Reasons Why New Restaurants Fail in Saudi Arabia Despite a Strong Market (and How to Avoid Losses)
FOOD GUIDE
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Despite the significant growth of the restaurant sector in the Kingdom of Saudi Arabia, a large percentage of new restaurants struggle or fail within their first two years of operation. This raises an important question: why does a restaurant fail in a strong and opportunity-rich market?
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One of the main reasons for failure is entering the market without conducting a real local market study. Many investors open restaurants based on a concept that succeeded in another city, without analyzing consumer behavior in the targeted area.
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Choosing the wrong location is a critical factor in losses. Some restaurants open in areas that do not match their product type or price segment, leading to weak demand despite good food quality.
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The absence of a clear brand identity is one of the most common mistakes. Restaurants that fail to offer a defined concept or clear message often appear as repetitive copies of many competitors in the market.
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Random pricing without accurately calculating real costs and profit margins quickly drains profits, especially with the high operating and raw material costs in Saudi Arabia.
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Relying entirely on delivery applications without an independent strategy weakens profitability due to high commission fees. As a result, some restaurants achieve good sales volume but no real profit.
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Poor management of internal operations—such as inventory, staffing, and kitchen workflow—leads to significant waste that directly impacts profits and service quality.
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Weak digital marketing and poor visibility on social media platforms and search engines make the restaurant invisible to potential customers, despite having a good product.
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The lack of continuous performance analysis and failure to rely on data-driven decision-making prevents restaurants from detecting mistakes early and correcting their course before it is too late.
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These reasons indicate that restaurant success in Saudi Arabia does not depend on cooking alone, but on planning, management, and smart marketing—making the support of a specialized partner like Food Guide Solutions a decisive factor between success and failure.