Hotel Propeller Blog

10 Challenges to Owning A Restaurant

10 Challenges to Owning A Restaurant

For many people, the dream of owning a restaurant began in their own home kitchen many years ago as they experimented with recipes under mom’s watchful eye.

Now grown, it’s time to open that dream restaurant. But, opening a restaurant isn’t for the faint of heart. It takes a great business plan, patience, a superb menu, and a bit of luck.

With more than 60% of restaurants failing within the first year, and 80% failing in the first five years, you want to stay on top of everything you need to know to be successful.

To help you, let’s look at 10 challenges to owning a restaurant so you can overcome them. 

#1: Getting Enough Capital to Open

Finding investors can be tough, especially in the crowded restaurant market. For many entrepreneurs, this is the biggest challenge to owning and keeping a restaurant open.

You want enough capital to keep your restaurant open long enough until you have enough revenue coming in to stand on your own. A good rule of thumb is having at least enough money to run for an entire year and enough extra on hand for all those unexpected expenses.

Be careful when estimating the amount of startup money you need and don’t underestimate.

Consider the purchase or lease of space, hiring a full team, stocking your kitchen and bar, decorating and outfitting your restaurant, and licenses and permits.

When going after investors, make sure you have a business plan that is thorough and complete for the best shot. 

#2: Finding the Right Location

Many a restaurant has been bested by its own location.

Consider the local space that’s been numerous restaurants over the last 10 years. Ask yourself why they never succeed, do your research, and learn whether it’s the location.

Picking the right spot for your restaurant is absolutely vital to your success. You want to be in a location that is accessible to all but avoids the competitor who serves cuisine like yours.

Make sure you research your target market and the competition so you can put your restaurant in just the right spot.

#3: Putting Together the Perfect Menu

Remember those days of experimentation? How about the food you cook that everyone rave’s about?

This is what should land on your menu. When putting together your menu, you want your top items on it. You also want to know your target market as well as your vision when creating your menu.

You might also consider changing things up with the season’s and staying current with trends. In addition, consider people with special dietary requests and try to meet them.

Bottom line – your menu should speak to who you are and what your restaurant stands for while appealing to your demographic. 

#4: Underestimating the Competition

Yes, the competition matters. Drive down many streets, and you’ll find clusters of restaurants everywhere. That’s a lot of competition for you.

Do your best to understand your competitors. Peruse their websites, follow them on social media, and dine in their establishments on occasion. Look at what they’re doing and do it better.

Independent restaurants often have a harder time than big, well-known chains. They don’t have as big a budgets or name recognition, so make sure you also have a strategic marketing plan to beat the competition.

#5: Finding the Right Suppliers

Another challenge to owning a restaurant is finding suppliers that offer quality food items you can trust.

You’ll want to again do your research and find out what suppliers are available. Then, check on their reliability and flexibility.

Above all, research price and payment terms. 

With so many available vendors, don’t be afraid to negotiate. After all, they would love to have your business. 


#6: Hiring and Retaining Employees

This is perhaps one of the biggest challenges to owning a restaurant.

Without the right employees, your restaurant will suffer. Your team is the face of your restaurant, providing excellent customer service and giving your restaurant name recognition.  (tweet this)

Since you’re in the hospitality industry, it’s incumbent on you to hire and train the best staff possible. Ultimately, you want to retain them, so you don’t have to hire and train all over again and on an ongoing basis.

The best tip is to treat your employees well, and they’ll be more apt to stick around. The restaurant industry is a volatile industry when it comes to staffing, so do everything you can to keep the good ones.

#7: Keeping Track of Inventory

This is tricky, even for seasoned restaurant owners and managers.

To be profitable, you must manage your expenses properly, so this means having someone trustworthy handling your inventory management.

You want to know if you have overages, shortages, or any loss. If you don’t keep abreast of these things, you’ll lose money and have trouble.

Make sure you spend time with your menu pricing and know exactly what the costs are to make each item. Then, you order appropriately.

Hire someone adept at handling your finances to help you with inventory management so you can stay in the black and away from the red. 

#8: Managing Food Safety

Most restaurant owners fear the health department inspection no matter how clean their restaurants are.

This is indeed a challenge for restaurant owners, but one you can handle by keeping your restaurant clean and safe.

Follow all rules, maintain your space, and monitor your staff for proper sanitation techniques. 

#9: Serving Liquor

These days it can be hard to tell a 21 year old from a 16 year old, but it’s an absolute must if you’re serving liquor at your restaurant.

You also need to stay on top of monitoring alcohol intake and train your servers and bartenders how to cut off intoxicated customers. 

#10: Managing Guests

Customer service has never been quite as important as it is now.

Your customers, led by a generation of Millennials, expect the best from you. They have high standards for everyone – from quick service restaurants to fine dining establishments.

They want you to provide them exemplary customer service, a top notch experience and the best food.

To help your employees provide all of this to your diners, provide ongoing training to your staff. 

Final Thoughts

You’ll find many challenges to owning a restaurant, but if it’s your dream, and you plan correctly, you’ll find you can overcome most of them.

Be strategic, do your research, and you’ll find people are still opening your doors in 10 years. 

Looking to showcase your hotel? At Hotel Propeller, we build functional, beautiful websites that highlight your hotel to help you stand out in the crowd. You’ll find everything you need to attract guests to your website and compel visitors to make a reservation. Take a look at our showcase and contact us today. 

Images Chris Liverani and Neven Krcmarek on Unsplash



Leave a Reply