Third Quarter 2002 Volume 4, Issue 3

Why So Many Restaurants Fail

After selling over 225 restaurants since 1996, we are able to assess why many restaurants fail. The following are the primary reasons:

1. Poor Location - Good location is extremely important. We have seen some mediocre operations survive long term due to a good location versus seeing some good operations fail due to a secondary location.
    

2. No Prior Restaurant Experience - Having past experience in the industry is essential to assure success. Learning from one’s past experiences gives a person a better understanding of the business and enhances one’s chance for success.
    

3. Lack of Employee Training - Having all employees trained properly assures that the customer will have a good experience and his chances of returning will be greater.
    

4. Too Much Spent on Capital Improvements - Often too much is spent in building the restaurant and the debt service is so high that it keeps the business from being profitable.
    

5. Inconsistent Food, Service and Cleanliness - Consistent good food, service and cleanliness are high priorities for the customer and customer erosion is frequently a result of the customer having a poor experience with these items.
    

6. Rent is too High - Rent should not exceed 6% to 8% of gross sales. Frequently operators pay too much rent which leads to their ultimate failure.
    

7. Lack of Professional Management - Having well trained management is imperative to assure the success of the business. Management sets the pace for the operation in terms of employee attitudes and the ultimate experience the customer will have.
    

8. Lack of Controls - Having the proper systems regarding cash handling, portion control, and accounting systems, etc. are necessary for an operations success.
    

9. Poor Price Value - Not giving the customer value for the money spent. If the customer doe not get good price value there is a strong change he won’t return.
    

10. Under Capitalization - I have seen several situations where the concept was viable, the business was on the verge of turning the corner and the owners had to pull the plug as they didn’t have enough working capital to keep the business going.
     

11. Outdated Concept - Periodically the decor needs to be updated as well as new menu items introduced to stimulate repeat business.
     

12. Partnership Disputes - A partnership is like a marriage and you should have a pre-existing relationship with your prospective partner prior to becoming partners so you understand each others respective strengths, weaknesses, values and priorities.

Restaurateurs of the Quarter - Ed Coleman and Robyn Sills

Restaurant Realty Company handled the recent sale of the former Gatsby’s site at 39 Caledonia, Sausalito. Ed Coleman and Robyn Sills, two seasoned food service professionals, who are the owners of this new concept called Treviso also own and operate two very successful restaurants in downtown Truckee called Pianeta and Pacific Crest. Pianeta features Italian cuisine, and Pacific Crest features Mediterranean food with an emphasis on French and Spanish dishes.

Ed who is from Boston started working in restaurants as a dishwasher at an early age. Ed has a strong background in wines having worked for Redwood Vintners and Rosie’s Cafe in Tahoe City and places a strong emphasis on great service coupled with great food and a great atmosphere. Robyn has an extensive catering background and also has a passion for providing the utmost in guest satisfaction.

Ed and Robyn have partnered with Chef Gary Bulmar, who formerly owned a well known catering company called Earthly Delights for the past fourteen years. Their new concept Treviso will feature Mediterranean cuisine with a heavy Italian emphasis featuring Moroccan spiced baby back ribs, homemade pastas made on the premises and thin crust pizza. They plan to focus on seasonal fresh ingredients from local farms. The restaurants phone number is 415-332-4500 and will be open for dinner nightly from 5:30p and will have a full bar which will open at 4p daily.

Their past success has been a result of their strong commitment to excellent service and providing the finest foods that are nurturing,
nourishing, healthy and clean. We are certain that Treviso will continue their philosophy and if you want to experience that philosophy in practice and have a memorable meal try their restaurants.

Best wishes to Ed, Robyn and Gary for continued success at Treviso.