Do you live in Dubai, Doha or Riyadh? Then we can bet our bottom dollar that you have borne witness to the rise and fall of many restaurants, fast food outlets, and cafes, and also know of this one spot where a new restaurant opens up every other year or so, only to close down a few months later.
Welcome to the cut-throat world of food and beverage (F&B), where the restaurant remains the most risky proposition to undertake. Statistics from various sources, including the industry, show that at least 30% of all restaurants close down in their first year, 60% in their third year, and 80% in their fifth year.
These numbers are alarming. If it were a game of poker, folding and going home would be the norm. Yet, every year, an increasing number of people enter the restaurant industry. About 19,000 additional F&B outlets are expected in the UAE by 2019, according to Euromonitor International, which also says that there are currently at least 6,000 outlets in the Emirates alone.
But only a few of them will ever go on to become multinational and multimillion dollar empires. Most of them will probably struggle to break even.
According to Duncan Fraser-Smith, managing director of F&B consultancy Cutting Edge Agency, who has over 20 years of experience in hospitality, there are tell-tale signs as to why a restaurant will fail.
You don’t know who you are
One of the big mistakes restaurant owners make when launching new ventures is that of second-guessing who they are and what their restaurant stands for. Questions start to flit around their minds, friends pass comments, and family members ask if they really have got it all right.
This is when they start tweaking the original concept and this can very easily lead a project off the rails. Stay true to the original brief. If you have done the research and developed your concept methodically, believe in yourself to deliver it, says Fraser-Smith.
You will rush… and crash
Methodical planning and execution is critical to setting a restaurant business up for success. Sometimes in the rush to open the doors and start trading, things are missed. Fraser-Smith’s advice to all is take an extra day to ensure that all of the training is perfect and all systems are in place to create that great first impression. Better to be a day late and succeed than open on time and risk a short lifespan.
You think your location will save you
Everyone always says it’s about location, but Fraser-Smith has a contrarian opinion about this. It’s about the right location, yes, but the right location for your concept and brand, and not necessarily just the right location in general.
Engage with consultants and industry peers at the very early stages to understand your demographic reach and then place yourself right in the middle, Fraser-Smith suggests. It may not be the beach-front or mall location you were dreaming of, but it will be the best place to target those with the desire to experience what you have to offer.
You Invest in everything but people
This is a deal breaker. Your human capital is the most important element in your operation. Some new restaurant owners believe that people are the easy part, especially in a cheap labor market like the Middle East. But choose wrong and all you are left with is a room.
Invest wisely in this side, use F&B specific recruitment consultants who have experience in the industry and know what to look for to fulfill your needs and requirements. Ensure you have enough time for training prior to opening. Don’t rush the training. And above all, hire leaders not managers.
