Growth Strategies

My New Restaurant Has Rave Reviews, But Business Is Slowing Down Dramatically. Why?

We opened a restaurant 10 months ago and have had many ups and downs. We have a unique concept for our customers, who sit at our large dining counter as a train delivers their meals. You should see their faces light up when they see the train chugging out of the kitchen. While people assume gimmicky restaurants don't have good food, we do. Every day, customers tell us how much they love the food and the train. We make most of our food in-house and are in a great location. We have tried a variety of marketing efforts including social media, local print and PR. We were even written up in a popular family magazine, but haven't seen a bump from that. Our business has slowed down dramatically and we can't figure out why. We want to know what else we can try to drive people into our restaurant and keep them coming back. What should we do?
Guest Writer
Head of Financial Partnerships, Xero Americas
min read
Opinions expressed by Entrepreneur contributors are their own.

Congratulations on your initial success with starting your own restaurant. There are a few different factors to consider as well as questions you need to ask yourself to identify the causes for the drop in sales.

You stated that you receive very positive feedback from customers that love the food and the train concept. That's fantastic! However, how are you utilizing that feedback to gain new customers? If you're just politely appreciating their kind words, then you're missing an opportunity to grow your business. You need to leverage your best customers, as they can be great company ambassadors in telling their friends, colleagues and family members about your restaurant. Provide an incentive for them to make referrals and make it as easy as possible to do so. Perhaps next time you tell them that you really appreciate their business and would like to personally offer this same experience to others that they know. You could also throw in some food and drinks on the house. In addition, you could run a promotion via Facebook and you tell your best customers about it and how to spread the word.

Speaking of social media, you stated in your question that you've launched several different marketing programs. They may be helpful, but they aren't worthwhile if you aren't using them effectively by measuring your success and optimizing for future campaigns. Most marketing efforts require some trial and error. I recommend that you start with one channel and put all of your focus and resources in until it proves to be effective. Then, move on to the next channel.

You also mentioned that the restaurant opened 10 months ago. Since this is a relatively new business, I think you need to be mindful that the initial growth was a result of curious customers in the neighborhood. It's possible that there are more people who tried the restaurant and have decided not to go back than the reverse. This may not be the case, but it's important to identify if there are more issues than you are led to believe from the positive feedback received.

To identify if there is a potential problem, I would recommend trying to determine the mix of new customers versus repeat customers on a weekly basis. If you're returning customer base is shrinking, then you'll need to dig deeper. It can also go a long way for the owner of the restaurant to go around the tables throughout the evening to see if people enjoyed the experience. You may receive very valuable feedback that you can utilize operationally and through your marketing efforts. 

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