Why these restaurant chains have failed...

2018 has become the year that many casual-dining restaurant chains have been dreading. We have seen closures by Prezzo, Jamie’s Italian, Byron Burger, Strada, Carluccio’s and most recently Cau restaurants. The senior management of these groups have been gathering their excuses and where to lay blame for a while, and it seems they will blame everything or everyone except themselves. You know the excuses I’m on about, tough trading conditions, Brexit, high rents, wage increases, consumers not spending, increased competition, delivery companies etc etc…

Well it’s ALL BS!!

Because there is NO MENTION of poor strategy, incompetent senior management, too much focus on opening more sites, failure to engage employees and customers and a very poor understanding of the market!

So, what really went wrong?

I firmly lay the blame for the failures with the senior management teams of these businesses! Let me be quite clear, I don’t blame the hard-working employees in the restaurants who are just following the strategy and orders passed down from above.

It is quite clear to me that many of the senior management of these businesses are simply incompetent and very out of touch with what is happening in the UK dining out sector. They failed to create effective growth strategies, they failed to properly consider why they were opening restaurants in particular locations, they failed to evolve their offerings to meet consumer demand.

Just because a rival had opened a restaurant in a certain location and they were doing well, doesn’t automatically mean your concept will succeed. Now, you may argue that the concepts were similar, so why wouldn’t they work? This comes done to your offering, how you are evolving your brand to your target market. Prezzo and Jamie’s Italian are clear examples of how not to go about this! They were awful concepts from the very start, poor quality food with poor quality service and I am surprised they lasted as long as they did!

Of course we have to also mention the private equity firms as many of these companies were owned by PE firms. Now, I am not against PE firms as they have invested hundreds of millions of pounds into the hospitality sector over the years and it is always a great sign of a thriving sector when they take an interest. However, my issue is that they have come in and not thought what the sector is about. Hospitality is very different to many other sectors, it relies heavily on it's people and the experience it delivers to it's customers. They don't seem to have got this and have just bought up groups, expanded them with little thought and then disposed for a quick buck! leaving carnage in their wake!

What about the excuses?

Let’s investigate some of the excuses. Tough trading conditions and Brexit, the market will always be tough as many new restaurants open and as in any industry their will always be closures. So how can we blame tough trading conditions… WE CAN’T!! and Brexit, yes it will have an effect, but lets be honest at the moment no one knows what effect it is having and with both of these excuses I can just mention the thousands of restaurants that are doing well and the casual-dining chains that are still growing and reporting good numbers such as Bill’s, Cote and Loungers.

High rents, wage increases and consumers not spending… If the rents too high, then why sign the lease? Really, it’s not that difficult to do a feasibility study on a site to calculate if the rent is to high, no site is worth paying over the odds for, so move on and find one that will work! As for wage increases and consumers not spending… Firstly, you should be paying your employees the best wage you can, these are the people who are the face of your restaurant, without them YOU have NO business, look after them, they will look after your customers and in turn your customers will return more often and spend more… oh did we just kill those excuses as well?

But what about the increased competition from the delivery companies? If this is the reason your restaurants failed, then you shouldn’t have been in business in the first place. Evolve and embrace that the landscape is changing, you need to be working with delivery companies it is an opportunity to grow your revenue stream and the size of your restaurant without having to buy another unit or extend your current one.

If you currently have a 100-cover restaurant, by working with a delivery company it can now be a 1,000-cover restaurant!

What an opportunity! If your offer currently doesn’t work for this market, then adapt it.

Good luck and please share your business successes or views on my Facebook pageOutSauced Consultancy

Jonathan Butler is the Author of Business Recipes for Success: Four Steps to Building a Successful Restaurant and Hospitality Business available now on Amazon

More About Jon

An award-winning chef, hotelier, restaurateur, and author Jon has over 27 years experience in the hospitality industry. Having successfully operated his own businesses as well as helped many others to grow theirs. He launched OutSauced Consultancy in 2010, and since then, has helped a number of start-ups, entrepreneurs and SME’s within the hospitality sector, become more efficient, customer-oriented and profitable.

Contact me now to arrange a Business Discovery meeting or Skype call

JON BUTLER - OutSauced Consultancy

+44 (0) 7775 746145