Did you know, 85% of statistics published in the media are inaccurate or misinterpreted? Or something along those lines. I definitely read that somewhere.
One example of the impact of stats being blown out of proportion (or just downright wrong) is the public’s perception of the restaurant industry.
The sector has (perhaps justifiably) a reputation for being a tough place to do business. But the oft-quoted claim that most new restaurants fail in their first year of opening, simply isn’t true.
Type “percentage of restaurants that fail” into Google and you’ll get a range of outrageous stats suggesting as much as 90% don’t make it past their first birthday. But dig a little deeper and you’ll see that more reliable datasets suggest only around 17% of restaurants close in their first year. Which is actually lower than many other sectors.
Nonetheless, recent years have demonstrated the industry does have its challenges. Which is why, if you’re a budding restaurateur, you should think carefully about whether your idea really has legs before you set up shop.
Do we need another restaurant?
Finding a genuine gap in the market and filling it is the key to building a restaurant concept with longevity, says Faber’s Creative Director, Tony Matters. “Identifying what will be successful usually starts with identifying what a location is lacking. But It’s also important to find out what has failed in the past, and why,” he explains. “In my experience, overly gimmicky concepts tend only to have novelty appeal, which will eventually wear off. Whereas an idea that fulfils a need will get your customers coming back for more, again and again.”
Between 2012 and 2017, the number of new bars and restaurants opening in the UK rose by 44% (again, according to some stats I found, so who knows.) Standing out is now more important than it’s ever been, but this shouldn’t be at the expense of long-term success, says Tony.
“Differentiating yourself is important, but concepts which are niche in the extreme tend to be a flash in the pan. It always boils down to quality of service and food in the end. Establishments that don’t prioritise these things are exposed pretty swiftly, especially in the era of online reviews,” he adds.
What does the future look like?
Remember your ultimate goal is to be profitable. It might be a lifelong dream of yours to open a coffee shop, but that doesn’t mean it will make money. And even if you’re not driven by profit, you need to be able to cover costs and provide your staff with a secure wage.
What do you want from your business? How you envisage your restaurant in the coming years should help shape your final concept. Are you hoping to create something that can be replicated over several sites? Or do you have more modest ambitions?
Whichever it is, you need to think about how this will impact your business model. For a business to be scalable, it needs a watertight business plan and mass-market appeal. If you’re more about staying local, does your idea have staying power, i.e., is whatever you’re making money from now still likely to be applicable five or 10 years down the line?
If you’re trying to secure investment, being able to demonstrate this longevity is key. But how do you determine the success of something that doesn’t exist yet?
The answer is market research. Gather as much knowledge as you can on the competition: find out whether anyone is already doing what you want to do and, if they are, how will you do it better? If no one appears to be a direct competitor, don’t start celebrating just yet – there could be a good reason for this. After all, thriving competitors are a sign your idea has demand.
So, in summary: to avoid being one of the unlucky “90%,” do your research, look at your business from a long-term perspective – and don’t believe everything you read…