restaurant owner

4 Reasons Why Your Restaurant is Losing Money

If your restaurant is bleeding money, don’t worry – you’re not alone. In fact, according to CNBC, 60% of restaurants fail within the first year. The good news is that there are some common reasons restaurants fail, and if you can identify them early on, you can correct them. Here are 5 of the most common reasons restaurants fail – and how to fix them.

Not Enough Customers

If your restaurant isn’t busy, it’s only natural that you’re not making much money. The solution here is simple but not always easy: you must find a way to attract more customers. Here are some ways you can attract more customers.

Social Media

Restaurants thrive in the age of social media. By creating a social media presence, you can interact with your customers and help build awareness of your restaurant.

Friendly Service

Customers go to restaurants looking to be cheered up, not frustrated or bored. To keep people coming back, ensure everyone on your staff is friendly, welcoming, and helpful.


Lastly, you can use promotions to attract more customers. Think about what kind of promotions will appeal to your target market and go from there.

Customers enjoying a pint of beer

Losing Customers

It costs 6-7 times more to attract a new customer than to keep an existing one, so you must focus on keeping the customers you already have. If you’re losing customers after they visit once, it’s likely because they didn’t have a good experience. Take a close look at every step of the customer journey – from when they walk in the door to when they leave – and see where things are going wrong. If you don’t know where to start, consider these two options.

Loyalty Program

Creating a customer loyalty program can help you keep your customers happy. Offer rewards like free food or discounts to people who visit often, and they’ll be more likely to stick around.

Feedback Process

When someone leaves your restaurant unhappy, you must find out why so you can fix the issue. Ask for feedback whenever someone goes, and use that information to improve your restaurant.

High Expenses

One of the quickest ways to lose money as a restaurant owner is by letting your expenses get out of control. Before you open your doors, sit down and create a budget outlining all your expected costs – from rent and utilities to food and labor costs. Here are some ways you can reduce expenses in your restaurant.

Fix Leaks!

Leaks are costing your restaurant money, so do what you can to find and fix them. This may involve calling in a professional plumber, but the money you’ll save will be worth it. The plumber can fix any leaks you might have and prevent leaks in the future. It’s a worthwhile investment that can help you save money.

Buy In Bulk

If you’re not already buying your food from a wholesaler, now is the time to start. Buying in bulk can help you save money, so find a reputable wholesaler and see what they offer. Additionally, consider buying from local farmers and using kitchen equipment to cut costs.

Sustainable Energy

Your restaurant might be spending most of its money on utilities. If that’s the case, consider installing solar panels or other sustainable energy options to lower your bills and save money in the long run. Remember that solar energy is much cheaper than coal now, so by switching to sustainable energy, you can save yourself thousands in the long run.

Track Your Finances!

If you want to keep your restaurant profitable, you need to understand your financial situation clearly. That means tracking your revenue and expenses carefully and regularly. Here are three simple ways to track your finances.

Inventory Check

Most restaurant owners tend to neglect their restaurant’s inventory. However, keeping your inventory up to date can help you track what you’ve spent and help you make better purchasing decisions.

Use an Accounting Software

There are many accounting software options out there that can help with tracking finances. Consider Xero, Quickbooks, or other options to track your finances efficiently.

Get Professional Assistance

If you’re struggling to handle your financial situation, it might be time to seek professional help. Consider hiring an accountant or a consultant who can offer expert advice and suggestions for improving your financial situation. With their help, you’ll be sure to stay profitable in the long run.

If your restaurant is struggling financially, don’t despair – there are steps you can take to turn things around. By identifying common causes of restaurant failure and taking action to correct them, you can get your business back on track in no time. Then, your restaurant will thrive in no time with careful planning, attention to detail, and a commitment to quality.

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