I've heard this sentence in many places, in various versions. There are no consistent statistics on this, but it can be stated with certainty that a significant portion of newly opened restaurants, up to 20-30%, may close within their first year. International surveys even suggest that within the first 5 years of opening, this number can reach up to 60%.
Analyzing Hungarian Central Statistical Office (KSH) data, a decline in the number of hospitality establishments can be observed, reaching up to 20% compared to 2010.
Therefore, it's worth delving into the reasons beyond the fact that many restaurants closed due to Covid-19 and economic changes.
I've gathered some experiences and challenges that I've encountered over the past few years while delving deeper into commercial hospitality establishments.
So, how does a love story in the restaurant industry begin? Naturally, it starts with falling in love.
For many, it's a cherished dream to open a restaurant someday. Whether it's a love for culinary experiences or a passion for cooking, I've heard various reasons. Moreover, almost everyone knows how to cook, and people who can cook have their specialties...
A dear friend of mine who works in IT, after an extended stay in Asia, started making ramen at home. And he makes it extremely well. Of course, this quickly led to the idea of opening a small restaurant offering ramen. I asked him only three questions:
Have you ever worked even one day in the hospitality industry?
How much money do you have for the opening, and do you have a company whose profits can finance the likely losses in the first year?
Can you dedicate 8-10 or even 14 hours a day to your restaurant until it becomes fully established?
I'm not saying that opening a restaurant without hospitality experience is impossible, but I'd like to emphasize that there are numerous factors to consider when opening and running a restaurant, and without involving serious expertise, such a budding relationship may end with the title of my blog.
My career in restaurant development started in a very interesting way. I bumped into an acquaintance on the street, and he told me he was opening his second restaurant. However, the catch was that the first one was still running at a loss. It took me a little while to understand the motivation behind opening a second restaurant with the same business model while the first one was running at a loss, but that's what happens when you're in love. Almost the entire operation had to be transformed - the scheduling due to overworking, the menu because of items that only resulted in losses, the opening hours, the appearance, and the entire background required to operate a restaurant. That's how it all began...
Another example is when a marketing professional contacted me because they had just rented a space to open a restaurant, inspired by a breakfast place they loved. But if they were serving breakfast, why not offer lunch and dinner as well? This led to a 16-hour opening time, an extensive menu selection, and high labor costs. And I haven't even mentioned the costs of opening, which nearly doubled despite detailed planning.
To provide an example from the street food scene, there's a truly kind and enthusiastic entrepreneur who opened a restaurant in Hungary without knowing the Hungarian language. It's admirable that they managed to start a restaurant in a foreign country and launch a business. After half a year from the opening, they were still putting in an additional 1,000 EUR monthly to keep the restaurant running.
Perhaps the most significant realization is how complex it is to successfully operate a restaurant, seeing experienced chefs struggle in the first few months after opening. Not because they weren't great chefs – they were.
Yes, everyone knows that the restaurant business is among the high-risk investments. The question in my mind is whether it needs to be this way to such a large extent. Can a well-planned and well-run restaurant result in more assured success?
After all, opening and running a restaurant is a fantastic thing. It evokes many feelings that have developed from our foundations. Food brings people together, especially when the food is good. Almost everything revolves around meals, and social gatherings tend to center around the kitchen. We celebrate and mourn with food. Offering good food and serving our guests with high quality is an extraordinary feeling, and it makes the host proud.
We see countless wonderful examples of what happens when expertise and passion are poured into a hospitality establishment, whether it's a restaurant, café, pastry shop, or even a local street food stand.
In any case, I'm extremely happy that I chose this profession, and I'm even more delighted that I can now use the many years and experiences in hospitality to fulfill the dreams of restaurateurs."