• Mistakes Restaurant Startups Commonly Make

    Any new business venture requires more than just optimism and luck to succeed. While there’s no magic formula to guarantee success, you can increase your chances by learning the most common mistakes restaurant startups make and how to avoid them.


    Failing to Plan

    Dreaming about opening a restaurant isn’t enough. If you focus only on creating a product and not on how to attract customers or pay startup and overhead costs, your dream will be over before it begins.

    “The strength and weakness of entrepreneurs is that they have this great idea that they are passionate about or they think they will make a whole lot of money on,” said Aubrey Agee of Wayne State University. “But…they don’t do their homework; they don’t understand competitors.”

    To help your restaurant be a successful venture, you must create a serious business plan, research your competitors, decide how to market your restaurant and establish a sound financing plan.


    Poor planning and unexpected costs often combine for disastrous results. Even the best restaurant with an excellent concept can’t stay in business if it runs out of money. Startup costs from construction and rent to soft costs such as permits and liquor licenses add up fast.

    To combat the issue of under-capitalization, add at least 10 to 15 percent on top of your projected startup costs.

    Not Establishing a Unique Selling Point

    Why should a customer come to your startup restaurant if it’s just like three or four other eateries in town? Having great food isn’t enough.

    “While you may honestly believe that your food is better than your competition’s, I guarantee you your competition thinks the same thing,” states Brandon O’Dell, owner of O’Dell Restaurant Consulting. “If you don’t believe me, just step back and listen to all the other restaurants out there. They make a lot of the same claims, don’t they?”

    In order to offer something truly unique, you must think beyond food and service benefits. To make your restaurant stand out, consider offering a unique atmosphere, unbeatable deals for people celebrating birthdays, or unmatchable customizability.

    Lacking Effective Marketing

    Once you establish a unique selling point, you must get the word out. Strong advertising at the start is important, but you shouldn’t stop there.

    “Many times a restaurant may successfully open with a big splash of advertising,” notes Tom Wilscam, restaurant consultant from W&W Restaurant Consulting Group. “After a few months of success, management may then drastically cut their advertising budget in the belief that they have now established a solid client base. However, the market is an ever changing entity. People are moving in or out and new competition may be opening.”

    That’s why you can’t abolish your marketing budget and expect to stay afloat. Plan to delegate 2 to 4 percent of your annual gross sales to advertising.

    By knowing these mistakes ahead of time, you can work to avoid them and increase the chances your restaurant startup will be a success.

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