There are a number of reasons restaurants don’t make it. There are often times dozens of reasons.
When you focus on building efficient systems and processes (i.e. simple restaurant payroll processing, streamlined HR administration, organized benefits routines – just to name a few), it will make all the difference. The restaurants and businesses that are skilled at preparation and contingency planning come out ahead most of the time.
When you take the time to address why restaurants struggle and take action to improve in these areas, you substantially increase your odds of long-term success.
Here are just 3 common reasons why restaurants fail, along with solutions to avoid each one.
1. Minimal Support and Resources
As an HR outsourcing company, we hear it all the time, “We don’t have the money to spend on an HR services company or to have someone handle our payroll processing.” We understand this! We know firsthand how tempting it is to want to do everything on your own in an effort to save money and preserve your funds, particularly when you’re just starting out or maybe your sales are a bit slow.
However, the problem is, when you don’t have the background (or the internal support or resources) to handle the many aspects required to operate a successful restaurant — like accounting, marketing, payroll, HR, purchasing, etc. — you could be doing more harm than good and spending more (time and money!) than necessary.
So, what can you do about it?
Spend some time looking at other options. Factor in the costs of outsourcing some or all of these tasks to professionals, so you can stay laser-focused on running your restaurant. You could also take the time to build, for example, streamlined HR and payroll processes and systems and delegate these certain areas to your management staff (if they have the skillset to handle, of course).
2. Lack of Restaurant Leadership
As a business or restaurant owner, you just can’t do it all on your own. Instead, you need a reliable team of capable managers and leaders who understand your vision and have your back. Sounds easy, right? Well, we know it’s not easy, but it is essential.
So, what can you do about it?
To start, make sure you are LEADING. It’s so important to make sure you, day in and day out, are setting the proper example. Then, it’s vital that you align your leadership team as soon as possible. Perhaps you have some internal candidates who show promise or possess several of the desirable soft (aka people) skills? Spend the energy and take the necessary time to coach and mentor them and further developing their talents. You can also seek external management candidates who are experienced in restaurant operations.
Managing the tasks, such as payroll processing, cleaning the cooler, and handling inventory are important but leading and inspiring people, that will set you and your restaurant apart, and make you great.
3. Lack of HR Systems
We are in the people business, right? Your people are your greatest asset. So, you must make sure you have HR systems and plans in place to take care of them. That’s why having easy-to-understand internal HR processes that cover the entire lifecycle of an employee — from recruiting and onboarding to payroll and benefits to performance management and leadership development — is so important. These systems will keep you and your teams organized and on track and will also ensure the fair treatment of all employees (and will help avoid those problematic legal issues).
So, what can you do about it?
Well, start with….STARTING! It can become overwhelming and head-spinning, but you simply have to begin. It’s never too late to develop HR systems, but it can be an overwhelming task if you’re starting from scratch. If you don’t have in-house HR, benefits, or payroll support, consider working with an HR or payroll outsourced company who can get you up-to-date, compliant with current laws, and likely save you money and prevent those legal and cultural troubles too.
More to Come
Because restaurant success and failure continues to be such a hot topic, we will continue to post articles and posts touching on other reasons restaurants fail, as well as other tips and guidance on what you can do to have more success in your restaurants.
Here at, Restaurant HR Group, we are on a mission to help create more restaurant success stories. If there is a topic you would like for us to touch on, never hesitate to REACH OUT TO US with your questions or suggestions.