This is a great question. Accept the fact that a percentage 10-15% will not be able to stick with it. Allow them to listen and enjoy the environment but don't expect 100% success. With the other 85%, provide a series of small successes. Be sure there is laughter. Some students have already made lots of progress with tab and will not slow down to learn reading. They should have tab.
When possible, incorporate reading in chord work, rhythm work and everywhere. I would encourage you to obtain my materials and book "Teaching Classroom Guitar".