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Turning the Tables: 6 Proven Methods for Rescuing a Failing Restaurant

Nobody ever said running a restaurant was easy. In fact, owning a successful eatery is one of the most challenging endeavors you can take on. Restaurateurs understand what has to happen to keep their joints afloat. Yet, excessive outlay, a weakened economy and ever-evolving preferences force restaurant owners to grapple with failure daily.

Of course, it’d be nice for one of the Food Network stars to swoop in and save your establishment. Unfortunately, your restaurant’s rescue mission is entirely in your hands. 

Here’s why restaurants tend to fail and what you can do to prevent yours from going under.

Why Do Restaurants Fail?

Nobody wants to watch their business fail, but it happens often in the food and beverage industry. The Business Employment Dynamic estimated that 72,500 restaurants closed their doors by the end of the second quarter of 2020 — three times higher than the typical quarterly average of 20,300.

Restaurants can fail for several reasons, including the following:

  • Low-profit margins averaging only 4% nationwide
  • Few savings for payroll, taxes, inventory and emergencies
  • Poor financial and operational performance
  • Outdated technology
  • Lack of inventory management
  • Poor location
  • Below-average food quality
  • Poor customer service
  • Lack of employee training
  • Poor planning
  • Inflation costs

Rising inflation has been the bane of most restaurant owners’ existence and will continue closing many food establishments nationwide. For instance, Gianni Cinelli — the owner of Vino Ristorante in Raleigh — spends three times as much on ingredients as one year ago. 

6 Ways to Turn Your Restaurant Business Around

Shuttering your doors is almost too easy when your restaurant business spirals. You’ve worked too hard to get this far to give up on your establishment. Restaurant owners struggling to rescue a failing restaurant need a comprehensive strategy. Give turning your restaurant around one last shot with these six helpful tips. 

Lower Overhead Costs

Restaurant owners must look for savings in all aspects of their business. Although cutting corners is never a good idea, there may be room for improvement, from reducing food waste to re-negotiating your lease.

Restaurant owners should also apply a convenience fee or implement a cash discount program to cover expensive credit card processing fees. Merchants usually must pay 1.5% to 3.5% for credit card processing services. A convenience fee is charged to the customer to cover some of those costs, while a cash discount program encourages customers to pay in cash.

Update Your Technology

Upgrade your point-of-sale system to organize business transactions and operations. The latest integrations create sales reports, inventory automation, staff management and scheduling, menu optimization, payment processing and table management.

Nearly 41% of restaurateurs want POS solutions with third-party delivery and loyalty management built in. Another 32% need POS systems with online ordering capabilities. 

Since the pandemic, 60% of restaurants have adopted online ordering apps, while another 15% and 46% have invested in reservation systems and QR code menus.

Utilize Social Media

If your restaurant needs rescuing, take a hard look at your branding and marketing. Perhaps your logo needs freshening up, or you’re missing out on opportunities to connect with customers.

Does your restaurant have a social media presence? Nowadays, few restaurants — or any business — survive without social media. Upload photos of your best dishes, behind-the-scenes shots of your staff and operations or promote discounts and specials for customers.

Remember to always respond to comments and feedback with kindness and appreciation. If there is a complaint, reply respectfully and apologize for the inconvenience. Restaurants can better retain their followers and build customer loyalty when courteous online.

Change the Menu

When was the last time you changed the menu? Are there any items you can remove? Revamping your restaurant’s menu can attract new and repeat customers alike. A refreshed menu might include only the most popular dishes — reducing inventory costs — or strictly seasonal offerings. 

Additionally, consider raising menu prices to keep up with inflation and cover restaurant expenses. Since February 2022, full-service restaurants have increased prices by 8.2% — but it isn’t stopping customers from stopping by. In June 2023, total sales for food services were up 8.4% from the same time the year before. 

Adopt Sustainability

Investing in sustainability could have excellent ROI for your restaurant business. Even simple changes — like installing low-flow sinks and toilets or swapping out light bulbs for energy-efficient LEDs — make a difference.

Although more expensive than incandescent light bulbs, LED savings are much higher than the initial costs. They also last years longer, meaning you won’t have to replace them often. 

Customers also prefer to support sustainable restaurants — 43% would spend more on takeout from a sustainable establishment. Another 56% expect restaurants to use sustainable packaging.

Collect Feedback

Customer feedback is invaluable for bailing out a failing restaurant. Your restaurant depends on the people it serves for revenue. Therefore, their opinions matter above all else.

Encourage customer feedback through your online ordering system, website or in person. You can also read reviews for your restaurant online to note what people enjoy or want to be improved.

Restaurant owners can make their presence known among dine-in patrons. Stopping by to ask about their meal and experience goes a long way and can help build closer relationships with your customer base.

As always, thank customers for their feedback, regardless of whether it is positive or negative. Even the harshest criticism could be the answer to saving your establishment.  

Trial and Error Is Key to Rescuing a Restaurant

Your restaurant’s rescue mission requires your undivided attention and a strategic, individualized approach. Sure, saving your restaurant is as taxing as the day-to-day operations — but if you can stay afloat, you will reap the rewards.

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