In a meeting the other day someone made that ubiquitous comment that 90 percent of new restaurants fail in their first year. I expect that, like me, you’ve heard this gem of wisdom so many times that you no longer question it, but if 90 percent of new restaurants failed so soon it would not take long before there were hardly any left. Yet, just about everywhere I go, there are more restaurants and cafés than ever before.
Then again, last year my team and I spent more than 1000 hours creating a beautiful coffee shop brand only to see it go out of business just 16 weeks after it launched. This failure got me thinking, and I realised what should have been obvious to me. Nearly all of the restaurants I have worked on for experienced operators have succeeded. On the other hand, a significant proportion of those restaurants I have designed for complete novices have turned to dust in the first few months.
The biggest consistent failing I’ve noticed novices make is what has become called ‘mission drift’. This means losing sight of the concept, or as I prefer to say, not sticking to your story.
My client’s failed coffee shop was supposed to tell a story about luxurious Belgian chocolates combined with elegant Italian coffee. We conceived a strong name and marketing slogan, funny advertisements and gorgeous interior design. So why did it bomb?
Before he opened up his outlet, our client lost his nerve. He said: “What if people don’t want to eat chocolate all the time? I’d better sell sandwiches too.” So, disregarding his own compelling chocolaty story, he told us to add a sandwich display fridge. When the outlet opened people bought plenty of those sandwiches. The trouble was that customers didn’t get the chocolate story; it had been sidelined. Potential high profits from chocolate sales turned into losses because no novice can realistically hope to compete profitably by selling commodities like coffee and sandwiches against competitors like Starbucks. The bank pulled the plug.
So, not wanting this to happen again, I decided to do some research to find out what other experts think causes restaurant failures and I came across a fascinating paper published by a team at Cornell University in 2005*. The team found that in the US, fewer than 30% of new restaurants failed in year one and fewer than 60% failed in the first three years. Mexican, subs and coffee shops were the most risky formats and Italian, burgers, and seafood the safest.
After interviewing 20 failed restaurant operators the main reason for failure was found to be mission drift. Remember my client, if he didn’t believe in his own story, why should his customers? Scared of not getting success from their target customers, the novice tries to please everyone. But, as you’ll know, if you cook a meal that pleases everyone it will taste of nothing. Distinctiveness is crucial and it’s not all about food.
The researchers found that most of the failed restaurateurs they interviewed could not explain their concept beyond the food offer, with descriptions such as ‘vegetarian’ or ‘pizza’ being typical. They had no deeper story or understanding about communicating original and genuine core values.
If you want to launch a restaurant think up a complete concept; it does not have to be new, just thorough, compelling, matched to its environment and excellently executed. Find the right team of designers that can bring the whole package together, including branding and an interactive website.
Meanwhile, I still own the intellectual property for a fully designed chocolate and coffee concept that I reckon would work brilliantly in the right hands. So here’s my challenge, do you want to franchise it and tell the story right?
* Why Restaurants Fail by H G Parsa, John T.Self, David Little and Tiffany King. Cornell University 2005.
Nigel Witham is a chartered designer who has been running his own international design practice for 20 years. For more information, email [email protected] .
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