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How to Kill Your Restaurant Business Fast: Four Eulogies

Guest post by: George Torok

Article Overview: One of the biggest mistakes that restaurant owners make is to believe that they are in the food business. Big mistake! Grocery stores are in the food business. Restaurants are in the experience business. The experience at McDonalds is very different from that at Boston Pizza from TGI Fridays from Ruth's Chris Steak House. Yet they are all in the same business - just different segments of it. Why do restaurants fail? It's usually not the food. Here are four restaurant failures that I witnessed recently in our neighborhood.

How to Kill Your Restaurant Business Fast: Four Eulogies

Why did the downtown restaurant close?

The downtown restaurant opened about a year earlier. I wasn't surprised that it closed. I was surprised that it stayed open so long. It was around the corner from my office. I walked past it every time I visited the restaurant next door - about once a week.

Have you ever watched a restaurant open and then watch it slowly starve to death? Have you ever wondered why they failed? Or did you know what they were doing wrong? Maybe you even offered constructive feedback to the staff and owners only to get a nasty look in return. We can see the self-destruction - while the owners seem to be oblivious.

Why is that? Because we see it from the perspective of a customer. The owners are engulfed in their emotional world of “It's mine - it must be beautiful”. And maybe they keep telling themselves, “Hey, I spent a lot of money fixing up this place - people just have to see it my way - eventually”.

What business are you in?

One of the biggest mistakes that restaurant owners make is to believe that they are in the food business. Big mistake! Grocery stores are in the food business. Restaurants are in the experience business. The experience at McDonalds is very different from that at Boston Pizza from TGI Fridays from Ruth's Chris Steak House. Yet they are all in the same business - just different segments of it.

Why do restaurants fail? It's usually not the food. Here are three more restaurant failures that I witnessed recently in our neighborhood.

There was the Middle Eastern restaurant that offered Shwarma in a setting that looked more like a Burger King than a Middle Eastern décor. A big disconnect. And even though I lived only three blocks away I never received a flyer from them. They seemed reluctant to advertise.

Joe's Dinner seemed like a welcome change. They advertised in the paper, on lamp posts and sign boards. Lots of promotion. However, after three breakfast visits I swore never to return because the service was very slow and the servers unfriendly. The young girls were clearly untrained and they seemed more interested in chatting with their friends than serving customers. Often three of the staff chatted openly at the bar.

I looked forward to the opening of the new English pub. The décor was impressive. The owners clearly invested a lot of money. Lots of wood, a dance floor and it was small enough to be cozy. After one breakfast visit, one lunch and two dinner explorations they were written off my list. The service made the glaciers look fast. The food was mediocre and the serving staff either failed to recognize the inconvenience or made excuses when we pointed out the short comings.

So why did the downtown restaurant fail? I suspect that the restaurant owners followed a marketing strategy of hope. Hope is an admirable personal quality. It is a lousy marketing strategy.

I never visited this restaurant because it did not look inviting. I walked past at lunch time on a snowy day and the sidewalk wasn't cleaned. It looked uninviting.

It had floor-to-ceiling sized windows across the front - but it always looked dark inside - as if the lights weren't on. I was never sure about the cuisine although it hinted at Italian - which is my favorite. It never looked busy, and oftentimes looked closed. It lacked music that might have suggested excitement to invite folks in. I saw nothing that looked like a grand opening. I saw nothing special going on. Although my office was just around the corner, I never saw an announcement or invitation. I never saw anyone standing outside to welcome passers-by from the main street of town.

Imagine if they had done something just a little different to create excitement. Imagine if they had put balloons outside, hired dancers, held free draws, sponsored a charity event, knocked on doors, offered coupons, distributed menus, invited service clubs to meet… something.

Well, too bad that it closed; I was thinking that I might check it out one time. The food might have been superb. But restaurants are not in the food business. They are in the experience business. They failed to invite me in, which is the first part of the experience.

This downtown restaurant failed in early 2006 - long before the current turbulent times. You can imagine that the business owners probably blamed the market, the location or luck instead of their own lack of marketing. Those business lessons are even more important today. Many businesses will fail over the next few years and the owners will blame the “market” instead of being responsible for their own success or failure.

They had a good location and the economy was good yet they still failed. Location is not the panacea. Luck comes if you do enough of the right things. Business will fail in good and bad economies. Only the excuses will change.

Learn from the lessons of these failed restaurants. I recently spent over $100 on dinner for two at a fine dinning restaurant. The service was fabulous. We would go again. Be very clear on the experience you must deliver. If you run a restaraunt you are not in the food business.

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Article Tags: food business, marketing, restaurant business



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