6 Common Mistakes Made by First-Time Restaurant Owners & How to Avoid Them

a photo of Stewart Dunlop, Untappd

Stewart Dunlop, Untappd

5 min read

Jun 16, 2022

6 Common Mistakes Made by First-Time Restaurant Owners & How to Avoid Them

Launching and running a restaurant for the first time is sure to be both exciting and challenging.

You need to pay close attention to every element of your business if you want to avoid mistakes and have a successful restaurant.

So, ensure you’re aware of the following five common mistakes that first-time restaurant owners make and know how to avoid making the same mistakes.

1. Forgetting About Licenses

Every restaurant needs appropriate licenses. Without a food service license and a license to sell alcohol, for instance, your restaurant has no chance of legally staying open.

So, don’t underestimate how important having the right licenses is.

Avoiding this mistake is easy. Research which federal and state licenses you need to run a restaurant. Get started by checking out this helpful article to learn more about how to get a food service license.

2. Not Having Enough Capital

Writing a business plan is a crucial first step in launching any kind of business. One key area of your business plan is funding and costing.

By having a proper financial plan in place, you can avoid overspending.

Many inexperienced first-time restaurant owners make the mistake of running through their startup capital too quickly, leaving them with a serious shortfall for the months ahead.

So, always outline all intended expenses and have enough left over for unanticipated costs. Ideally, you should have enough cash in reserve to operate for the first twelve to sixteen months.

3. Not Having an Integrated Tech Stack 

When opening a restaurant, you need to carefully consider and vet each piece of restaurant industry technology you’re adding to your business. 

Whether exploring POS systems, table management solutions, online ordering systems, inventory management software, or employee scheduling tools, it’s critical that the technology not only works for you but that it is seamlessly integrated throughout your restaurant. 

Today, data is king, and you should ensure that each piece of technology is giving you the data and insights you need to execute magical guest experiences. Most critically, systems like your point of sale, online ordering and event management software should flow data into your restaurant CRM (customer relationship management) platform. 

When you have your customer data in one place, it’s much easier to act on that data to drive deeper guest loyalty. After all, guest experiences are higher than ever coming out of the pandemic, and these same guests expect the hyper-personalized experiences that data can enable. 

4. Not Having a Social Media Marketing Strategy

While foot traffic will make up some of your custom, if you want your restaurant to be a success, marketing it well is critical.

Some first-time restaurant owners make the mistake of only advertising through local magazines and leaflet drops.

In this day and age, it’s critical that you utilize a social media marketing strategy to drum up more customers and build your brand.

Don’t miss out on a large proportion of potential customers. When you post photos of your delicious food on sites like Instagram and post content to hype your restaurant on platforms like Facebook, you’re sure to engage potential customers. Plus, don’t forget to add a ‘Reserve’ button to your direct reservation link, making it easy for customers to book a reservation when they’re already thinking about you.

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5. Having a Complicated Menu

Far too many first-time restaurant owners believe it’s best to offer a large range of dishes. Some even mix up cuisine styles and offer everything from Italian food to Chinese food.

Your restaurant needs to have a clear identity if you want it to be successful, so stick to one cuisine only and don’t overcomplicate your menu.

Quality is far more important than quantity when it comes to restaurant food. So, focus on providing a selection of high-quality delicious dishes rather than trying to cater to a broad range of tastes.

Furthermore, having a large menu means it will take customers longer to choose what they want to eat. That means your table turnover time becomes reduced, which equates to less profit.

6. Not Paying Attention to Customer Reviews

Once your restaurant is up and running, you need to keep a close eye on how well your food and service are being received by your customers.

You can get a good idea by judging customers’ reactions and whether you get repeat customers. But you also need to continually pay attention to online reviews.

Bad online reviews can potentially damage restaurants’ reputations and cause them to go under. So, ensure you not only read online reviews of your restaurant but also listen to what customers are saying.

If dozens of reviews say your spaghetti bolognese is awful, for instance, don’t be pigheaded and think those customers are mistaken. Instead, take another look at the dish and take steps to improve it, or remove it from the menu.

Interested in how SevenRooms can help you acquire, engage and retain more customers? Request a demo to learn more about SevenRooms’ restaurant CRM software today.

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