What startups can learn from the restaurant business

Having worked with startups in the past 8 years or so, I've come across interesting observations (mine and others). Majority startups fail. Most pivot. Everyone expects a startup journey to be wavy - maybe with crazy waves. It's not a journey for the faint hearted.

Yet, why is it that more startups are being founded year over year?

It's not outsized returns. Yes, that's a factor but not the most important one. Startups are started because the founding team is passionate about delivering in a particular area. They believe that their offerings will be mouth watering to their customers. In this state, they can take on established entities and win!

Isn't the above similar to how restaurants start?

Yet, why is it that only a small percentage of restaurants are in business 5 years after starting? I don't have data to prove what I'm going to say next. It's these well off survivors that are the beacon for new restaurateurs.

Just that the new founders want to challenge the status quo and they miss the key elements.

Good establishments sustain because they are consistent with what they do well. Their menu items do not change - in fact may appear boringly constant. This is the point to attack by the newcomers. Yet, they fail time and again. Why?

Novelty is only one part of the equation.

After a new offering has found favour with the market, the next challenges creep up fast. Do they crank out more innovations? Should the scale? Improve in- house dining? Optimize for delivery? Market more? The list is endless.

That's where the game is lost both for startups and restaurants.

In these situations, it helps to be conscious of which challenge will be addressed. With a small size (team, funding), the team can meaningfully deliver on only so much. Best to pick the problem that can be solved to the max.

Mentors and advisors can be of great assistance here.

They observe from an independent view provided they are not involved in the day-to-day operations. Seek them out and be open about your strengths and areas of improvement. It pays to be brutally honest about yourself and your enterprise.

Running restaurants and startups are tough endeavours.

If you want to be a successful startups, it may help to visit some well run restaurants. Learn from them and adopt their best practices.

Happy Ideating!

Hemang.