If you build it, they may not come.

Why are so many restaurants closing down and what can we learn from their failure?

By Dan Rowell

18 July 2019
Share:

I’m sick of seeing cafes and restaurants close down. My team and I have lunch at Post Office Square in Brisbane City and have noticed half a dozen places close in the space of a year. This is a thriving area in the city but they just weren’t good enough. It’s harsh and I feel sorry for them. Behind that business is a person, a person who took a chance and poured their guts into something (hopefully not literally). But they rolled the dice and they came up short.

Cafes, bars and restaurants are so visual, you notice when they close.

I see the same mistakes happen over and over again. They get the formula wrong. Sometimes it’s the branding; it either looks cheap, tacky or too expensive, the menu is too complicated or – even worse and harder to salvage – the food is absolute crap.

Gone are the days where the same formula could be replicated food court by food court, because competition and consumer-savviness is just too high.

We live in a time where the ease of travel and cost of delivery is constantly decreasing. Restaurants nowadays no longer compete with those in the same suburb. Thanks to UberEats and Deliveroo they compete with those within a 10km radius.

I was recently at an event where the food trucks didn’t cater to my genetic inability to properly digest gluten and dairy. Years ago I would have had to either suck it up or just go hungry. Now with a few taps on my phone, a friendly bloke on a bicycle dropped off some fresh Mexican from Guzman y Gomez 15 minutes later. I couldn’t make eye contact with the food truck owners as I walked back past holding my UberEats bag.

 

My point is that convenience and location are no longer reliable competitive advantages.

Truly great hospitality businesses often have a number of things working well for them, but I believe they are all permeated by two necessary things: Firstly, they offer something unique. It could be the food, atmosphere or service. Secondly and more importantly, like our favourite childhood restaurant – the Golden Arches – they nail consistency.

 

Picture your favourite restaurant. Why do you go there?

Most likely, you went there for the first time and had a great meal, the staff made you feel special and you enjoyed yourself.

You returned and your expectations were met.

You keep returning, they keep delivering.

They may, on occasion, forget a dish, or a waiter may be a bit rude, but you weigh up all of the times, and the good far outweighs the bad. If the bad begins to outweigh the good, you find another restaurant.

 

So what can we learn from our favourite restaurants to apply to the professional service sector?

You need to do something that no one else can do, solve a problem like no other, and repeat that process consistently well.

Gone are the days of the one-stop-shop and shopping based on convenience or close proximity. My accountant is based in Sydney, two of our longest-standing clients are based in Melbourne and we’re currently doing a project for a New York-based Advisory firm. Our connected and global economy allows us to seek out experts regardless of location.

Before starting a new business, be it hospitality or professional services, I’d ask yourself these three questions:

  1. What unique product/service could you offer which would convince people to travel for?

  2. What quality of this product/service would make people pay a premium or tell their friends about the experience?

  3. What processes do you need to put in place to ensure you can deliver this with consistency?

Incidentally, going into hospitality by owning a bar or cafe with some friends is something I’ve spent serious time considering. Once I got past the fun side of it, I thought, what do I actually want out of this “ownership”? Turns out I want to control the coffee and have the staff treat me like a VIP. I figure if I just spend enough at my local cafe, I’ll get the VIP treatment, minus all of the risk!

Monthly Articles.

Written for business founders trying to better articulate their vision and maximise their brand’s potential.

Have new articles delivered straight to your inbox. One email a month.
No junk. Just insights.

Most Read: