Biggest Challenges Faced by Small Businesses Post Pandemics

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Why 80% of Restaurant Business Failed In First 3-5 years?


The average lifespan of a restaurant is five years and by some estimates, up to 90 percent of new ones fail within the first year. According to research, it shows that if a business is losing loyal customers, fail to get new customers, and lack of top talent, first look to their immediate leader. More than any other single reason, the strong brand is the reason customer retention and grow in that establishment.


Why 80% of Restaurant Business Failed In First 3-5 years?



1. Lack of Leadership

“Who’s in charge or leading this team?” I’d often ask the owner this question. And the answer would normally be “No one”. A workplace is made up of people of different ages, with various profiles and customs. Our moral, ethical standard dictates by our principles. These principles control how we interact with people around us in the workplace. This is exact reason why leadership is essential in organization.


Leaders are someone who deal with emotional and often irrational people who demand attention. Leaders are called upon to be coaches, mentors, and amateur psychologist to keep their staff motivated, focused, and delivering on goals. Leaders are people who can connect and bind people while creating a positive working experience. Leaders must maximize everyone full potential and getting their team in position to win. Leaders are essential to the organization’s productivity, retention, process, and motivation. Without leader in place, your organization is like a ship that simply floating at sea without direction.


"People's first Impression of you, is also their last Impression of you, remember that!"



2. Lack of Advertising and Marketing

Advertising and marketing are both key in establishing your new business's reputation. To appeal more to targeted consumers, marketing must be in place. Marketing main purpose is to match the value your business is creating with the right customers. Developing an effective your online presence, digital marketing to web design is part of your marketing effort. And it’s the only way you can get the attention of your potential buyers. Your brand value should speak to your target market, addressing their specific needs in a language they can relate to. Building a proper online brand presence can increase activity on your page, easier to convert leads into sales, boost the impact of your marketing techniques and it's the best way to market your brand.


"Customers don’t expect you to be perfect. They DO expect you to fix things when they go wrong." - Donald Porter


3. Lack of Capital and Cash Flow

In business, anything can happen. Uncertainty can happen anywhere and at any time from the raise of unemployment rates, massive layoffs, economic recession, a person's health to the unexpected and the unfortunate events. Ask yourself, can your business survive a cash crunch? The basic rule is when your cash inflows exceed your outflows, you get positive cash flow. And in terns, this increases your cash account and provides money to grow your business.


“Expect the best. Prepare for the worst. Capitalize on what comes.”Zig Ziglar


4. Customer Service Is Not Top Priority

It's a fact, brand trust is loyalty. In fact, some of the most successful brands are the most relevant brands. Brand relevance comes down to trust. It's not enough for a brand to just promise change, your brand must actively engage and drives change through brand consistency. Your loyal customers help boost your cash flows more than any other advertisement tactics.


As business owner, you should ask yourself "Is your brand story coming across in everything you do?" or "Is that story consistent across all marketing channels?" At the same time, you also need to understand how people are experiencing your brand every day? Remember, your brand consistency counts just as much as your brand promise. Collectively, there are ways your restaurant can help build your customer loyalty.


Building customer royalty program is a great way to build cash flows safety nest. Remember loyal customers usually buy more and are often willing to pay more. They refer others to your establishment. At the same token, this saving you the marketing and advertising costs of acquiring customers significantly. By increasing customer retention can boost your bottom-line profit by 25% to 100%.


"Go beyond merely communicating to ‘connecting’ with people." -Jerry Bruckner



5. Business Owners Don’t Know Their Number

As a business owner, you have to know your numbers. Manage overhead costs is essentially necessity. Business overhead costs are expenses that are related to the day-to-day running of a business. Reducing overhead costs is important in a business downturn. When business is slow, cutting overhead costs is normally one of the easiest ways to minimize losses and return your business to normality and ultimately profitability.


Business overheads which usually include.

  • Your rental space, insurance and contracts.

  • Your utilities, maintenance, repairs and misc. expenses.

  • Your sales and marketing, inventory, product ordering, vendors, payroll down to your revenue streams.

Your restaurant revenues are usually coming from these areas:

  • Your daily revenue, and sales per table revenue.

  • Your bar/alcohol sales.

  • Your to-go sales, deliver services and referrals.

  • Your ability to upsells, restaurant special promotions, offers and giveaways.

  • Your online orders, reservations, walk-ins, to various traffic leads.


Again you have to know your numbers especially the different between cash inflows and cash outflows. The rule is when your restaurant's cash inflows exceed your outflows, you get positive cash flow. And certainly, this increases your business's cash account and provides money to grow your business.


“If you really look closely, most overnight successes took a long time.” – Steve Jobs


My Two Cents: The Importance of Leadership

As a business owner, you have to reevaluate your business core values. What are you stand for and why you're here. There is a high cost to poor leadership or lack of there is. Without vision, businesses slow their production in retaliation, and loyal customers bail. Revenues shrink, just as turnover costs rise. On the other hand, there are secrets of running an oil machine that all leaders or business owners should learn.


A well planned establishment motivate and position your overall team to perform at the highest level. By building brand trust, strong leadership and loyalty, you will retain your existing customers as well as new ones. This is an idea of an environment where your business grow, develop and thrive.


About Me

My name is Chez Boodparset, a founder of Loft16. I’m on a mission to help those businesses with everything I can. I notice the common patterns that business owners are shared that is unacceptable and may cost them their business down the road.


Brand Management

My mission is helping restaurant business to reach their highest potential with measurable gain. However, there are patterns that I often see from majority of business owners that may cost their business from reaching their full potential and ultimately moving forward. I’m on a mission to help those businesses with everything I can. I notice the common patterns that business owners are shared that is unacceptable and may cost them their business down the road.


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