Restaurateurs Reveal the 5 Lessons They Learned from Failing

We’ve all seen it happen: one day, there’s a brand-new restaurant around the corner that we can’t wait to try and the next day, that same restaurant is closed—for good.

Statistics paint a grim picture for anyone who dreams of opening a restaurant. In New York, for example, 80 percent of restaurants fail within five years. And regardless of their location, about 60 percent of restaurants close in the first year, one study shows.

Luckily, from those failures come lessons—and two restaurateurs, who now own successful spots, are here to share what they learned from their own shutterings.

“Match the restaurant to the location.”

When James Groetzinger, who owns Warehouse and Calhoun Street Tavern, opened Parlor Deluxe in 2015, “it was a little bit ahead of its time for the location,” he says. “The location was on a one-way street with no nearby parking lots, making it street parking only. It was also before a lot of construction was moving farther up town, so we weren't getting a ton of foot traffic passing by.”

But since the restaurant closed in 2016, “the street has become a two-way,” Groetzinger says, “and they've built a huge parking deck a couple blocks over.” Had Groetzinger waited another year to launch the restaurant, he might have had better luck, a lesson in choosing the right location.

“Eliminate dress codes.”

Carl Sobocinski, owner of Table 301 Restaurant Group, believes today’s diner wants to dress casually—but two of his former restaurants, Restaurant O and Devereaux’s, had dress codes. “I never thought they were that strict but the patrons who were turned away did, and they were sure to tell their friends that we had a dress code,” he says. (The restaurants’ dress code included no shorts, no flip-flops and no baseball caps.)

“The [no shorts rule] was the biggest issue with patrons because we are in South Carolina where summer nights are humid and can reach temperatures in the 90s, even during dinner hours,” he says. Lesson learned: “We dropped the dress code after a few months, but the damage was already done.”

“Build a detailed budget.”

"I definitely learned to take more time to budget and create a range of realistic sales projections,” says Groetzinger. “And to do your due diligence with all of the legalities involved in opening a restaurant.” Groetzinger believed Parlor Deluxe was a success in almost every way—except financially—and could have stayed afloat with more realistic planning and budgeting.

“I was able to help build and design the space to fit my vision,” Groetzinger says. “Our culinary team created an awesome menu that got a lot of people excited. We even made people excited about hot dogs."

“Don’t ‘overbuild’ to compete with larger markets.”

Before Sobocinski launched Restaurant O, he traveled to New York, Chicago and Washington, D.C. for research. “We were experiencing great growth in our company with our first two concepts and I traveled a lot … and took design elements from spaces I saw in those cities,” he explains. “But we over-designed Restaurant O, and overspent and always struggled to pay the steep investment back especially when the economy crashed in 2008.” A smaller, simpler space, he says, may have survived.

“Recognize a concept’s life span.”

“Sometimes a concept has a life span and it needs to be closed down and re-tooled,” says Sobocinski. That was the case with Restaurant O. “It was a difficult decision to close Restaurant O because if felt like failure, but in truth, what we have in that same location now works better than Restaurant O would at this time—and so the ability to recognize it’s time to change was a very valuable lesson.”