California Restaurants: The Top 5 Reasons For Success and Failure
Written By Jammes Luckett
The Golden State is a foodie’s paradise — being both home to 70,000 restaurants and a magnet for top-tier culinary talent. Yet, almost 30% (21,000) of these businesses close each year.
Some of California’s most celebrated restaurants close their doors after a streak of praise. Meanwhile, those with lower profiles or ratings can thrive for years. Here are the top five factors in their recipes for success… and disaster:
1. Business Acumen
Business outcomes hinge upon at least five major factors and as many as 50 unique variables. Yet, many new restaurateurs open establishments knowing about spectacular food preparations but lack the basic skills needed to successfully run a business.
Food service is a complex business requiring sufficient startup capital, a solid business plan, and efficient management of financial and human resources. Overconfidence can result in mismanagement from the start, with a trickle-down effect across all moving parts.
2. Location
Real estate can make or break a restaurant before opening day. Even if led by a top chef, the business will struggle if the location makes little business sense.
While scouting locations, owners need to analyze factors such as:
· Rent and operating costs vs. average check yield (Will revenue cover overhead?)
· Demographics
· Unique value of concept vs. existing competition
· Visibility and accessibility
· Traffic trends during operating hours
3. Company Culture
Attitude can go a long way toward customer satisfaction and loyalty.
Many guests can forgive mediocre food, enjoy the atmosphere and will become regulars if they experience consistent hospitality and appreciation. But even the 5-Star rated establishments won’t see the return of those customers if they somehow were made to feel slighted in any way.
Investments in experience, training, and a pleasant environment can set the tone from the first hire. Team members who feel valued are more motivated to extend the same to clientele.
4. Technology…communication about your establishment is now instant
Establishments used to enjoy the luxury of months-long trial periods. Issues with menu, service, or staff were addressed long before word got out.
Today, a majority of the 78% word-of-mouth visits originate through social media. With immediate access to millions of choices, there’s more to compare… and to expect. With one click, thousands discover a restaurant’s cold open.
If launched without proper funding, training or test runs, a negative first impression can be instantly shared with millions.
5. The Unexpected
It’s important to note the difference between “failure” and “closure”. A study by the Center for Economic Studies found that 29% of businesses were doing well at the time operations ceased.
Some business owners merely springboard to a different venture. For others, this scenario is a result of variables beyond the owner’s control:
· Loss of property (natural disasters or theft)
· Personal emergencies (stakeholders)
· Economic downturn
· Industry legislation
· Shifts in city planning
· Eminent domain or property sale
Conclusion
The individual catalysts for most business outcomes can be difficult to identify but most stem from internal rather external factors. It’s not enough to have a passion for good cuisine or to be known as the best Chef in town.
Chances of survival only increase when also paired with leadership that understands the business side of the industry. Leadership that makes informed decisions, allocates resources efficiently, and is supported with a trained and motivated team who’ll create positive, memorable experiences.
About the Author:
Jammes Luckett is a writer and multimedia producer based in Santa Monica, California. Her writing credits include the culinary survey series Top 40 Restaurant Guide, music industry trade Lip Service Magazine, and a co-authored article published in the Austin American-Statesman.
