The Main Reasons Why Startups Fail in the Food & Drink Industry

There are many reasons why businesses in all sectors fail. Whether you’re aiming to start a food production company or a restaurant, you need to be aware of these reasons. The food and drink industry is a specific one. There will, of course, always be a need for food and drinks. But that doesn’t mean that customers will flock to your brand in particular. The market is dominated by the big companies. However, there are gaps, and if you want to start a restaurant, it’s always possible to do so if you can engage the local community. Here are some of the most common reasons for failure in this industry.

No Knowledge of the Market or Competition

Not knowing the competition or understanding the market is a fatal mistake when you run a business. You can’t possibly hope to succeed when you don’t know what you’re up against. So, before setting up the business, be sure to carry out some in-depth market research. This will allow you to get a more comprehensive understanding of the market you’ll be entering. On top of that, make sure that your products stand out from what your future competitors are offering to the public.

16 NYC Food Startups Worth Getting to Know

Poor Quality Produce

If you are selling food or drinks to people, they will need to be made with the best produce. If you opt for ingredients that are cheap just to save money, this could have an impact on sales. Always opt for the best quality produce you can find and afford. If you want to run a restaurant, it can be a good idea to buy imported meat. Alternatively, you could make the fact that you source your meat from a local butcher a selling point for the restaurant. Whatever you choose, make sure you can justify your final decision.

Can Quality Food Be Made at Tech Scale?

A Lack of Clear Direction

When a company lacks a clear direction, then it is always going to struggle to some extent. That’s probably not what you want, so make sure that it doesn’t come to that. You should have a business plan that has been written up and contains the exact details of what you want the business to achieve. This will keep the business motoring along in the right direction. You should also deliver your message to customers in a clear way. If they’re not clear about what you have to offer, they won’t buy from you.

It’s dangerous for all of us when food companies are also tech startups


In the end, this is another common reason for failure. And it’s not a reason that is specific to the food and drink industry. Any business that ends up becoming underfunded will fail sooner or later. When starting the business, you should be aware of how much capital you need. Don’t get the business up and running until you have the necessary money in place. This might mean taking out business loans or securing the financing from an investor. It’s up to you how you go about funding the company. But going ahead without the funding to keep the business ticking over in its early months is not an option.

Alcohol Startups Are Brewing Up VC Cash

You Might Also Like