The best part of opening a second restaurant is that you already know the challenges faced while running the first one. The worst part of opening a second restaurant is that the things that worked for the first restaurant venture might not work at all for the second one. And you wouldn’t even know why. Restaurant expansion without diluting your brand name and credibility, and replicating the success of the first venture is a difficult task that requires careful strategy and execution. That is precisely the reason why restaurant expansion is seen as a great challenge and is almost akin to starting a new venture altogether.
That being said the question of “how to expand a restaurant business” resonates with most restaurateurs. Thus, it is necessary to look at how restaurant expansion should be approached. Here we have for you 7 tips that will help you do the same.
Restaurant Expansion Tips: How To Expand Your Restaurant Business
We have created a checklist of the top 7 things you need to do before your launch your second venture to ensure that it is a success. These are:-
- Current Model Evaluation: Evaluate the success of your current model to understand if it should be replicated or tweaked before you start your restaurant expansion.
- Planning and Market Research: Study the market to understand if your original model or offering will work or if some changes are required.
- Financial Planning: Create a budget and a financial plan for all your upcoming ventures.
- Robust Central Management: Once you expand, it will be virtually impossible to be at different locations at the same time, hence invest in a central management system.
- Hire Right: Hire enough employees before the launch of the second restaurant and train them adequately.
- Consistency and Quality: Quality and consistency of taste, flavor, and proportions must be maintained across outlets. You can do so through recipe standardization.
- Maintaining The Effort: Put in and keep putting in as much effort as you did for your first restaurant.
Here is a detailed piece on the seven tips you must follow to expand your restaurant business successfully.
1. Current Model Evaluation
The first thing that you need to consider when thinking of ‘how to expand your restaurant business’ is whether the current model is successful enough to be replicated. You also need to analyze if the existing restaurant is churning out a profit. If yes, then you must further identify these based factors, and evaluate whether these factors can be simulated at the new venture as well. For example, the current location may be the most critical factor in the popularity of your restaurant. If the restaurant is a success just because it is the only restaurant in the 10 km radius, then opening another one in a crowded restaurant location is not a good idea.
Do a SWOT (Strengths, weakness, opportunities, and threats) analysis to gain a better understanding of your restaurant’s business model.
Another critical thing to consider is the sustainability and scalability of your establishment. The restaurant should be able to function without you. You would no longer be able to monitor the operations of all the outlets physically.
2. Planning And Market Research
Before you put your hands on the restaurant business expansion, careful planning and evaluation of the market is a must. Conduct market research and demographic survey to identify your customer base, and to make sure that you’re catering to the right audience. Primary research consists of personal interviews and online surveys that give a direct insight into your target customers’ mind. Secondary research includes the analysis of the already collected data to identify competitors
Location of the new outlet is essential as well. It is important to consider the existing competition in the area, and whether your restaurant the right fit for that particular demography. Location and target customers are some of the most determining factors in a restaurant’s success.
3. Financial Planning
The next most important thing to consider when trying to understand how to expand your restaurant business is finances. Opening a restaurant is a financially taxing task, and restaurant business expansion is even more so. Raising enough capital on your own, or taking a loan involves a lot of financial risks, and needs to be done carefully. Therefore, restaurateurs often come together and form partnerships to make the investment more affordable. In this way, the risk of losing money is also reduced.
With the startup wave hitting the country, startup restaurants have also become popular in the hospitality industry VCs and angel investors are considering restaurants a profitable venture, and are now investing more than ever into exciting ideas. Investors look for scalability, standardization, and quality in the restaurant venture. The model needs to be successful enough to be replicated, and therefore, the first three or four restaurant outlets are evaluated before investing in them.
4. Robust Central Management
Robust central management is inherent to any long chain restaurant, without which the chain cannot grow profitably. It is impossible to oversee all the restaurant operations manually; therefore a restaurant ERP software is used to manage and monitor the operations.
Central Kitchen Management is especially required in long-chain restaurants, and Quick Service Restaurants, where there are multiple outlets, and consistency needs to be maintained throughout. Right from keeping a track on the inventory needs of all the outlets, to managing menu and recipe consistency everywhere, your ERP software can handle the entire central management. Learn how you can use a restaurant ERP to manage a large restaurant chain seamlessly here.
5. Hiring Right
It cannot be stressed enough that employees are the backbone of any restaurant, and they are the ones who keep it running. Therefore, hiring enough resources before the launch of the new restaurant, and training them adequately is an absolute must.
Often, a restaurant is known for its exceptional service and the signature dish. Hence, investing in a reliable and efficient staff is a wise step and crucial for restaurant business expansion. Hiring the team that can pull off the legacy of your restaurant brand, and then training them right is extremely important.
6. Consistency and Quality
The success of your first restaurant and the brand name will bring customers to your next restaurant, but only excellent food and service are going to help retain them. Therefore maintaining consistency and quality across all outlets are a must while running a chain of restaurants. Standardization of recipe is essential and helps to keep the taste and quality of the food. In the case of long-chain restaurants, brand image is integral to the chain’s success. A standard format and menu help to keep the brand image intact.
7. Maintaining the Effort
It is often seen that the other branches of a successful restaurant are not as popular as the first one. This is usually because restaurateurs often get laid back and do not pay as much attention to the new restaurants as they gave to the first one. This is the principal cause of failure of restaurant chains and leads to the stagnancy and failure. Each restaurant outlet is just as important and requires the same level of effort as given to the first successful outlet. Maintaining the same attempt plays an instrumental role in restaurant expansion.
Hiring a strong management team, and using a centralized POS with mobile analytics and reporting feature helps you keep track of all your outlets in one place. You can remotely view the restaurant operations such as total sales, total bills generated, and the number of customers served in real time.
Make sure to implement these tips during your restaurant expansion, and let us know how it helped you in the comments below!