| There are dozens of statistics from various | | | | As part of your business plan, a marketing plan |
| sources about the failure rate of restaurants. The | | | | should be included. One common mistake is the |
| only thing they agree on is that the vast majority | | | | thought that marketing is synonymous with |
| never survive. Some say the failure rate is as | | | | advertising. Advertising is just a small part of |
| high as ninety percent and some as low as | | | | marketing. If you think you can compete in the |
| seventy percent. Either number is staggering for | | | | restaurant business with a few newspaper ads, |
| the entrepreneur who is trying to get their | | | | you will lose that battle to the chains who have |
| dreams off the ground floor. | | | | vast regional advertising budgets that probably |
| There seems to be three key elements to | | | | exceeds your entire start up costs. Understanding |
| increasing your chances of survival. | | | | the complete definition of marketing is essential to |
| | | | making inroads into the consumer's restaurant |
| 1. Creating a business plan that provides a cash | | | | choices. |
| flow analysis and projects your needs. | | | | Your location is even more critical today than it |
| 2. Creating a marketing plan as part of your | | | | was when the old trite phrase location, location, |
| business plan that addresses more than just | | | | location was coined many years ago. Gas prices |
| advertising. | | | | and time is at the forefront of the consumer's |
| 3. Matching your location with food and | | | | mind when making any choices for restaurants |
| demographic target. | | | | and many other services. You not only have to |
| A study of failed restaurants will find that all | | | | be convenient to your guests, but you have to |
| closed because one of these steps wasn't done | | | | match your food concept to the demographic. |
| or even considered as part of the planning | | | | Putting a down home barbecue joint in a young |
| process. Many had the idea that if they just | | | | trendy urban location where the emphasis is on |
| produce good food, the masses will come. The | | | | health foods and exercise is probably a kiss of |
| facts show very few restaurant failures are due | | | | death. Increase your odds and find a better |
| to bad food. | | | | location. |
| Your business plan is where everything starts. | | | | Are there exceptions to these three critical |
| This should be a working document that changes | | | | steps? Certainly. There are also exceptions to the |
| as your ideas, relevant facts and conditions | | | | loss ratio for Las Vegas visitors who, on average, |
| change as you go along. If you know someday | | | | lose 97% of the time! |
| you are going to take the plunge into the | | | | There are restaurants who stumble onto the |
| restaurant business, start your plan now. Pay | | | | scene and become successful without doing all of |
| particular attention to capital requirements. A | | | | the steps above. However, of the almost 25,000 |
| great number of good restaurants fail because | | | | restaurants that start in the next five years, you |
| they just ran out of cash. Get an accountant or | | | | could probably put all the exceptions into one small |
| do diligent research to learn how to make | | | | strip center. Don't gamble on your future; just |
| projections of cash needs. | | | | plan your future properly. |