Industry News
Maddy Caro
New Zealand
Feb 10, 2019

5 Reasons Food Businesses Fail in Their First Year (& How to Avoid Them)

5 Reasons Food Businesses Fail in Their First Year (& How to Avoid Them)

New Zealand is home to some incredible chefs and restaurateurs. In all of our main centres and many of our smaller ones, world-class eateries are ready and waiting to take your order.

why food businesses fail

But if you’re an aspiring Al Brown, Peter Gordon, Josh Emett, or Simon Gault, you’ve got some big shoes to fill. Starting a food business in New Zealand isn’t as easy as finding a sweet location, making an eye-catching logo, setting up shop, and hoping people turn up. In fact, many food businesses fail in their first year because they’re ill-equipped to succeed in the industry.

Keen to launch your own New Zealand food business but also keen to avoid making the same mistakes other entrepreneurs have made before you? Here are five common reasons why food businesses fail in their first year - and how to avoid them.


1. Too much competition

If your dream is to open a burger joint that’s pretty similar to another burger joint in town, you might be setting yourself up to fail. If there’s nothing that really sets you apart from other restaurants, punters may not bother checking you out. If they already get what they’re looking for from your competitors, why should they bother trying your menu?

Successful food businesses always have a point of difference that sets them apart from other establishments. You might still open a burger joint that has a similar menu to your competitors, except what sets you apart might be the family-friendly atmosphere you’ve created out the back of your restaurant, complete with a trampoline and sandpit for the kids.


2. The wrong location

Just like a lot of real estate, success comes down to where a house is positioned (sea views will probably win over suburban ones). Location has the ability to make or break a new food business. If you don’t set up shop in a location where there are already plenty of people passing through, you immediately make succeeding in your first year of business hard yakka.

Try to rent a space that has lots of foot traffic so you don’t have to work so hard to promote yourself. Make sure the people you’re trying to target are close by too; there’s no point setting up an expensive, high-end restaurant right beside a university, for example.


3. Lack of business know-how

Just because you’re a great chef or are exceptional at customer service, doesn’t mean you're a great business owner. As with any kind of business, it’s important to implement great processes as soon as you get into business, starting how you intend to keep going.

This includes everything from how you hire people (and who you hire), how you store and manage inventory, how you manage your food control plan (FCP), how you manage your staff, and how you manage your money.

If you’re just starting out, don’t be afraid to ask for help. Financially, an accountant could be your best investment. When it comes to compliance, talking to the Ministry of Primary Industries (MPI) about how to manage your food control plan (FCP) is definitely worth the effort too.

4. Not enough start-up capital

In the world of business, money makes the world go round. If you have savings, great. If you need to ask the bank to help you out, be cautious. Many businesses that fail in their first year of business do so because they can’t afford to pay their debts.

Remember too that start-up capital shouldn’t be limited to simply opening the doors. Unless you’re already a pretty big name with a great reputation, chances are the first few months are going to be pretty quiet. You need to make sure you’ve got enough capital to cover, for example, ordering inventory, paying staff and (possibly most importantly) marketing.


5. Lack of experience

Just like a florist probably wouldn’t start a building company, someone who doesn’t have much food business experience might not be the best person to open a restaurant or cafe. If your dream is to open a food business but you don’t have the experience necessary yourself, surround yourself with people who do. Hire exceptional managers, chefs and front of house staff and empower them to help make important decisions that could impact the future of your business - because they’re experts.


Set Your Food Business Up for Success with Safe Food Pro

New Zealand has a thriving food industry which means that wannabe restaurateurs and food business owners have the potential to do really well. A lot of success comes down to how you manage your food control plan (FCP) and other compliance obligations.

Start how you intend to continue by managing your FCP digitally. Safe Food Pro is the new standard in cloud-based food safety apps. Designed and built in New Zealand to meet the requirements of MPI’s Food Act 2014, Safe Food Pro makes food safe and suitable for both New Zealand consumers and export markets.Save time on paperwork and record-taking. The Safe Food Pro app tells users exactly what to do and when to do it, then tells them who did what and when. The app will also alert the user when important tasks haven’t been completed or when fridge temperatures are outside the recommended range.


Keen to start your food business the way you intend on continuing? Find out how Safe Food Pro could set your business up for success today.

About the author

Maddy Caro

Sales Executive / Team Lead

Arts degree, an acting diploma. A rising star of our sales team, Maddy, proves every day that it's not about ego, testosterone or bluster, it is all about empathy, passion and attention to detail. Maddy's keen intellect, inquisitive style, and engaging communications gives our clients a strong internal advocate. Maddy takes the term digital natives to another level, making the software work for her customers.

View LinkedIn Profile

Safe Food Pro delivers on promise.

Shield with check mark


Businesses protected by Safe Food Pro



Food Safety forms completed on Safe Food Pro

Happy face


Customer Happiness Rating (Based on over 340 reviews)



Every 4.4 seconds a food safety form is completed in Safe Food Pro

Want to learn more?

Talk to an Expert

Book a 15-minute chat and let us show Safe Food Pro fitting into your business’s food safety.

Try before you buy
No credit card required
Support included