 Hey guys, my name is Wilson. Today we're going to be talking about the top 5 reasons why restaurants, food and beverage industry has failed. These are the 5 common pitfalls which you, if you know, can avoid. More than 60% of restaurant owners within the first year of operation fail. That means that 6 out of 10 people that run restaurants that have a beautiful idea, who wants to bring their dreams into reality, fail within the first year. And a lot of the reasoning behind why they fail can be avoided if only they know about these 5 common pitfalls. Make sure you guys stay tuned and pay attention. The number one reason why businesses fail is because of location. What I mean by that is location in terms of not understanding the difference between destination location and high traffic location. If you guys have an opportunity, definitely check out this video where I break that down in terms of what they truly mean. In essence, what high traffic means is that a lot of people walk by and in turn has the potential for more customers. And whereas destination is someone that actually has to drive over specifically for your restaurant and having a really high intent. A lot of people mistake in the fact that, Hey, you know what? I'm going to pay $10,000 in rent. And in turn, I'm going to be making $100,000 in revenue because I'm paying so much money for rent and this high traffic place. High traffic only means higher potential for customers coming into your restaurant does not equate to more customers. You still need to be able to do the work. You still need to have a product market fit. You still need to have high visibility for your food and beverage restaurant. It doesn't make sense for a lot of people who actually pay super high rent and have this expectation that their business would survive just because they have a lot of foot traffic. Now, on the other hand, if you're running a destination location, people don't understand that you need to do the right amount of marketing. You need to be able to appeal and market and bring your food offering in front of your core and the ideal customers, mind and eyes in order for you to be actually an entire stomach to come over to your destination location, which at the end of the day, if you understand the concept between the two and understand the different variables and elements that come into play, whether it be visibility, crime rate, accessibility, then you're going to be able to prep yourself much more for success. And you're going to avoid much more pitfalls. So if you guys have not had the chance, definitely check out this video where I talk specifically on these elements and the two different types of locations. The second reason why restaurants fail within the first year, it is because of the fact that they don't manage their team properly. What I mean by that is, first of all, you need to make sure you hire people that has the same aligned values. Because if the way you do things and the ways that they do things don't align, then you're in big trouble because you guys are not speaking the same language and you guys are always going to butt head. And they're not going to have that accountability. They're not going to have that common sense, which you expect from them. And in turn, you guys cannot work towards a better and the vision that you're trying to create. In this video, we talk about how do you actually train? How do you retain? How do you create the right culture in order for you to be able to bring in and build an all-star team? Now, a lot of people also neglect treating your staff like humans. And what I mean by that is giving them a fair wage, giving them proper schedules so that way they can actually do things outside of work, especially in the food and beverage industry. The schedules are so whack. Whenever there holidays, they're working. Whenever it's like happy hour, they're working. And they're basically working hours that a lot of people don't. And at the end of the day, we as owners need to be able to take care of them. Because at the end of the day, if we do take care of them, they are going to be able to take care of our business and in turn helps us out, right? So in this video, we talk about the five different ways in order for you to be able to train them properly, in order for you to be able to align with them. And in turn, have them run your business for you and not have you being able to run your business day in, day out, and getting burnt out. Some of the poor examples that I see within the industry is that owners treat these their employees like trash. And what I mean by that is giving them a minimum wage, always cutting on the benefits, not giving them development opportunities, not trusting them, always looking over their shoulders and micromanaging them. And in turn, just think about it. If you're on the other side of the table, how would you feel if you're not treated with respect? How would you feel if you're not empowered to take action? How would you actually able how are you actually able to like actually take any accountability if there's no trust in you? Which is the reason why we need to empower our staff. For us at 720 Suites, we have a $10 rule. And what that means is anything below $10, our staff has the ability to avoid to come to actually give out products for that amount. So then that way, they can actually bring a pleasant experience for our customers. And on top of that, our staff feels like that they have trust, that they have power, that they can make a decision. They don't need to go through us. And in turn, allows them to be much more accountable for our business, treating it like their own, right? Now, for those of you that think that, oh, you know what? What if that staff ends up abusing this $10 rules? And I can tell you that for a fact that people do abuse it, but those people, they don't align with us because their values are different. They're not high in integrity. They don't not high in empowerment. And because of the fact that we, whenever we hire, has this really strong sense of alignment in terms of values, we know and we already vetted 90% of those bad apples away from us, which is the reason why this $10 rule works very well with us as 720 suites. And hopefully, by me sharing some of these strategies with you, you're going to be able to actually bring back to how to treat your team properly, to empower them, and to actually give them proper training. So then you can build an all-star team who's going to be able to take care of your business while you're away traveling, taking care of your family. The third reason why restaurants fail within the first year is because of ego. And what I mean by that is it's okay if your food sucks and that there is room for improvement. It's okay that your customer service is not the greatest. It is okay because customers are willing to give you a chance if you have the right attitude, if you're willing to improve, and if you're putting in the resources for development and constantly creating and nurturing that relationship and molding your offering until it fits your customer's palate. People are okay with that because we're all human. We all understand that if you're genuine in putting in the work and actually improving your food offering, then people are much more likely to support you along the journey. Why a lot of people fail is because of ego. And what I mean by that is if I'm given a feedback that my food sucks and I just take it personally, and I think that you know what, these guys don't know their stuff. These guys just don't understand my offering. Well, if one person tells me that, it's not a problem. But if 10 people tells me that my food sucks, then I should better take action to improve and tweak it. But a lot of business owners, their ego gets into place and their ego gets into their own way and that they think that everyone is picking on them. The world is not fair and they're not willing to adapt and change because they have this idea that their recipe is amazing. Well, that's the reason why they fail. Same thing with customer service. They can take it personally. They think that, you know what, my customers are picking on me. You know what, my process, this is something that I've been doing for the last 20 years. It's okay because it's been working for the last 20 years. Well, sad to say, this is the reason why they're failing because their ego is in the way of them improving, delivering better customer service, better food offering. So if you want to succeed, make sure your ego is not in play. Make sure you're able to take in that constructive criticism and actually do something to improve upon it. And that way you're going to be able to actually bring your customer along the journey with you for this whole development. And in turn, create an amazing experience for your customers. The fourth reason why restaurants fail is because they don't know their numbers. And what I mean by that is, do you really know the cost of good souls for your restaurant? Are you keeping tabs on the percentage that you're actually spending on labor? And do you know how much rent actually accounts for your total revenue? If you don't know these numbers, these golden metrics and these golden margins, you're not going to be successful. Because if you don't know the numbers, how can you know if anyone is stealing from you? How can you know how much you're making? How can you manage your cash flow properly for expansion? You can't do any of this if you don't know your numbers. At the end of the day, numbers would allow you to actually manage your food costs properly. So for example, if you're throwing away tons of food because they are rotten, because they get stolen, then at the end of the day, you know this. Let me give you an example. If your cost of good souls, so for example, the burger costs $3 to make and you sell it for $10. And all of a sudden, your cost of good souls raises to $5 and you're selling it for $10. You know for a fact that somewhere in between, something is wrong. Either you have been throwing away and wasting a lot of ingredients because you just overordered and now they're expired, now you throw everything away, or someone is stealing from you because you're buying, like let's say $500 worth of burgers, but in turn, you only have $400 worth of ingredients. What's going on? That's the reason why you need to know your numbers. So in that way, you can actually work on, you know what, better delivery system to ensure least amount of spoilage. Or you can work on, hey, you know what, are people stealing money away from me? These are all things that you need to work on and that you can work on if you know your numbers. Same thing with scheduling. Are you working at the most efficient labor force? Can you stagger the amount of people that comes in? Are you maximizing the amount of revenue that people can bring in? And if you don't know your labor costs, you're not going to be able to control any of these elements, which is the reason why a lot of businesses fail. They do not understand their golden margins. So if you want to be successful in the restaurant business, make sure you understand and know your golden margins. In this video, we talked about how do you run and open a successful restaurant. Check it out here and understand your golden margins. The fifth and final reason why restaurants fail it is because they keep running promotions. What I mean by that is we see someone being super successful running promotions. Our competitors are like having lineups around the block because of their big promotion. It's like buy one, get one free. And in turn, you run the same promotion. And as you're running that promotion, people are buying, yet you're not making money. And you're like, wow, I can't survive if I keep running this promotion. But yet my competitor is doing it. So that's why you copy them. And in turn, you're running yourself to the ground because you don't understand why they're doing the promotion. At the end of the day, you need to really truly understand the foundations of your business before you run any promotions at all. And what I mean by that is if you're running a promotion, what's the objective? Why are you running it? Is it to gain awareness for your business? Some franchise stores, they have the budget to run these promotions to gain the awareness. It is a marketing cost and they're okay with it. But for your small business, is this something you can afford? And is this a strategy you want to employ for your business? Whereas if you're running a promotion for the sake of gaining profit, then the type of offering would be different, completely different from a buy one, get one free. It could be an upsell. So for example, if you create a meal bundle and push it out to the market, then you can actually optimize the amount of people that are buying from these things. So at the end of the day, having and understanding the foundations of how you run your promotion is key when running it. Do not just go blindly and offering and copy it from competitors just because they're offering something that you're not. So there you go, the top five reasons that you should absolutely avoid when it comes to running your restaurant. The first one is bad location, not understanding the fundamental of choosing the right location for your offering. And second is mismanaging your team, not aligning with their values and not incentivizing them, not treating them like human beings. And third, your ego. Make sure that your egos and check be receptive with people's suggestion. And fourthly, we are talking about the numbers. Know your numbers so that way you know which lever to pull in order for you to maximize the amount of profit that you can make. And finally, blindly following what your competitors are doing and running promotions without understanding the fundamentals. Make sure you avoid all these pitfalls so then that way you can run a successful restaurant business. If you guys want to learn more about how we've started our business to now we're becoming international food chain, make sure you check it out and link below because that's where I share with you all the resources that we've learned through the last 10 years. We're talking about finding the right location, negotiating free rents, finding and assembling the right team, understanding what our customers want, offering them what they want, knowing the numbers, crazy marketing strategies, raising funds. All these types of information are all in the link below. Check it out in the link below. I really hope you find value in this video. If you do, just smash the like button. If you want to show some more love, comment in the section below. Otherwise, subscribe along the journey for weekly videos that it's going to help you improve and start an amazing restaurant business. I'll see you guys next week.