Five Doomsday Restaurant Statistics and How to Survive Them

April 10, 2017 Jackie Prange

 

Did you know: Humanity has a one in 500 chance of being wiped out this year.

 

Feeling the optimism? Didn’t think so. But now with that stat out of the way, no study or prediction could seem as bad. Right… right?

 

As much as the restaurant industry is a game of ingredients, booze, romancing guests and crafting unique dishes, it too is a numbers game. Study after study analyze restaurant openings and closings: 60% fail within their first year, or is it 80%, or is it 50/50, or is it basically a guarantee? The results are often so apocalyptic, it’s a wonder anyone would venture to start a restaurant anyway.

 

While these stats might make you feel like doomsday is upon you, we’ve composed an action plan to help you survive the impending cataclysm intact. So stop filling your fridges with water and stockpiling those canned beans – consider the following as your new and improved stockpile of emergency supplies.


 

“90% of restaurants fail in their first year.”
- Reality TV Show, The Restaurant.

This stat has been embedded in our collective imagination for the last decade. But it’s wrong. According to research done by Professor Dr. HG Parsa, yes, the first year is inherently the riskiest, with 26% of restaurants failing, succeeded by 19% in the second year and 14% in the third year. Collectively, this totals a 59% failure rate over the course of about three years. “If we compared this research result to other businesses, restaurant industry is quite prosperous business,” says Dr. Parsa.

 

So while things aren’t as bad as they may seem, they’re not … great. For budding restaurateurs, minimizing the risk of failure is twofold. First, it means understanding start up costs from the outset and having the ability to take action on costs and revenues as they evolve. Secondly, it means minimizing operational burdens so that waitstaff and kitchen staff can focus on what they’re meant to instead of being mired down by inefficiencies.

 

What are these essential tools imperative to success?

  • Reporting mechanisms: A means to create, understand, evaluate and predict your restaurant’s sales, costs and revenues in order to optimize scheduling and ordering.

  • POS: The POS you choose is the communicating vein of the restaurant which servers use to take orders and communicate those orders with the kitchen, and the brain, because it stores valuable sales data to be used for later analysis. This is a technology that cannot be undervalued.

 

Required Reading: How Much Does it Cost to Open a Restaurant?

 


 

“A 2014 study by the Food Waste Reduction Alliance found that 84.3% of unused food in American restaurants ends up being disposed of, while 14.3% is recycled, and only 1.4% is donated.”
-
Business Insider

Yikes. Those numbers aren’t so sunny. Luckily there are a number of apps and local food donation programs that are emerging in order to combat this problem. Apps like Copia are taking the logistics out of food donation so that all restaurants have to do is post excess food to the app, and the pickup and delivery of that food is taken care of.

 

To quell food waste from the outset, inventory tracking in many POS and restaurant apps has advanced by leaps and bounds. Now, not only can chef's see their stock levels in real time but they also can determine the effectiveness of certain dishes so they can order according to sales trends, reducing spoilage from the outset.

 

Required Reading: Quick Tips to Reduce Waste in Your Restaurant

 


 

“As of December [2015], delivery accounted for only 1.7 billion of 61 billion total restaurant visits in 2015, Riggs says. But between 2012 and 2015, total restaurant traffic grew 1 percent, while delivery traffic increased 9 percent.”

- QSR Magazine

While this may not seem like a doomsday stat at first, for dine-in restauranteurs, the takeaway boom is literally taking away customers who would otherwise be filling a table. While there is much speculation on the longevity of take-away food — with even some asking if the bubble has burst as the major players have been established — rather than shying away from delivery, many restaurateurs are choosing to embrace it.

 

“The normal constraints around growth, typically related to bricks and mortar, are not there. It's only constrained by people adopting an app, and that can happen overnight,” says Martin Kneebone, managing director of food market research and analysis firm FreshLogic. Restaurants are now adjusting their opening hours, creating delivery-only menus, and opening pop ups. Some entrepreneurs are even doing away with the dine-in experience all together in order to expand their offering and survive. To attain this agility, again, it all comes back to operations and analytics.

 

Required Reading: Fast Casual: Why It’s Working and How to Make It Work for You

 


 

“Food packaging makes up most of the remaining weight of the garbage bins, but accounts for around 70% of the volume of foodservice trash.”

- SustainableFoodService.com

Unlike our other doomsday stats, this is one issue that could lead to the apocalypse. Good news restaurants – there are plenty of ways to reduce your footprint. While this list is in no way exhaustive, it serves as jumping off point to start bettering yourself in the eyes of mother nature.

  • Biodegradable packaging for takeaway containers

  • Motion sensor lights & low flush toilets in bathrooms

  • Energy efficient fryers, steamers, broilers, ovens, refrigeration and ventilation

  • A green bin, compost and recycling program

  • Regular maintenance on kitchen equipment

  • Donating used equipment

 

 

Required Reading:  3 Steps to Conserve Energy & Reduce Costs for Restaurants

 


 

“The median cost to open a restaurant is $275,000 or $3,046 per seat. If owning the building is figured into the amount, the median cost is $425,000 or $3,734 per seat. Most survey respondents estimated these median costs were 15% above their projected budget.”

- RestaurantEngine.com

Do you really need that $2,000 chandelier? Whether it’s a runaway dream, or an inflexible vision, or being just too gosh darn excited – the Achilles heel of many restaurateurs is poor budgeting. While there’s only so much that can be projected from the get-go, a combination of creativity, ingenuity, reality and efficiency is required.  

 

Everything you invest in should be both scalable and durable, from industrial dishes to your POS. A mobile POS, for example, presents huge budgeting benefits, as the up front costs to purchase the tablet are minimal and the long-term costs are based on subscription models and the amount of tablets needed. No maintenance fees, or outdated systems that require replacing. Of course, properly managing your food inventory and keeping an eye on any redundant labor costs will be a godsend when you’re trying to abide by a budget.

 

Required Reading: The 4 Financial Spreadsheets Your Restaurant Needs

 



Now that we’ve shown you the flip side of a few food waste, guest frequency, and budgeting doomsday statistics, you can finally loosen your grip on those emergency supplies. With the help of this survival guide, the “end of the world” is no match for you.

 

 

 

About the Author

Jackie Prange

Jackie is a Content Marketing Specialist and Social Media strategist at TouchBistro. She covers the latest food, dining, and technology trends for the restaurant industry. A lover of all things coffee, Jackie’s hobbies include breakfast, lunch and dinner.

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