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Why Restaurants Fail

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Why Restaurants Fail
Shechem Scatt
Monroe College

Why Restaurants Fail
The restaurant industry has always been a difficult industry to work in, especially if someone is the owner of a restaurant. The restaurant industry is completely full of all different kinds of restaurants so it is difficult to start a restaurant and make it different from all the other restaurants to acquire profit quickly. Unfortunately, most restaurants fail to make profit in the correct amount of time and overall shutdown as a result. There are many reasons why a restaurant can fail, but some of them are more significant than others. Any restaurant, whether it be a chain or an independently owned restaurant, can fail no matter how fantastic the service is, if the place is dirty and unsanitary. Sanitation is the most important aspect of a restaurant because inspectors can walk in at any moment and shut down a restaurant for being uncleanly and unsanitary. Restaurants could also fail due to poor service or wait staff that do not fulfill the job requirement given to them. Poor staff that are not working to their full expectation can result in extremely unhappy customers, which can result in lack of customers coming back and lack of customers in general, which leads to monetary profit decline, which ultimately leads to closure. Another mistake that most restaurants make that leads to complete failure, especially independent ones, is inexperience with the math part of owning a restaurant. What this means is that restaurant owners open up their own establishment without even knowing a single thing about the accounting aspect of a restaurant, which is the most important aspect. Lack of knowledge in this aspect causes debt, which in term causes extreme cases of bankruptcy. While there are other reasons why restaurants fail, most those reasons are the causes of these three main reasons. Once restaurants are subject to just one of these three things, there is no turning back, which is why most restaurants, within the first year of business, tend to fail and completely shut down. Within the past decade, many restaurants have shown that if these three things do not occur in any restaurant, failure is the only product that will come.
Failure by Sanitation Sanitation is a serious issue that must be maintained in a restaurant because when you have an unsanitary workplace, then the food that is being served is unsanitary, which is a national violation. There are numerous sanitation requirements that every restaurant, chain, independent, or franchise, must follow in order to properly maintain business. That is why it is incredibly important to perfectly execute each sanitation requirement, but most restaurants fall short, overall fail, and file for closure. Many restaurants have failed to reach these requirements in the last decade and they are blowing up the media causing the newest restaurant owners to upgrade their sanitation regulations. A story from the News-Gazette leaked out just last year, and it was an article about six restaurants that failed at the same exact time in the same area that all failed due to some kind of sanitation issue. Restaurants can fail inspection and still stay open, but if the restaurant fails seven of its nine inspections, it has to pass inspections for the next year or face closure and the loss of its operating permit. If that happens, the owners will have to go through a hearing to get its permit reinstated (Dempsey, 2014). Most restaurants only face closure, but if a restaurant fails so many times, then the operating permit is taken away from the owner. Many restaurants per year in America are being closed because of numerous sanitation issues, but if these issues were maintained, there would not be a problem. Failure by Staff Behavior Whether the food in a restaurant is of high quality or not, the staff that comes into direct contact with the guests and cooks the food being served to the guests must be performing to their fullest ability. If staff that come into direct contact with the guests have bad attitudes and spend more time standing around than they do helping their guests, then that puts a bad reputation on the restaurant no matter the quality of the food. When the staff in the back of the house does not perform to the fullest ability, then the food does not come out to the fullest potential, and the guests become unhappy. In either situation, the customers will be unhappy with the restaurant and the owner, and they will decided to not come back. This will cause these guests to tell their friends not to go to said restaurant, the restaurant will lose money, and a decrease in profit will result in closure. There are a couple television shows on the Food Network that depict terrible customer service and that depict back of the house employees that disrespect the employers in many ways. These shows are Restaurant Stakeout and Mystery Diners that air frequently on the Food Network to show the lowest standards of restaurant employees. Restaurant Stakeout follows as Willie Degel takes his practices to troubled restaurateurs looking to find and rectify the hidden problems that lie within their establishments (Food Network, 2015). Most of these problems found on this show lie within the staff and most episodes of Restaurant Stakeout end in employee firings. As for Mystery Diners, Charles Stiles created a company called Business Evaluation Services (BES). This company was set to secretly examine restaurant employees to identify if they misbehave while working or not. Charles decided to take his company to the Food Network and he televised what he does for restaurants (Food Network, 2015). It is so prevalent that if the staff does not perform to the fullest extent in a restaurant, then a restaurant could end up failing. The Food Network even televised it to show that proper staff in a restaurant is incredibly important, and if there are issues it could lead to failure. Failure by lack of monetary knowledge To a surprise, most restaurant owners do not know much about the monetary aspect of owning a business. All of the bills, taxes, and expenses need to be managed by someone in the restaurant and owners usually think they are eligible to do so. Most restaurant owners have no experience with this kind of work; therefore, many problems are caused by their lack of knowledge. This can be easily resolved by either hiring an accountant to do all the for them or by learning the math of owning a restaurant before deciding to do so. USA Today quotes “To greatly increase your chance of success, find out as much as you can BEFORE you open your doors. Talk to people who run their own businesses, especially businesses similar to yours, and get a realistic understanding of the time, financial, and emotional resources necessary.” (Abrams, 2004). Most owners do not obtain the necessary experience required to run a restaurant before they open their restaurant, which causes for instant failure. The lack of knowledge, when it comes to the accounting side of owning a restaurant, causes restaurants to fail more often than they fail with any other reason. Conclusion In the whole, owning and running a successful restaurant is extremely difficult and it rarely works in the United States. Most new restaurants fail within the first year of business mainly because of three key points: sanitation, staff behavior and performance, and lack of monetary knowledge. With just one of these three things either not be executing correctly or not up to par, a restaurant is bound to be either shut down, or a restaurant will overall fail. Restaurant owners are mainly the overlying problem when it comes to restaurants having problems; they are the ones that cause these three important aspects of restaurant owning to fall short of what is acceptable. These three aspects of a restaurant are key to maintain if a restaurant owner wants to have success and wants to prevent overall failure.

Abrams, R. (2004, May 7). - Focus on success, not failure. Retrieved November 24, 2015, from
Dempsey, P. (2014, February 5). Six restaurants fail inspections. Retrieved November 24, 2015, from
Food Network. (2015). Retrieved November 24, 2015 from

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