Houlihan’s posted on their Geneva, Illinois Facebook (s) page, and other location pages, “There is never a good time to close a restaurant, but due to the wind-down of the bankruptcy estate, Houlihan’s Geneva has closed effective today.
Management is doing everything possible to minimize the impact to affected team members by working to place them at different continuing locations and reaching out to local restaurant companies.
On behalf of the entire team, thank you for your support and friendship over the years. We do hope to see you at one of our other locations as your travels take you around the Midwest.”
Called Houlihan’s corporate phone listed on their website for comment. It was obviously an answering service. Left a message for a call-back in attempt to obtain additional information; no returned call. Additionally, we visited their corporate website, but they had not published any information regarding the closings. Based on our research it appears the individual locations Facebook pages is the only information provided.
There is anger posted on Facebook as Gift Cards were sold for gifts in those location without disclosing the upcoming closing, leaving employees hanging during the holidays, etc.
The Houlihan’s in the following locations announced on Facebook the closing:
- Wheaton, Illinois
- Grand Rapids, Michigan
- Fairway, Kansas
- Creve Coeur, Missouri
- Schertz, Texas
- Olathe, Kansas
- Fort Worth, Texas
- Dallas, Texas
While this is a sad day in the restaurant industry, there are many lessons to be learned as mismanagement is generally the cause of failure for most business closings.
Fierce competition and an increase in prices have added a significant amount of margin pressure on restaurants, with privately-owned restaurants hurting the most because they do not have the buying power to help absorb price increases.
Other expenses that have hit the restaurant industry is many of the delivery food vendors that provide delivery to many restaurants take a large percentage of the tickets. Many restaurants make very little profit, and paying out 20-30% of the ticket hurts the establishment rather than helping them as the delivery companies promote.
After the economic crash in 2008, property taxes took an increase, sales taxes are higher, and for those restaurants that lease their facility, as most do, the triple net lease expenses have increased.
Recent development is minimum wage will be increasing after the first of the year in most areas adding even further margin pressure to restaurants.
Unfortunately, many restaurants have not increased prices as they should to keep up with the increase in expenses. This predominantly has impacted the privately-owned restaurants for fear of losing customers.
While we are not restaurant experts, we expect to see an increase in restaurant closing after the new year arrives because many were holding on for the holiday restaurant rush to reduce their losses. Most small restaurant owners that we know are barely keeping their doors open, but refuse to consider raising their prices because of fear. Truthfully, most do not know how much to increase do to lack of proper accounting.
Common errors made by restaurants that typically lead to failure are:
- Poor or no accounting procedures to accurately track the true cost of doing business
- Due to lack of accounting, not keeping up with a cost to reprice their menu’s
- Poor management and theft
- Poor marketing
- Using third-party food delivery vendors that charge an excessive amount for the delivery
- Not leveraging online ordering. Even if the restaurant can’t afford to perform their own delivery, they should have online ordering for pickup
- Failing to leverage online digital marketing products and services, some created specifically for the restaurant industry
If you own a restaurant, learn from others’ mistakes. If you are not fluent in these specialized areas, considering hiring the services of those that are.