Buck Stops Here"

                            Line managers may lose their jobs if the restaurant falters, not their capital investment.

                            If you put your money at risk, you are ultimately responsible for the sucess or failure of the business venture...this is direct ownership investment, not the buying of stock in a traded company.

                        2. I'd say that about 80% of it is that restaurants have a very, very thin margin of profit, and very high levels of competition, so any one of a wide variety of problems can be enough to push them down. The owners can do things right and be sensible, and still fail.

                          And there are tradeoffs - hiring experience staff or hiring inexperienced staff and training them extensively will cost much more than hiring inexperienced staff and giving minimal training (and are harder to replace). So they could fail because the cost of staff is taking up too much of the budget, but raising prices to pay the staff more will drive customers away - you don't get high quality, best of everything for free.

                          I will note that you seem to be talking specifically about higher end restaurants - chefs, visions, etc. The majority of restaurants, at least where I live, are small, often family run operations that make food for people to eat - the closest they get to a vision is which news channel they have on the TV screen.