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Why do Restaurants Close?

There was a horrendous practice termed ‘death by a thousand cuts’in a far eastern country until the early years of the 20th century. While reading this morning of yet another restaurant closure in Dublin and the promise of another 25 to open in the near future; this practice came to mind. Is it ‘death by a thousand cuts’ that causes a restaurant to effectively bleed to death or it is something sudden and traumatic that swiftly lands that final blow?

As the operation of a restaurant is as multi faceted as an orchestra, so the closure of one has as many connected links, which silently break one by one until the music stops completely. It is often possible to predict on the opening day of a restaurant whether of not it will close in the near of distant future. Why so? Openings are frequently delayed, mired in unexpected and expensive debt, brought together by those with a dream without a solid foundation and run it on a wing and a prayer. There can be a strong desire to start big, bold, brash, bells, whistles and honky tonk, all of which costs dearly, rather than slow, steady and organic growth. There can also be a strong desire not to run it like the ‘big boys’, but to cruise along and it will all come together somehow.

So what brings about the closure that is often so fast that some kit can be still in wrappers?

  1. Would be restaurant/ cafe owners forget that they are running a business first and a restaurant second. All business rules apply.
  2. It can be forgotten that the restaurant business has many peculiarities uncommon to other businesses, such as a highly perishable product and a peripatetic workforce, which needs to be managed with care, attention and a forensic eye to detail.
  3. Managers who do not have the knowledge to manage facilities, people and operations; the skills to make things happen and the attitudes to roll with what each new day brings. Poor management is one of the leading causes of business failure generally, but it can bring about the demise of a restaurant with lightning speed.
  4. Poor Menu development can lead to chaos in both kitchen and front of house. A menu which is too big, long, complicated can increase labour costs, equipment costs, utilities costs, ingredient costs, waste and slow down service.
  5. Over reliance on people rather than systems. Systems are what underpin any strong business. Financial, Information technology, Legal, Kitchen Management Systems, Front of House Management Systems, Human Resource Systems all provide a solid foundation on which to build the business. Without robust systems – which must also be flexible when necessary – a business cannot grow.
  6. Failure to recognise when emergency aid is needed. A cut on a finger requires a plaster, a broken leg requires the emergency room. Being able to tell the difference between them is vital.
  7. Poor and infrequent communication. Conversing while passing each other on the corridor or across the dining room is not communication. It is not possible to run a business unless the key people involved communicate in a formal way weekly and follow it up with action.
  8. It should be a given that the food offering is of a certain standard, however that standard can range from fast food to fine dining and all permutations in between. Defining and reaching out to the specific market while identifying competitors is a core skill in survival..
  9. Overspending in the start up phase and opening with unexpected and crippling debt can be the ailment from which a restaurant cannot recover. Someone needs to be able to say ‘stop, we cannot afford that just now’.
  10. Finally, would it be possible to become a hairdresser without first learning how to cut hair, or a pilot without first learning how to fly, or a civil engineer without learning the basics of that craft or a dentist without learning how to pull teeth? Most probably not. Why then, do so many think that opening and running a restaurant requires only a fondness for eating?