A cautionary tale every restaurant owner should hear

A cautionary tale every restaurant owner should hear
Photo: ViDi Studio, Bigstock

Lots of people want to start their own businesses, especially chefs who want to own their own restaurants. Unfortunately, not all companies take off, and some businesses fail simply due to unforeseen circumstances. There is one very peculiar case, however, where the popularity of a restaurant’s service was the ultimate cause for it going bankrupt.

How did this happen? Well, it was an “all you can eat restaurant,” one of those places where you pay a set amount then eat as much as you want. Usually this isn’t too much of an issue, because most people can’t even eat as much as what they pay for. It is almost gimmicky in a sense. However, there was an issue where some customers were sharing the card that allowed them to purchase the food.

The cards were being shared between whole families and friends, meaning that for $25 an entire family could eat as much as they want. The company had 500 customers a day when they announced the all you can eat offer, and even then, the amount of money made was being offset by the amount spent on supplying the food. This fiasco cost them so much that, within the first month, they were $100,000 in debt.

This businesses’ failure caused such a massive ripple that China’s social media was flaring up about it. One user wrote “Customers can eat till they go bankrupt” and another saying, “never underestimate the power of a Chinese appetite.”

It is a perfect example of how to run a business into the ground with lack of foresight about what you are doing. Most businesses like this in other countries usually pay up front at the door, so each person pays separately, but this business allowed for a card system which was easily being abused by customers. Even with the card, it would have been possible to check the name on the card with the ID of the person, however they didn’t even attempt that.

One thing is for sure though, the owner has learnt their lesson. At this point, it’s safe to say that this whole ordeal has shined a light on how a lack of forward thinking can cripple a business.