Why Restaurants Go Out of Business

Recently someone asked me why so many restaurants go out of business. I answered that too many people open a restaurant because it's their dream.

A number of years ago I was walking along the street near my home and office. I came upon a brand new Continental-type restaurant down a few steps from the street, very atmospheric. Standing outside was the chef/owner with pride of ownership written all over him. We fell into conversation, I congrat- ulated him, mentioned I was a publicist and he invited me in to talk.

He explained that he was originally from New York, had spent the last decade or so working as a chef in Florida at some of the top restaurants there. His dream was to open his own place and he decided to do it in New York. His financial "backer," if you could call him that, was a friend in a completely unrelated field with very shallow pockets who had no idea opening and running a restaurant was such an expensive project.

The owner/chef (we'll call him John) should have known better but thought he could open on a shoestring. A very short shoestring. He hired a waiter who agreed to work for tips and a Spanish-speaking (only Spanish-speaking--no English) busboy. John felt that since the place was so small, no more than 12 tables or so), that as enough of a staff. I asked about someone to greet people at the door. John said that the kitchen door would be left open and he could run out when people walked in.I'm serious! He desperately needed a publicist, among other things; he said he'd scrounge up the money somewhere, and against my better judgment, I went to work. I tried his food and it was really wonderful. Unfortunately, while this man could certainly cook, he had no idea how to run the front of the house and didn't even have too firm a grasp of the economics of pricing his food. After less than two weeks, his one waiter disappeared so he was left with a busboy who couldn't speak any English trying to work as a greeter and a waiter.

One evening during this time I called the restaurant and there was no answer. Wondering whether my client had gone out of business without telling me, I grabbed mt coat and ran down to investigate. The place was dark and closed with no sign. As I walked away, two men walked up, planniung to dine there. They saw it was closed and said, "I guess they went out of business." The next day I spoke to John and he said he hadn't gone out of business but there was some big sports event that night and he figured there wouldn't be much business so he might as well close for the night. I explained to him that you can't close without at least a sign and many people probably assumed he had closed for good.

John admitted he never thought of that.

I was able to drum up a fairly gratifying amount of business, critics' reviews (the New York Times reviewed it on radio) and a mention in one of the gossip columns. After two months I could see he had no idea what to do so I quit and the following month so did he...he went out of business.

This should give you some idea why restaurants close.

Miriam Silverberg is founder and president of Miriam Silverberg Associates, a boutique public relations firm in New York City. Listed in Who's Who of American Women, she has lectured extensively on how to create publicity and is a contributor to professional journals.