What Makes a Successful Restaurant?

What Makes a Successful Restaurant?

As a hospitality business owner, you are aiming for one thing: Success. But what does success actually look like? What are some of the key warning signs that your business is headed in the wrong direction, and what can you do to right the ship?

We've compiled this comprehensive guide on what makes for a successful restaurant to help you manage everything from menu development to the nitty-gritty of finances.

 It's everything you need to set yourself up to create a thriving venue.

Why do restaurants fail?

In order to understand what makes a successful restaurant, you need to understand the most common reasons restaurants fail.

A comprehensive 2005 study conducted by Cornell University found that over 26% of restaurants fail within their first year of operation. Some of the key reasons for failure were identified as:

Location and point of difference

As any restaurateur knows, location can make or break your business. While close proximity to other restaurants can be useful in generating foot traffic, it can also create a very difficult competitive environment.

This is why a point of difference is so important. The ability of a restaurant to distinguish itself from competitors allows it to leverage a high-traffic location while drawing customers away from rival businesses. A restaurant business located in such a position will need to carefully consider why customers should choose their venue over the competition.

Ownership size

Unsurprisingly, restaurants with greater financial backing are much more likely to succeed. A restaurant with support from a large, committed business can operate at a loss for much longer than a small start-up. Ownership size can therefore completely warp a restaurant's sense of success and failure.

Cornell's study also concluded that banks and suppliers are biased against smaller businesses and will take much longer to act against their larger counterparts, as large-scale businesses are commonly associated with safety and security.

Planning and experience

Practice makes perfect, and restaurants owned and staffed by more experienced individuals tend to perform much better. Those who are new to the restaurant industry often struggle to adapt to changes in the market and show inadequate levels of planning. Even rapid growth can be problematic for new restaurant owners if they are not properly equipped to deal with it.

Restaurants with comprehensive business plans and a wide range of contingencies for various situations will be well-positioned for whatever is thrown at them.

Failure to adapt

The market is constantly changing, and so too must your restaurant. Cornell's study highlights the importance of understanding, adapting to and anticipating market trends to avoid being left in the dust. In the modern world, this factor is more relevant than ever.

Restaurateurs should be active on social media and stay abreast of all the latest trends in food. Also of great importance is an agile business structure that can adapt to other external factors such as shortages of food and beverage items.

Indicators of successful restaurants

Don't be alarmed by the stats or all the reasons your restaurant can fail. Many successful restaurants boast key features you can emulate. If your business is flourishing when measured in the following ways, you are on a great path to long-term success.

Financial success

Financial management is incredibly complex. Here are a few KPIs for your restaurant business to track to ensure financial success:

  • Sales: Sales are necessary to establish your break-even point and gross profit. It is therefore critical to ensure you have accurate sales data.
  • Labour costs: One of the hidden killers of restaurants is labour costs. Closely track how much money you are spending on labour. Ensure you are making the necessary adjustments during busier and slower periods. Consider switching to a rotating roster to make implementing flexible shift patterns easier.
  • Cost of goods: Finding out exactly how much you are spending on your goods will help paint a picture of your most profitable and least profitable dishes. This can be essential to improving your restaurant's bottom line.

Delicious food

Money is important to any business, but it's important to place your focus on other areas as well. Serving up delicious plate after delicious plate is a surefire way to keep customers coming back for more. A steady supply of repeat business is crucially important for any restaurant.

Consistently excellent food is also a great sign that your kitchen and suppliers are performing well. Stunning meals should always be a top priority for your restaurant, as long-term success is virtually impossible without this factor.

High employee retention

High levels of employee turnover can significantly hinder a restaurant's success. Constantly going through the process of hiring and training staff is an inefficient use of time. Once you've hired a great staff member, you want to ensure you keep them.

To retain your staff, ensure they are fairly compensated, feel appreciated in their roles and processes are in place to resolve any employee complaints. A happier team will lead to a better work environment and a more successful restaurant.

How to make your restaurant successful

Now you know what a successful restaurant looks like, how can you go about fostering these qualities in your business? Here are some of the most important factors for you to focus on to create a flourishing restaurant business.

Good financial management

If your restaurant has received backing from a Fortune 500 company, that's great news. If not, you'll have to rely on your personal financial savvy to craft a viable restaurant.

The key to financial management is organisation and record keeping. Load up on excellent restaurant management software to begin the process of tracking all your finances. ResDiary has over 60 integrations covering everything from EPOS functionality to inventory management, offering the perfect foundation for tracking your restaurant's finances.

Strong restaurant concept

Cornell's 2005 study stated as arguably it's most important finding that a clear concept is critical for a successful restaurant. Hospitality is a highly competitive industry, and customers need a clear vision of what they will experience when they enter your venue.

Establish your restaurant concept from the outset and integrate it into everything your business does. A great way to do this is by crafting a mission statement to share with your customers and your team.

Optimised menu engineering

A great menu goes well beyond your food. Once you and your culinary team have built a delicious menu for your customers to enjoy, look into other steps you can take to optimise your menu structure. For example, research has shown that customers' eyes are often drawn to the top right-hand side of a menu, so consider placing your most expensive dishes here.

Other tips include hiding currency symbols and highlighting high-margin items through colours, bolding or illustrations.

Experienced staff

Experience is essential for the success of any business. Owners and managers will have their own areas of expertise, but it is important to also prioritise experience when attracting employees. More experienced staff may drive up your labour costs, but the right amount of acumen in your business is essential to long-term success.


If you have confidence in your restaurant concept and team, consider positioning your restaurant near competitors in the hopes of taking advantage of foot traffic. A prime location may come with a higher price tag, but it is one of the key elements of a successful restaurant.

Customer service

Customers are the most important asset of any business. Prioritise customer service in all aspects of your venue. If you notice standards lapsing around the restaurant, consider implementing training courses with your staff using activities such as roleplaying.

If you want to take your customer service to the next level, solicit customer feedback through avenues like online surveys. Once customers make their voices heard and see that your venue is willing to implement their feedback, they will feel they have a stake in crafting your restaurant and will be eager to return time and time again.

Supply chain and inventory management

Once again, organisation and record keeping are critical to bringing down costs wherever possible. Craft strong relationships with your suppliers and keep tabs on the wider industry to ensure you are paying fair prices.

Inventory management is also critical for keeping track of goods costs and overall overhead. When you begin comprehensively tracking your inventory, you may find food wastage going on in your restaurant. This is a needless source of higher food costs. In this case, staff training on subjects such as First In First Out (FIFO) may be necessary to ensure you aren't wasting money in this area.

Great marketing strategies

A strong marketing strategy can be the key to a thriving restaurant. From social media marketing to local advertising, getting the word out about your venue is essential to drawing in new customers.

Consider ResDiary for your business' marketing needs. From DishCult, a ResDiary-exclusive booking platform, to email marketing solutions, we offer an impressive array of beginner-friendly tools you can use to enact and track advertising strategies.

How ResDiary can help you craft a successful restaurant

There are many factors that go into building a successful restaurant business. To give your business the best possible chance to thrive, you need all the help you can get.

That's why ResDiary stands as an excellent investment for your venue. Its extensive table management functionality offers easy organisation of bookings, yield management and even an automated phone reservation service.

Plus, ResDiary offers a wide array of integrations to keep all your operations running smoothly. From EPOS integrations to marketing solutions, take a unified approach to maintaining all facets of your business.

It is key to operating a successful hospitality business.