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Old 03-06-2008, 09:37 PM   #1
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Why do restaurants close?

Everyone on DC has seen restaurants come and go.

Went on the web and it does not seem to be too much of an overestimate that 50 percent or so of all new restaurants close in the first three to tive years. And from the stuff on the web that may be a conservative estimate.

I am just curious as to why some restaurants seem to make it and others do not.

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Old 03-06-2008, 09:44 PM   #2
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There are too many reasons to list, but here are just a few...

Bad location
Bad food
Bad service
Wrong type of food for the location
Bad parking
Word of mouth after a bad experience

and many many more.
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Old 03-06-2008, 09:53 PM   #3
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There really are dozens of reasons. IMO the number one reason why any business fails is because the entrepreneur does not really know what they are doing. They think they do.
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Old 03-06-2008, 10:11 PM   #4
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I think burnout and unrealistic expectations by the owner starting the business can be a factor. I definitely agree about poor location and poor food. Of course, there's always the health factor; there was a place here that kept giving everyone food poisoning and, as you can imagine, I think they were ordered to close.
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Old 03-06-2008, 10:33 PM   #5
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I have heard the failure rate for new restaurants is in the the range of 90%.

Sometimes a great chef is a bad businessman.
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Old 03-06-2008, 10:38 PM   #6
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That is what I have heard as well, Andy.

Poor pre-planning (IE doing your homework first to understand your customers and their needs) seems to be another major factor in restaurant closing.
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Old 03-06-2008, 10:42 PM   #7
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GB, UB and CM covered most of the basics. Something else is management and having sufficient financial capital to see you through the first 2-3 years to get established.

And, then, you have stupid stuff like a great little BBQ joint over in Dallas is suffering thorugh, a showstring operation that has good food and location, but copper theives had hit them about 4 times in the past year .... and that has shut them down for a month or two each time.
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Old 03-06-2008, 10:49 PM   #8
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I have heard the failure rate for new restaurants is in the the range of 90%.

Sometimes a great chef is a bad businessman.
You are so right. A very good friend of mine was the personal chef to Donald Trump. He was making $250,000 a year!

When the time came to re-new his contract, he said no and went in business for himself. In his restaurant he had pictures of all the great people he cooked for. Presidents, celebrities, sports players, and yes, Donald Trump.

He was in business for about 10 years. Everyone thought he was doing fine. Then one night he burned the place down. Now he lives in Italy because he knows that if he comes back, he is going to jail. turns out that business was only good for the first 3 years or so. He started going on long vactions and letting his business fail. He tried to rebound and borrow some money but by then the business already had a bad name. He could not recover.

My point is that no matter how good you are, business can always go south for whatever stupid reason, but you have to stay on top of it. This I think is the main reason so many restaurants go out.
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Old 03-06-2008, 11:10 PM   #9
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PastaKing - that brings up another problem ... which goes back to poor kitchen management - when the chef becomes a "celebrity" and spends more time out in the front of the house smoozing with the ladies than managing what is going on in the kitchen!

The first two names that come to mind are Gordon Ramsey (he admits it) and Rocco DiSpirito (he denies it).

Another problem is "theme" restaurants that go out of style. There was a fantastic Polynesian restaurant in Dallas back in the late 1960's called "Ports O' Call" (maybe it was Ports Of Call) that was riding on the popularity of Polynesian drinks - Mai Tai, Piña Colada, etc.
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Old 03-06-2008, 11:15 PM   #10
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GB, UB and CM covered most of the basics. Something else is management and having sufficient financial capital to see you through the first 2-3 years to get established.
Exactly!! I think that is the main reason. Then the rest play a factor as well, but all are correctable if you are really trying. I see it happen all the time around here. I have seen one location become 5 different resturaunts, I always wonder exactly how long they will last and who will be the next in line to try. It's a tough business to break into and be successful in.
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Old 03-06-2008, 11:16 PM   #11
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One of the biggest reasons for failure of new restaurants is inadequate financing. It takes time to build a clientele, but the rent still has to be paid, and all the other bills as well. so any new restaurant needs cash behind it to ride out the lean time until it catches on (if it's going to). too many restaurants open on a shoestring. A few make it like that, but it's the exception, not the rule.
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Old 03-06-2008, 11:25 PM   #12
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There is also an awful lot of internal theft. Huge theft, from food to booze to cash.
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Old 03-07-2008, 12:00 AM   #13
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I owned a thriving restaurant in a small Northern Iowa town was making good money and paying all of my bills.. Then the Iowa department of transportation( idiot)built a bypass around the town and in three years I went broke to the tune of mega dollars.
so it is not all ways bad food, management, bad vibes. Something completly out of your control does happen to give you the green weenie.
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Old 03-07-2008, 12:10 AM   #14
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Something completly out of your control does happen to give you the green weenie.
I have never heard this phrase before but I think it's gonna be my favorite now, Dave! But I am sorry about your restaurant.
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Old 03-07-2008, 01:06 AM   #15
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I know what you're talking about Dave. Down here I guess we would call that "Route 66 Syndrome"?
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Old 03-07-2008, 08:26 AM   #16
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From an ex-restaurant owning family(closed due to my mom retiring). I can say this. If you server GOOD food and have GOOD service for reasonable prices you can make a go of it. You can never serve bad food or bad service. One bad experience will haunt you for a long time. multiple bad service will kill you..

Don't expect to make a lot. Cook cheap, but cook well! do a lot of work yourself. EXPECT to be there all the time for the first few years.

The ones that don't make it usually one of the following.. poor ideas on how its run. Serve food that isn't good, have poor service, too specialized of food(i.e. pannini sandwiches only... etc).

We have a restaurant that is struggling. They only served pressed grill sandwiches with very little on them for big dollars.. Gee, wonder why they aren't making it...
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Old 03-07-2008, 08:49 AM   #17
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You can never serve bad food or bad service. One bad experience will haunt you for a long time. multiple bad service will kill you..
I have to disagree with the word never in the above quote. There are exceptions to the rule, specifically when it comes to bad service. I have been to a number of thriving restaurants who have had atrocious service and it was known that these places have atrocious service, but because the food is so good people put up with it.

If you have bad food then no one has a reason to visit your restaurant, but bad service can be overcome if your food is good enough.
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Old 03-07-2008, 12:34 PM   #18
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Everyone on DC has seen restaurants come and go.

Went on the web and it does not seem to be too much of an overestimate that 50 percent or so of all new restaurants close in the first three to tive years. And from the stuff on the web that may be a conservative estimate.

I am just curious as to why some restaurants seem to make it and others do not.
Competition could be one reason restaurants come & go. In my neck of the woods there are so many restaurants competing w one another, it's hard to choose. Unless you have something new/different that sets you apart from your competition, you may fail (possibly w/i the first year). Not enough publicity or a bad review (for those that follow reviews), may also have something to do w being successful. I like trying new restaurants, but find some of the newer/trendier restaurants are pricey & the portions are small. If the restaurant does not take reservations, & there's an hour wait at the bar, chances are I won't return, unless the food is exceptional. Parking is another factor. Some of my faves are the ones that I've gone back to over & over again, because I enjoy the food/atmosphere & the price is right, & know that I won't be disappointed.
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Old 03-07-2008, 12:45 PM   #19
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Quote:
Originally Posted by auntdot View Post
Everyone on DC has seen restaurants come and go.

Went on the web and it does not seem to be too much of an overestimate that 50 percent or so of all new restaurants close in the first three to tive years. And from the stuff on the web that may be a conservative estimate.

I am just curious as to why some restaurants seem to make it and others do not.
I had a friend whose father opened a restaurant. His closed because of location. His restaurant was tucked behind a subway. Most people I told about the place, said they couldn't find it.
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Old 03-07-2008, 03:18 PM   #20
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I have to disagree with the word never in the above quote. There are exceptions to the rule, specifically when it comes to bad service. I have been to a number of thriving restaurants who have had atrocious service and it was known that these places have atrocious service, but because the food is so good people put up with it.

If you have bad food then no one has a reason to visit your restaurant, but bad service can be overcome if your food is good enough.
OK, never might be a little harsh, but it better be almost never for me.

I will say this if I eat at a restaurant and get bad service twice in a row, I let the management know and I don't eat there again until I hear they have improved the situation. I also let people know if they ask my opinion. Word of mouth can be very powerful.

In my opinion people should not continually patronize restaurants that have poor service. Poor service shows a disrespect for the patron.

Oh, should have added Location, Location, Location--key to success..
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