To open and run a restaurant is a complicated business. Despite factoring in all the challenges that you might face, sometimes things are just not meant to be. Or at least that is what it seems to the restaurant owner whose business just failed. However, a closer look at the reasons why some restaurants never taste success can help a struggling business to amend its operations and set the right tone for the future.
We talked to Dubai-based restaurateur Sanjeev Nanda to understand the key factors that could make business unfeasible for a restaurant owner. According to him, while the pandemic-induced crisis has been the top reason behind restaurants’ failure of late, there are several other challenges that restaurants face from time to time, making operations a tad difficult. Read on to know what they are:
Excessively High Rentals
Most restaurant owners wish for their business to be set up at a location that has high footfall. It could be a place of interest regularly flocked by tourists, or it could be a bustling marketplace. However, these dream locations often incur high rentals. Most business owners are put into a great dilemma while choosing the location for their restaurant since properties with lower rentals are often situated in areas with lower footfall, while prime locations come at a rental that burns a hole in their pocket.
The restaurant industry traditionally has a lower entry barrier, which makes the sector quite lucrative for investors and entrepreneurs alike. However, this has led to excessive competition in the sector. According to Sanjeev Nanda, the restaurant-to-customer ratio in the UAE increased with such a disproportion that too many service providers crowded the scene while the number of diners plummeted due to restrictions on travel, making the business unfeasible for many.
Bad customer experience
Customer experience plays a highly important role in the making or breaking of a restaurant business. If a diner loves the taste of food at your restaurant but is highly dissatisfied with the service in terms of delayed food service, overcomplicated reservation process, or poor restaurant management, chances are they will not only never visit the place again, but also dissuade others from visiting as well. A bad reputation from a single unfortunate incident can linger on for years, which often leads many restaurant businesses to suffer losses and eventually call it quits.