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5 Mistakes That Will Set Your Food Service Company for Failure

A food service business is one of the riskiest and toughest ventures to start. 60% of restaurants fail in the first year, while 80% don’t make it past the 5-year mark.

In spite of the grim prospects, a lot of entrepreneurs try to make a name for themselves in the food service space. “Why?” You might ask yourself this question. Well, the reason is pretty simple: the higher the risks, the greater the returns.

Opening a restaurant needs a significant investment which is estimated to pay off in three years if everything goes well. That means getting the right concept at the right place and for the right people from the very start and managing it well.

It sounds easy when you put it like that. In reality, food service companies continue to make the same mistakes over and over again and set themselves up for failure.

1. You Don’t Have a Unique Selling Point

Obviously, you would say that a food service company’s value proposition is the food and the service. If these are top-notch, the business will thrive. But, even though the way to a man’s heart is through his stomach, food isn’t the only element that will win the heart of your prospects. If it were, then we’d have food service companies at every corner.

What’s amiss in this equation is the emotional connection. One of our basic needs is belonging. Clients will remember you if you make them feel like they belong at your table, not someplace else. Have them relate with you by making them feel nostalgia or like they’re part of a community or whatever emotion suits your target audience best.

2. You Try to Be Everything to Everyone

A food service business is part food, part management, and part marketing, all wrapped up in talent and skill that work together to create a memorable experience for the target audience.

However, a lot of businesses try to please everyone and end up becoming a generic company that no one remembers.

Be clear about who you are, and what you do best. Build a focused menu that allows you to put more attention into the quality and execution of your food, and improve overall efficiency. Large menus are confusing for the customers. Not to mention, they require more inventory items, staff, and equipment to produce.

3. You Hire Poor Management

Bad management is a straight line to failure. If they don’t know how to manage the resources, be it people, money or other items, they do you no good.

Among the skills a good manager should have are people skills, accounting skills, and business acumen. The best ones are those who started at the bottom and worked their way up. Their experience provides insights on how to motivate the staff better.

Managers need to know restaurant accounting procedures to keep track of items such as food costs, labor, income and so on.

Lastly, a good manager needs to understand the importance of data collection. They should monitor things like how many people the restaurant feeds each day/shift/hour, how many labor hours are spent per dollar or what the sales are compared to what they should be. This kind of information helps companies learn more about their customers and serves as guidelines on what adjustments should be made to increase profits.

4. You Don’t Promote Your Business Enough

By now, you know how important advertising your business is. No matter how good your food, service, management and concept are, without proper advertising they are nothing. You need to build awareness around your business.

Find the most successful ways to interact with your potential customers. There are many techniques you can use, but one of the best is to collect contact information from every person stepping through your door. After offering them great service, let them do the marketing for you. Remember that word of mouth works best when you’re already an established business.

5. You Offer Poor Customer Service

There’s never enough stressing on how important the customer experience is. High-quality food, engaging staff, and a pleasant interior design are just a few of the elements that get your customers to return.

The news travels fast nowadays, and just one bad review posted online can do significant damage to your image.

Ask your clients how their meals were or ask them to give you feedback on comment cards. Make sure to do it frequently and address them, as for every complaint you get there are another three unsaid.


Just because a food service business is harder to run doesn’t mean that it should apply to you too. After all, there’s a risk of failure in any business.

These are just a few factors that could help you break that mold. There are more, of course, but start making adjustments connected with these if you relate to any of them.

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