Skip to main content

Want to open your own Restaurant? Some good news

I came across some interesting tweets in my timeline about one successful restaurant trying to raise capital for their new venture. They ended up listing on Kick-starter after been turned down by their bank. When I thought more about this, I stumbled upon that age old theory, if you're thinking about opening your own restaurant, chances are that you are going to fail. We've all heard that statement, '90% of all restaurants fail within the first year of business', and we just take for granted that its true, we never think to dig deeper or check the source.

Well thanks to an associate professor of Hospitality Management in Ohio, who decided to find out exactly how this information was deduced, it turns out that this is actually a myth and unfortunately it is the banks themselves feeding into this myth. We can now reveal that this statement had actually been used in an ad for American Express and on trying to investigate further, American Express themselves couldn't trace the original source leaving the professor without any concrete evidence of the 90% failure rate.

In fact what he did find was when he tried to replicate similar numbers through his own research, not only could he not come to the same conclusion, it was in fact nearly impossible. Other similar studies that had been conducted were consistent with his own findings conducted with over 3 years of data. What they found was 60% of restaurants close or change ownership within the first year. 

While 60% may seem high, when you look into the reasons behind this, it reveals some interesting insights. Instead of the usual assumption that the 'business' of running a restaurant is too high in risk, they found of the 60% that do fail, a significant portion of these were due to situations outside of restaurant control. One of the key problems were the banks buying into the 90% failure myth and reasoning not to lend to restaurants. If they do lend, it is often at extortionately high rates and unfortunately, some restaurants fail in the first year because they can't secure that start up capital. The banks have in fact set a self fulfilling prophecy of failure.

Take banks out of the equation and what the professor discovered when checking for reasons behind failures, was actually more circumstantial. Issues of family demands, ill health and retirement all contributed to closures. Divorce and time spent away from the family unit lead to lifestyle changes and even if the business was profitable this made no difference, they still closed! Only a small number of restaurants actually closed due to profitability.

So if you're thinking about opening your own restaurant or cafe, arm yourself with this valuable knowledge, it is incredibly hard work but at least you know that's its not the doom and gloom that its been made out to be.

More info: The restaurant failure myth


Popular posts from this blog

Good Kai Best Restaurants in Richmond and Twickenham

Best performing restaurants in London borough of Richmond The Good Kai List is a list of restaurants in the London Borough of Richmond that are currently performing well. Uniquely, each restaurant has been visited within the last 90 days.    ***  -- T H E   G O O D   K A I   L I S T -- Atithi Restaurant - Twickenham Jun 2014 Indian -  ££'s The Duke - Richmond Jun 2014 Gastro Pub - ££'s A Cena Restaurant – East Twickenham May 2014 Italian – Gourmet Dining ££'s Jun Ming - Twickanham  April 2014 Chinese Dining £'s St Margarets Tavern - Twickenham  April 2014 Gastro Pub ££'s Recommend the burgers - Vennison Bouge at The Old Goat - Twickenham  Mar 2014 Belgium Cuisine ££'s Go for the mussels a la creme and frites The Green Spice Feb 2013 Comfort Indian - £'s Cheap eats Aitithi Indian York Street Twickenham Jan 2014 Modern Indian cuisine ££'s Addesso Restaurant - RIchmond  Jan 2014 Italian/Sicillian - ££'s Cote Restaur

Le Salon Prive Restaurant, St Margarets Twickenham

Le Salon Prive Restaurant, St Margarets, Twickenham La Salon Prive (The Private Lounge) is actually a newly re-invigorated, and much needed refurbished Brula - a French Bistro restaurant based in St Margaret's, Twickenham for over 15 years. The restaurant went through an ownership change back in January (the former owners having connections with other Richmond restaurants, La Buvette and A Cena, as well as Covent Garden restaurant Joe Allens). The new proprietor happens to be the same owner of a very popular Italian restaurant, Bacco, in Richmond. Bacco is one of my top Italian fine dining eats and here's a  review of Bacco  here. Entrance to Le Salon Prive, Dining Room La Salon have kept the lovely glass stained windows but have totally redone the inside. Formerly the restaurant resembled something similar to your geriatric granny's living room - it might seem charming but it really felt like it had been under-invested, incidentally a similar theme also exist

Best Romantic Restaurants, Richmond & Twickenham, London ♥♥♥

Romance at Le Salon Prive 'I took you to an intimate restaurant...' Here are a list of excellent fine dining restaurants in Richmond and Twickenham, for celebrating anniversaries, valentines, first dates or an intimate dinner. The Petersham Hotel Restaurant - Richmond Crab Lasagne - Petersham Hotel This is one for the grown-up lovers. PHR mixes vintage charm with fine dining topped with one of the nicest views in the borough. You'll have Petersham meadows and the river Thames as a backdrop to your romantic evening. One of two great restaurants located close to the water, what better way to top off your night, than a leisurely stroll along the river Thames. Petersham Restaurant is located on Nightingale Lane, Richmond, Surrey TW10 6UZ Le Salon Prive -  Twickenham Le Salon Prive, Twickenham This restaurant has eclectic style. This 2016 they are doing a Valentine's menu of four courses for 50 quid plus a glass of bubbles . Its' interior is