April’s Restaurant Pitfall Prevention Tip-Family Owned Restaurants

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April’s Restaurant Pitfall Prevention Tip

Starting A Restaurant With Family Members Is A Love Hate Experience


If the odds of starting a successful restaurant business are not very good, then the odds of successfully running a family owned restaurant for multiple generations have to be astronomical.

For one, it’s a volatile industry, to say the least. In New York State the Restaurant Association said, 75 percent of the restaurants that open today will either change ownership or be out of business in the next five years. Mix that statistic with the dynamics of family relationships it can make for potentially fireworks.

family business

Starting A Restaurant With Family Members Is A Love Hate Experience

Two-thirds of family businesses close before getting to the second generation.

The Family Firm Institute says only 12% of family owned businesses stay viable into the third generation, and only 3% are alive at the fourth-generation level and beyond.

Even the best of intentions, dedication and sacrifices may falter when you mix business with blood.

Mention “family business” and most people assume you’re talking about the mom and pop restaurant around the corner which is all good.

Family owned businesses have been around since the beginning of time. Did you know BMW, IKEA, Heineken, The Hershey Co. and Wal-Mart are deeply rooted family businesses?

Family owned restaurants are generally among the oldest small-business establishments. The only more-prevalent businesses remaining from the 1800s are funeral homes.

There are still entirely family owned-run restaurants; in fact, they are quite common.

Family run restaurants typically have a very traditional menu that reflects the area of the world from which the family originally hailed.

Family run restaurants also become like living members of the community.

Local communities rally around family owned and operated business.

I’m sure you have heard stories of family businesses being destroyed by fire or weather and the local community helps them begin again.

Though most are small businesses, these family operated restaurants play a decent role in today’s economy. In fact, it is estimated that 80% of the world’s businesses are sole proprietorship or family run corporations.

Are you thinking about starting a family owned restaurant business?

Based on research of the Forbes 400 richest Americans, 44% of the Forbes 400 member fortunes were derived by being a member of or in association with a family business.

Family businesses can have owners who are not family members.

Family businesses may also be managed by individuals who are not members of the family. However, family members are often involved in the operations of their family business in some capacity and, in smaller companies; usually one or more family members are involved.

The challenge for family businesses is deciding on roles and job responsibilities.

Who does what depends on their experience and natural ability towards a particular role.

Advance planning is the key to a lasting business legacy.

It comes down to a plan for succession. A plan gives you the best chance to survive the transitions from the second and even third generations.

What factors lead to business failure among family owned restaurants?

All family restaurants struggle with same issues most of the time. In fact, almost every business faces the same issues, which often lead to the family owned business’s downfall.

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It is estimated that nearly half of all family owned businesses that fail do so because the business owner/operator dies without leaving a clear plan on how to see the restaurant through it. This is in comparison with only 16% that fail as the result of an orderly and pre-organized business turnover that didn’t go as expected.

It can be awfully difficult to distinguish between business matters and personal matters in a family business. Mixing business and personal matters can be a major mistake when running a family business. You need to respect each other’s boundaries, when working together. When you argue, argue constructively don’t yell about things in your personal life keep pertained to the business. This isn’t always easy. After all, your co-worker could be your sister who potentially knows you better than anyone else and can easily push your buttons.

brother chefs

Owning a family business can be all consuming in terms of your family time, and social life. You can’t help but think about it all the time, often you make the mistake of bringing business home. Designate time with your family where business talk is not allowed!

Schedule meetings outside the home and restaurant from time to time, in an office, or rent a conference room those are the places where you can talk about business and make major decision without interruptions.

Another mistake as the owner of a successful family owned business, you can make is assuming your children, nieces nephews, or cousins will want to join the ranks when they come of age. Big mistake! Try waiting for them to initiate interest in the business; forcing it can backfire. If they do show an interest, give them a little responsibility, but make sure they feel that they have an option to come on aboard or not.

Always, always, keep the lines of communication open at all times, let them know whatever their decision is you will be supportive.

The other common causes of failure relate more to business decisions than emergency planning. Many family owned restaurants fail within the first two years simply because the family that opened the business was not prepared for the responsibilities that it entailed.

Remember just because a person’s name matches the name on the door or business sign, doesn’t mean they are qualified to do the job or are entitled to anything special.

What factors lead to success among family owned restaurants?

A successful family owned restaurant will make sure there are excellent business-management and financial structures in place, so that they can focus on good food and good service.

It’s good hiring practice to be sure each employee is someone you’d hire even if they weren’t part of the family. This qualification will help earn the respect of employees, many of whom won’t be family members.

The best family run restaurants find their niche, or strength, and really play to it, while carefully marketing and advertising the business to ensure that customers know they are there.

Avoid money tearing a family and a business apart.

Don’t rely on lose financial agreements.

Have an attorney draw up contracts whether it’s dispersing portion of the business or sales contracts etc. make it all legal.

Don’t think things will just work themselves out it can cause huge problems in the future. It’s one of the major mistakes many family businesses find themselves dealing with.

Check these interviews and articles out below!

Liz & Ted Button on Running a Family Business, Making Decisions, and Seizing Special Moments When You Can

Owners of Asheville restaurants Cúrate and The Nightbell that are owned by not one but two married couples: Liz and Ted Button; their daughter, Chef Katie Button; and her husband, Felix Meana.


Find out what makes their  two Family Owned restaurants work!

Family businesses are the backbone of American businesses, an estimated 80% to 90% of all small businesses fall into that classification. And it might surprise you that many of them are highly successful.

Secrets To Running A Successful Family Business

By Linda Segall

 restaurant pitfall preventionI hope April’s Tip assists in your decision process of owning a family business.

There are lots of dynamics, personalities and skill levels or non-skill levels to deal with.

If you feel very strongly it’s the right option for you and your family I wish you much success.

Please go to our resource page for more guidance when starting your Family restaurant.

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