How to Kill Your Restaurant Business Fast – Four Eulogies

Why did the downtown restaurant close?

The downtown restaurant opened about a year earlier. I wasn’t surprised that it closed. I was surprised that it stayed open so long. It was around the corner from my office. I walked past it every time I visited the restaurant next door – about once a week.

Have you ever watched a restaurant open and then watch it slowly starve to death? Have you ever wondered why they failed? Or did you know what they were doing wrong? Maybe you even offered constructive feedback to the staff and owners only to get a nasty look in return. We can see the self-destruction – while the owners seem to be oblivious.

Why is that? Because we see it from the perspective of a customer. The owners are engulfed in their emotional world of “It’s mine – it must be beautiful”. And maybe they keep telling themselves, “Hey, I spent a lot of money fixing up this place – people just have to see it my way – eventually”.

What business are you in?

One of the biggest mistakes that restaurant owners make is to believe that they are in the food business. Big mistake! Grocery stores are in the food business. Restaurants are in the experience business. The experience at McDonalds is very different from that at Boston Pizza from TGI Fridays from Ruth’s Chris Steak House. Yet they are all in the same business – just different segments of it.

Why do restaurants fail? It’s usually not the food. Here are three more restaurant failures that I witnessed recently in our neighborhood.

There was the Middle Eastern restaurant that offered Shwarma in a setting that looked more like a Burger King than a Middle Eastern décor. A big disconnect. And even though I lived only three blocks away I never received a flyer from them. They seemed reluctant to advertise.

Joe’s Dinner seemed like a welcome change. They advertised in the paper, on lamp posts and sign boards. Lots of promotion. However, after three breakfast visits I swore never to return because the service was very slow and the servers unfriendly. The young girls were clearly untrained and they seemed more interested in chatting with their friends than serving customers. Often three of the staff chatted openly at the bar.

I looked forward to the opening of the new English pub. The décor was impressive. The owners clearly invested a lot of money. Lots of wood, a dance floor and it was small enough to be cozy. After one breakfast visit, one lunch and two dinner explorations they were written off my list. The service made the glaciers look fast. The food was mediocre and the serving staff either failed to recognize the inconvenience or made excuses when we pointed out the short comings.

So why did the downtown restaurant fail? I suspect that the restaurant owners followed a marketing strategy of hope. Hope is an admirable personal quality. It is a lousy marketing strategy.

I never visited this restaurant because it did not look inviting. I walked past at lunch time on a snowy day and the sidewalk wasn’t cleaned. It looked uninviting.

It had floor-to-ceiling sized windows across the front – but it always looked dark inside – as if the lights weren’t on. I was never sure about the cuisine although it hinted at Italian – which is my favorite. It never looked busy, and oftentimes looked closed. It lacked music that might have suggested excitement to invite folks in. I saw nothing that looked like a grand opening. I saw nothing special going on. Although my office was just around the corner, I never saw an announcement or invitation. I never saw anyone standing outside to welcome passers-by from the main street of town.

Imagine if they had done something just a little different to create excitement. Imagine if they had put balloons outside, hired dancers, held free draws, sponsored a charity event, knocked on doors, offered coupons, distributed menus, invited service clubs to meet… something.

Well, too bad that it closed; I was thinking that I might check it out one time. The food might have been superb. But restaurants are not in the food business. They are in the experience business. They failed to invite me in, which is the first part of the experience.

This downtown restaurant failed in early 2006 – long before the current turbulent times. You can imagine that the business owners probably blamed the market, the location or luck instead of their own lack of marketing. Those business lessons are even more important today. Many businesses will fail over the next few years and the owners will blame the “market” instead of being responsible for their own success or failure.

They had a good location and the economy was good yet they still failed. Location is not the panacea. Luck comes if you do enough of the right things. Business will fail in good and bad economies. Only the excuses will change.

Learn from the lessons of these failed restaurants. I recently spent over $100 on dinner for two at a fine dinning restaurant. The service was fabulous. We would go again. Be very clear on the experience you must deliver. If you run a restaurant you are not in the food business.

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What Are You Stepping Into With Your Business Exit?

The emotional impacts of exiting a business can be disastrous for an owner who did not carefully consider his or her options and future needs, prior to selling or transferring the business. In the absence of this self reflective thought, a successful exit for the departing owner becomes significantly more challenging, with a greater chance of either financial or emotional dissatisfaction. In order for a business exit to truly be successful, you must be aware of what you will be stepping into with your exit, and be satisfied with that life you realistically expect to live after the business.

It is important for you to put your potential exit, and the consequences of that exit, into perspective. You have likely invested most of your time in that business over many years, and the next stage in life following an exit can be just as, if not more, successful and fulfilling. In order to achieve this ultimate goal, however, you must devote significant time to considering exactly what you plan to do following the exit – and what will be needed in order to realize those plans. This is a critical component to the exit planning process, as being able to envision what you want to do next in life is necessary to begin to visualize the future without the day-to-day running of the businesses. In the absence of this type of thought and analysis, a business owner is often sub-consciously relegated to his current comfort zone of running the business, and will be lost once it is gone.

The most effective way for advisors and family members to assist business owners through the exit process is to encourage reflections on life after “the business,” and for you in turn to begin envisioning specific activities that you’ll engage in during the time currently occupied with running the business. Full days stretched into others can become a seeming eternity for a business owner used to working 40-plus hour weeks. It simply is not in the makeup of most entrepreneurs to spend their retirement in idle.

Many exiting owners will take up hobbies, plan to spend more time with their families, begin mentoring or start another, less time-consuming company. This is an opportunity for the business owner to create a new life style, to enhance his or her life beyond the current restrictions on time inherent to owning a business. It is an opportunity for an owner to get creative about trying out new activities they would really enjoy doing.

When you can envision yourself outside of the business, the planning process quickens with you no longer considering the exit as leaving something, but rather as starting something new. A business exit should not be viewed as only signaling the end of an era, but more importantly, as heralding the start of another. If it is planned for properly and you embrace the newfound freedoms inherent to exiting a business, the period following that exit can be the most emotionally fulfilling in your life, and of your family.

Without individual self-reflection on what you truly are stepping into with your exit, and what can and will await you there, it is unlikely for you to achieve a successful business exit that truly meets all of your goals.

© John M. Leonetti