The Brutal Truth About Why Hospitality Venues Fail—And How to Fix It...

Mar 4

6 min read

The hospitality industry is brutal. It chews up dreamers and spits out bankrupt operators faster than any other sector.

I have had the privilege of being engaged by hospitality owners over the years and I can tell you, it is not enough to have a good location, a renovated (or brand-new) venue, or even a top-chef with a revolutionary concept.

Success in hospitality is won in the trenches of execution, consistency, and commitment.

Denmark, offers a microcosm of the broader industry struggles.

Take The Denmark Hotel—a revitalised space with every chance to thrive, but is still held back as a venue that fails to meet expectations. Then there’s The Dam—an architecturally stunning venue with huge potential, yet it struggles. Or Flametrees, amazing cocktails but is limited by space.

This isn't an attack but a recognition that wherever you are on the spectrum, whether you are a Michelin Star restaurant or you have Chef's Hats from the WA Good Food Guide, I think we can all agree, you want to see your venue do better!

And let me be clear, these failures aren’t unique to Denmark. They’re the same mistakes that have doomed countless venues before them.

But for every failed hospitality business, there are battle-hardened operators who have found ways to succeed.

Here’s why so many venues fail—and how to avoid it.

1. Lack of Commitment: Half-Hearted Operators Lead to Half-Hearted Businesses

Great hospitality isn’t a side hustle. It demands relentless presence, oversight, and a leadership team that bleeds for the business.

Too often, investors or absentee owners think they can “set and forget.” They hire managers, leave them to run the show, and assume things will take care of themselves.

Reality check: They won’t.

Customers can smell disengagement and if they can't smell it, someone will tell them about it. If you’re not obsessed with your own business, why should your team be?

A hands-off approach leads to inconsistent service, uninspired menus, and a venue that slowly decays into mediocrity.

The fish rots from the head is the saying.

War Story: The Rise and Fall of the Passive Owner

A well-known restaurant in Perth launched with a million-dollar fit-out and a celebrity chef. The owner had no hospitality background but figured good food and a flashy launch were enough.

Within 12 months, the chef quit, standards dropped, and the business collapsed.

Why? The owner was nowhere to be found, leaving undertrained managers to run a sinking ship.

Success Story: The Operator Who Lives and Breathes Their Venue

Conversely, look at places like Settlers Tavern in Margaret River. It thrives because the owners are actively involved—talking to customers, mentoring staff, and tweaking the experience constantly (and that sneaky, yet extensive wine list is spectacular!).

Commitment at the top trickles down, creating a team that genuinely cares.

Strategies for Commitment:

Owner Presence & Leadership: Be on-site regularly, lead by example, and show staff what great service looks like.
Engage in Daily Operations: Even if you’re not in the kitchen, walk the floor, talk to guests, and monitor the vibe of the venue.
Hold Regular Team Meetings: Weekly meetings to reinforce standards, address issues, and keep the team motivated.

2. Poor Quality Control: If It’s Not Consistently Excellent, It’s Not Good Enough

One bad meal. One rude staff member. One experience that doesn’t meet expectations. That’s all it takes to lose a customer forever.

The biggest sin in hospitality isn’t being bad—it’s being inconsistent. People forgive a rough night if they believe in your standards. But if one visit is great and the next is terrible, you’re finished. It feels Denmark venues struggle because quality control is absent. It doesn't matter how grand a venue is, you need to succeed where it matters most—the food.

You can have the best venue in the world, but if the food and service don’t match, people won’t come back.

War Story: The Restaurant That Got Lazy

A bustling Asian fusion restaurant in Fremantle was the place to be—until it wasn’t. Early on, the chef-owner was in the kitchen every night. But as success came, he got comfortable. He stopped checking dishes, let standards slide, and allowed inexperienced staff to take over. Regulars noticed. Word spread. Within a year, the restaurant was empty, and he was forced to sell.

Success Story: The Relentless Pursuit of Excellence

Vasse Felix in Margaret River maintains its position as a premier winery restaurant because quality is non-negotiable. The Holmes à Courts, Virgnia Willcock, Tony Liversage et al ensure the food, wine, and service are held to an uncompromising standard. If a dish isn’t perfect, it doesn’t leave the kitchen. That’s why they continue to attract diners from across the country.

Strategies for Quality Control:

Implement a Mystery Diner Program: Regularly assess food, service, and cleanliness with anonymous reviewers to identify weak spots.
Strict Training & Accountability: Every staff member must understand expectations. Have checklists, training refreshers, and consequences for poor performance.
Daily Quality Checks: Kitchen and front-of-house staff should follow strict food and service quality checks before each shift.

3. Failure to Understand the Customer: A Venue Must Adapt or Die

A hospitality venue is not about the owner’s ego—it’s about the customer’s experience. The Dam is a perfect example of getting this wrong. It’s visually stunning but tries to be too many things at once. The rigid wine list forces customers into a single option rather than catering to a wider market.

The best venues evolve based on what their customers want, not what the owners think is best.

War Story: The Wine Bar That Refused to Listen

A boutique wine bar in Sydney insisted on stocking only niche, natural wines. Hardcore wine enthusiasts loved it, but the average customer found the selection overwhelming. Instead of adapting, the owner doubled down—lecturing customers who asked for something more familiar. The result? Empty tables and then a closure followed.

Success Story: The Venue That Listened

Balthazar in Perth, run by Emma and Dan, thrives because of their deep understanding of their customers. They’ve created a menu and an expansive wine list that caters to both connoisseurs and casual diners alike, blending high-end dining with accessibility. If a dish isn’t working, it’s adjusted. If guests request a broader wine selection, they listen. They balance consistency with innovation, ensuring the venue remains fresh while delivering an exceptional experience every time.

Strategies for Understanding Customers:

Customer Feedback Loops: Gather data, and actively seek feedback through surveys and direct conversations—and actually implement changes.
Menu Flexibility: Keep a core offering but introduce seasonal specials or tweak dishes based on what customers actually want.
Adapt Your Experience to the Market: If the environment isn’t working (e.g., too many distinct zones with limited food and beverage menus), simplify and refine the guest journey.

3 Key Takeaways for Hospitality Operators

Be present and committed – Hospitality success is hands-on. As an owner, if you’re not fully invested, your team won’t be either.
- Be on-site, engage with guests, and lead from the front.
- Regularly meet with staff to reinforce standards. Make family style meals for staff (getting everyone all together) before or after a shift.
- Ensure that your team knows your vision and standards inside-out. I hope you have one!
Quality must be non-negotiable – If you’re not delivering a consistently great experience, you’ll lose customers to those who do.
- Implement mystery diners, training and wine refreshers, and daily quality checks.
- Hold everyone accountable, from the kitchen to front-of-house. Run regular wine tastings for staff, expand their knowledge so they can educate and "wow" the customer.
- If something isn’t up to standard, fix it before it reaches the customer.
Listen to your market and adapt – If your concept isn’t resonating, pivot before it’s too late. Customers dictate success, not your personal preferences.
- Gather and act on feedback to refine your experience.
- Introduce flexibility in your menu and wine list. This means:
  - Food: Have pilot-testing of plates, cross-utilise ingredients, monitor popularity.
  - Wine: Have limited-runs of wines, data-driven ordering, run tastings, guage the market's "wants".
- Design the venue around what guests actually want, not just what looks good. This means, gather data. Who are your consumers? Do you know them intimately. When you know them inside and out, it is much easier to ensure a sale.