5 Signs You’re Ready to Open a Second Location
Originally Posted on Typsy by Doug Radkey – 04/24/2018
Opening a second restaurant location is not as easy as many people may think. Just because “you’ve been there – done that” once doesn’t mean it’s going to be any easier the second time around. In fact, many restaurateurs find it more difficult than the first one.
A common first challenge is that many restaurants, even the most successful restaurants, are simply not ready or properly positioned for this type of expansion. There are numerous circumstances that need to be executed on first, many of which are often overlooked.
To take a restaurant from one location to two or three takes a variety of planning methods, in-depth market research, and the proper execution of a variety of systems. Sound familiar?
Let’s have a look at the indicators so you can ready yourself for growth and expansion!
1. You’re Mentally & Physically Prepared
By now you should know if you have the willingness to sacrifice in addition to the required systemized thinking, social skills, creativity, stress management, and passion to lead a restaurant to success. But that’s just one restaurant, now you’re considering multiplying all of that by two (or more).
Are you ready?
We know restaurant owners more often than not, wear too many hats, leading to upwards of 60 to 80+ hours of work per week. You have to truly ask yourself if you’re in the right mindset and have structured your personal life to endure this type of growth. This is where surrounding yourself with the right professionals (supporting cast) and/or considering a business partnership might be ideal for some – to reduce both risk and potential burnout with the opening of a second unit.
2. Your Previous Restaurant Isn’t Dependent on You
How critical is your presence to the operations and day-to-day success of the restaurant? If it is highly dependent on you; what would happen if your time was shared at a secondary location? What often happens is an independent owner will spend more time at the new location, leaving the first location vulnerable.
That’s why it’s important to take the time to consider the right management team for multiple locations to ensure there is no collapse of the first location and a strong start for the second location.
This includes additional chefs, managers, and supervisors in addition to start-up specialists like consultants, designers, engineers, and architects that will save you time, money, and energy during this growth stage.
3. You Have Strong Systems and Processes in Place
Arguably one of the most important aspects in terms of growth is ensuring that each restaurant (current and the potential new one) has consistent systems in place. Duplication of the same winning formula is the key to early success.
Developing daily routines, service sequences, training programs, communication methods, hiring practices, and customer experience strategies to name a few – is absolutely critical.
It takes effort, honesty, training, reviews, and accountability by the entire team to ensure these basic systems work and are implemented on a daily basis. If you feel there is a gap in any of these systems, it needs to be addressed immediately before any second location is considered.
4. You’re Financially Ready
Is the current restaurant highly profitable and maintaining the most important key performance indicators? Could there be any further financial improvement at the current location? Could it help financially carry the second location if needed for a period of time? If so – for how long and by how much?
Again, just because one restaurant is profitable, doesn’t mean the second unit will have immediate profitability. It takes a deep dive into the books to make a verifiable business decision to expand. Work with trusted and experienced accountants to fully understand the financial health of the current location and the viability of a second.
5. Your Restaurant is a Good Market Fit
Conducting a feasibility study for the second location is just as important as completing one for the first location.
Consider these factors: Where are you planning on developing this second location? How close will it be to the first location? Is the market large and strong enough to support a second location of the same brand? What has made the first location so successful? Will you need to scale or adjust the concept?
There are numerous market related questions that need to be addressed.
Outside of the company structure, choice of concept, financial viability, and overall market – growing restaurants need to consider supplier consistency and overall marketing plans for numerous outlets.
There are many positives to growing into multiple locations, but it should only be done when the time is truly right and when it is done for the right reasons. It’s important to not forget the fundamentals of restaurant operations; where consistency, the quality of food and beverage, customer service, and overall guest experience is paramount at each location.