Starting a restaurant is a tempting dream for many, but it is only a possibility for a lucky few. The restaurant industry is similar to the beginning of the New York marathon. Thousands of people start the race, but only a fraction of those who start finish, and an even smaller percentage of those who finish actually achieve their race target. What is the reason for this? Well, it isn’t as simple as most people believe, and there are some skills and qualities that an entrepreneur must recognise while considering how to start a restaurant. According to the National Restaurant Association (“NRA”), over 42,000 new licences are given in the United States per year. These are impressive figures, and you could be forgiven for mistaking them for a positive. Arthur Avenue Restaurants
Restaurants, by far, have the highest attrition rate of any form of industry. The sector’s turnover rates are extremely variable, ranging from 90% failure in the first year to as low as 20% in the first year of trading. According to a recent academic study conducted by researchers at Michigan State University, 27 percent of new restaurant openings fail within the first year; after three years, 50 percent of those restaurants have closed; after five years, 60 percent have closed; and by the end of the decade, 70 percent of restaurants have closed.
While these figures can seem alarming, a 2005 Cornell University study found that 81.4 percent of small business failures are due to factors beyond the owner’s control. In other words, amid these dire indicators, failure is far from certain. So, how do restaurateurs avoid tripping over this minefield? Here are a few pointers on how to start a restaurant. Most people fantasise about owning a bustling small business with perfect ambiance, a throng of adoring, loyal customers, and a cash register that is always brimming with cash. That’s a nice fantasy, but it’ll take a special kind of person to make it a reality.