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10 reasons brands fail at delivery

It may surprise you that the top 10 reasons why many restaurant concepts are stumbling or failing to deliver represent very simple business principles.

August 6, 2015 by Darrel Suderman — President CEO, Food Technical Consulting

Have you wondered why many QSR and Fast Casual Brand concepts aren’t delivering? Having worked for 17 restaurant brands around the world, here’s my top 10 reasons why many restaurant concepts are stumbling or failing. You may be surprised that the reasons for failure represent very simple business principles.

1.Restaurant owners fail to create thorough marketing, sales, and financial business plans with appropriate sensitivity analyses. Business plans serve two important functions in that they cause the shareholders to think through every detail of their planned business, and the plan serves as a governance control to make sure the business doesn’t drift from its core tenants.

2. The restaurant concept doesn’t revolve around an all-encompassing brand. Denise Lee Yohn clearly explains why brands should build an encompassing theme in her new book entitled What Great Brands Do. Within her book, she discusses seven brand-building principles that separate the best from the rest. One example of clear brand communication is Smash Burger, which communicates everything that represents its brand in just two words — Smash – Burger.

3. The concept doesn’t focus on core processes for People, Product, and Processes. To borrow terminology from Marcus Lemonis on the Profit cable TV show. His simple formula is:

Right Processes + Right People + Right Product = Profit $$$ (4Ps)

Mr. Lemonis’ principles may seem far too simple to you, but if your restaurant business is struggling, maybe it’s time to refocus on the basic 4Ps principles. I like to apply these principles, as well as those exposed on the “Shark Tank”, as teaching examples for my 2-day seminar entitled The 10 Principles of Food Innovation.

4. Many times restaurants fail because of deep seated divisions caused family members or friends’ personal feuds. Division of personal relationships sinks the “restaurant boat” faster than anything else. As a hard core viewer of the cable TV show Bar Rescue, this is one of the primary reasons why hundreds of bars close their doors yearly.

5. Restaurant owners and managers do not keep their thumb on food and labor costs, and their eye on the cash drawer. The best restaurant operators that I have worked with throughout my career, were the ones who paid unusual attention to these three things. Cash drawer and food theft can sneak up at any time. I knew one franchisee owner who once was a brand VP of Operations for many years - that had to fire a manager after 15 years of perfect performance because of theft.

6.  Restaurant executives leave themselves exposed to legal lawsuits due to non-existent or slack food safety programs. I have worked 5 years as an expert witness on food litigation cases, and for the first time lawyers are beginning to seek criminal charges against company officers when consumers get sick or die. I recently received a call from one of the fastest growing brands, with the simple charge of fixing and installing state-of-the-art food safety systems throughout their stores!

7.Restaurant concepts can fail because personal relationships are not left at the door, and core business relationships are not embraced for managing the restaurant until the store closes at end of the day. Most restaurants don’t fail because the food and drinks are bad, but fail because the employees don’t work together as a team.

8. Concepts can fail because they don’t have a broad food menu appeal. This concept has particular application to theme restaurants that rightly design a menu that fits its brand theme but fail to appeal to a broader consumer base that grows its sales and profit base. A simple example is placement of salads on QSR menus. Many years ago salads were an option, but today they are a requirement.

9.Menus don’t stay relevant. Sometimes the customer base changes, and requires a revised menu that reflects patrons with new food expectations. For example, a new restaurant in the financial district of San Francisco requires a completely different menu than a restaurant on the San Francisco bay.

10. Restaurants can fail because they don’t participate in the community their customers live. This represents building that “emotional bond” that so many marketers strive for.

In conclusion, these 10 principles may seem simple on paper to understand, but hard to attain and maintain. But remember, designing and growing a successful restaurant concept is a journey that is achieved one step at a time!