Nigel Witham. Nigel Witham.

As a mathematical fact if 90% of new restaurants failed so soon it would not take long before there were hardly any left. Yet, just about everywhere I go, there are more restaurants and cafes than ever before.

Then again, last year my team and I spent over 1000 hours creating a beautiful coffee shop brand only to see it go out of business 16 weeks after launch. This was a huge shame.

So this failure set me thinking and I realized what should have been obvious. Nearly all of the restaurants I’ve worked on for experienced operators have succeeded (and some of those have been sold for huge profits). On the other hand, a significant proportion of those I’ve designed for novices have turned to dust in the first few months.

The biggest consistent failing I’ve noticed novices make is what has become called ‘mission drift’. This means losing sight of the concept, or as I prefer to say, not sticking to your story.

My client’s failed coffee shop was supposed to tell a story about luxurious Belgian chocolates combined with elegant Italian coffee. My team and I conceived a strong name and brand and clever marketing slogan, our advertisements were funny and edgy and got fans on Facebook right off. Our interior design was gorgeous. Everyone thought it would go a bomb, instead it bombed.

See, even before he opened up his outlet our client lost his nerve. He said: “What if people don’t want to eat chocolate all the time?” (Can you believe it? Don’t want to eat chocolate!) “I’d better sell sandwiches too,” he said.

So disregarding his own compelling chocolaty story, he told us to add a sandwich display fridge. No argument from us would convince him to do otherwise. When the outlet opened people bought plenty of those sandwiches. The trouble was that customers didn’t get the chocolate story; it had become a sideline with no real truth or commitment and not part of the core brand offer.

Fresh Belgian chocolates hardened in their carefully controlled, chilled storeroom. Potential high profits from chocolate sales turned into losses because no novice can realistically hope to compete profitably by selling commodities like coffee and sandwiches against expert competitors like Starbucks. The bank pulled the plug.

So, not wanting this to happen again, I decided to do some research to find out what other experts think causes restaurant failures and I came across a fascinating paper published by a team at Cornell University in 2005*. You can find it too by searching online for ‘why restaurants fail’. It’s the most thorough investigation into restaurant failures I have ever read. Its conclusion is that opening a restaurant is no more risky than most other types of small business. The team found that fewer than 30% of new restaurants failed in year one and fewer than 60% in the first three years. Percentage failures were far less where restaurant density was low. Mexican, subs and coffee shops were the most risky formats and Italian, burgers and seafood the safest (at least in the USA where the investigation took place).

After interviewing 20 failed restaurant operators the main reason for failure was found to be mission drift or as I prefer say, 'changing the story of the brand'. Remember my client, if he didn’t believe in his own story, why should his customers? And so far as I’ve observed when a restaurant fails it’s always this same problem.