The restaurant business is often romanticized as a world of creativity, good food and satisfied customers. But behind every successful restaurant is an operation constantly exposed to financial risk, economic shocks and rising costs.
For many food entrepreneurs, the biggest challenge is not starting the business—it is surviving the crises that inevitably come along the way.
For Kenneth Lim, founder and CEO of Dessert Factory, one of the earliest risks came even before the restaurant opened.
“Financial. I had little saved up so I had to ask my parents to help finance the startup,” Lim says. “They wouldn’t ask for it back, but failing would have meant a big loss of cash.”
This situation is common for many first-time entrepreneurs. Unlike large corporations with access to capital markets, small restaurant owners often rely on personal savings or family support to launch their ventures. The financial risk is therefore deeply personal.
In the restaurant industry, however, the challenges rarely end after opening day.
Operating costs are constant, and the margin for error is often thin. Rent, electricity, salaries and raw materials must be paid regardless of whether customers walk through the door.
This reality became painfully clear during the pandemic.
“Covid was the worst,” Lim recalls.
For restaurants across the country, the sudden closure of dining establishments created a situation where revenue disappeared almost overnight while expenses continued.
“Even if stores were closed, bills like electricity and rentals still had to be paid. Salaries of skeletal staff also flowed.”
This dynamic illustrates one of the structural challenges of the restaurant business: many of its costs are fixed. Rent and utilities must be paid regardless of whether the dining room is full or empty.
When revenue collapses, these fixed costs quickly place pressure on the financial stability of the business.
Even after restrictions were lifted, the industry faced another wave of difficulties.
“The cost of ingredients soared and customers were not willing to pay for higher restaurant prices,” Lim says.
This mismatch between rising costs and customer price sensitivity is a familiar problem in the food industry. While inflation pushes up the price of ingredients such as dairy, sugar, flour and meat, restaurants often struggle to pass these increases on to customers.
Raising menu prices too quickly can discourage diners, especially during periods when consumers themselves are feeling the effects of higher living costs.
As a result, many restaurants find themselves absorbing part of the increase in costs, which squeezes profit margins.
“Our finances were really stripped especially since it has taken so long to recover,” Lim says.
Recovery in the restaurant sector has been uneven. While customer traffic gradually returned after the pandemic, many businesses continued to carry financial strain accumulated during the shutdowns.
Even today, the industry continues to face new pressures.
“We are now feeling the pinch again with the rise in fuel prices and the drop in consumer demand,” Lim says.
Higher fuel prices affect restaurants in several ways. Delivery costs increase, suppliers raise transportation charges, and logistics become more expensive. At the same time, consumers often reduce discretionary spending when household expenses rise.
Dining out, which many people consider a discretionary activity, is often among the first areas where households cut back.
For restaurant operators, this combination of rising costs and softer demand creates an environment that requires constant adaptation.
Survival in the industry therefore depends not only on culinary creativity but also on financial discipline and operational resilience.
Entrepreneurs must monitor costs carefully, adjust menus when necessary, and find ways to maintain quality without driving prices beyond what customers are willing to pay.
At the same time, they must continue investing in their brand and customer experience even during difficult periods.
The experience of Dessert Factory reflects a broader truth about the restaurant industry. While success may begin with a great concept or a popular menu, longevity often depends on the ability to navigate crisis after crisis.
From financial risk at the startup stage to the pressures of inflation and economic uncertainty, running a restaurant is a continuous test of resilience.
For entrepreneurs entering the food business, the lesson is clear: the ability to survive difficult periods may matter even more than the ability to launch the business itself.
