The Real Reason Restaurants Fail

Everyone is talking about it.  Some people are truly concerned about the future industry. Everyone has their own opinions about why.  The real scoop, though, has not really been discussed.  It’s something that people in the industry know, but don’t want to talk about.

Because they are too scared.  They are too scared to be the first ones to really try it.  They are too afraid to break free from the dynasty model of relying on free labor and tipping.  It’s an archaic system, and its time to be reformatted.

Chicago is in the midst of a restaurant closing circus.  Every week there is a full on list of places that are donezo.  It has infected every type of spot- from that anniversary dinner at a 3 Michelin starred famous restaurant, down to your favorite local watering hole, your spot, your gem of a place where you feel cozy, protected, fed, watered, and loved.

There are many opinions which have been given:

*Too many options! That’s a bit ironic now isn’t it?

*Bad location! It’s upstairs or something?

*Social Media! People just like to look at pictures, they don’t actually eat.

*Rising Rent! On Randolph row?  Well yeah, it’s like the MOST popular spot in town.

*Cost of Opening!  Yes, it takes a very long time to get the damn thing open.

*People not eating out enough! I know plenty of people who have no idea how to cook at all.  How do you think they are surviving?

*Too Expensive!  This is true, sorta.  It’s not really, people are deceived about how much something is going to cost, so they become hesitant.  People like the familiar, they like to know what to expect.

It is true that it all boils down to money, but it’s not the monetary reason that people are blaming.  It’s as simple as you can’t have a great restaurant without great cooks. You need a responsible chef and a small army of skilled cooks.  It’s a simple formula, but it is one that does not exist anymore.

To state point blank, nobody wants to cook for a living.  It’s hard, it’s demeaning, and it does not pay anything.  Note, it’s not that you don’t make a lot of money cooking, or even enough, you don’t make any.

It doesn’t have to be this way.  The cook should not feel cheated, the customer should not feel swindled, the restaurant should not feel poor.

Money Unaccounted for in the Operational Costing

The problem is with the business model of restaurants.  You have set prices on the menu, but when the bill comes the customer must add an additional 20% to pay for service.  First of all, this does not make sense.  Why pay for service at a sit-down restaurant?  It’s not like its an option to walk up to the window, it’s not like its an option not to tip.  So why are we playing this game?  When the customer tips the server, this money simply walks out the doors.  It is not cycled through the business, it’s just written off as a form of payment for staff.  20% minimum is a lot of money to just sigh away.

Unfair because of the Percentage Skew based on hours worked and responsibility

20% of the bill is a large amount to pay for only one cog in the wheel mainly because this is far greater than anyone else in the entire machine.

A server working for 5 hours makes up for 4 times more than a cook working for 10 hours (in some cases 12+ hours).   It is an unfair distribution of wealth.  Even management does not make the amount that the servers make.

Servers, however, feel slighted when business is slow because they are not fairly compensated for their downtime.

The restaurant needs to staff and budget accordingly, and have the real prices built into the menu

The Customer Want to Know the Cost Beforehand.

People want to know what to expect to pay so that after its all said and done, they don’t feel slighted.  If you are prepared to spend $100 dollars, that’s all well and good.  But if a person spends slightly more, say $125 then they have remorse from overspending.  This makes them not want to return.  It’s not about the actual dollar amount, it’s about expectation.  Set prices would change this.

Everyone feels like a sucker

Customers feel cheated, the cooks are angry, the managers are too tired to care.  This is the current model and it is clearly not working.  You don’t need to take my word for it, just look around.

It is about having repeat customers,  and it is about having steady employees.




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