Opening a Second Restaurant Location: A Guide to Expanding Business
If you’re running your own restaurant then you already know what a massive endeavor it is. It’s a full-time job that demands your undivided attention. To most restaurant owners, even very successful ones, opening up a second location sounds like science fiction. Opening a second restaurant location? Now that sounds like a challenge.
But in the right situation and with a right moves being made, it is not an impossible feat. Perhaps you’re a successful restauranteur. Your eatery is running on all cylinders and has been for some time. In this situation, you might be asking yourself – what’s next? Opening up a second restaurant location might be the answer.
But how do you know if you are ready to move on from being a successful restaurant owner to potentially becoming the successful owner of a restaurant chain? Here are a few questions to ask yourself if you’ve been considering such a move.
Can Your Current Location Carry You?
Unless your original restaurant is making a killing, there really is no reason to even consider expanding your operation. That’s the first and most important sign you need to see in order to get the ball rolling. Is your main location generating enough money to sustain your business and cover at least some of the costs of opening a second restaurant location? If so, you have a good place to start.
Having a restaurant that’s very profitable is not only a good starting point, financially, it also gives you a fantastic place to begin in terms of developing a business plan for your second restaurant location. Take a look at what has worked for your first location and then perform an analysis on whether these winning business ideas can be implemented at your second location as well.
How important was the neighborhood to the success of your first location? Will you be able to find a location that has just as much potential for success as the previous one? How much competition did you have at your first location? Is there more competition to battle at the potential second location?
Use your successful location as a benchmark that is going to help you plan your next move. And while the exact conditions that allowed your first restaurant to succeed can rarely be mirrored at your next location, you can still gain tremendous insights by analyzing what worked at your first location and what didn’t.
And of course, if your second location ends up taking longer to get going, it’s good to know that your first location is going to be able to handle some of the financial burdens that is sure to come in the early phases of your expansion.
Can One Location Succeed Without You?
How critical is your presence to the success of your restaurant? Do you need to micromanage your business or do you have a team that you can trust to keep the eatery purring along even when you’re not around?
If you don’t believe that the success of the first restaurant can be duplicated if you aren’t able to dedicate all your attention to it, then it’s not worth attempting. There’s no way to devote all of your attention to two restaurants – it’s physically impossible. And if that’s the situation, no matter how dedicated you are, one location is bound to suffer. Either your first location will flounder without you or your second will never get off the ground.
Many restauranteurs do not realize how important it is to create a strong team of trusted business partners to surround them. Many are prone to trying to participate in every facet of running their business, and sometimes they end up spreading themselves too thin as a result.
Do you have someone on your team that you can trust to run your first location while you’re tending to the new one? Do you have someone that you can trust to develop the second location while you keep the old one profitable?
If you don’t, then you should hold off on opening a second location. What you should then focus on is working to assemble a team of skilled and trustworthy colleagues that you feel comfortable handing the reins over to every now and then.
Is The Market Big Enough?
When speaking about opening up a new location, it’s already assumed that you have thought about it some and that you at least have an idea of where you’d like the new location to be. Obviously, researching that planned location is one of the most important aspects of this undertaking. If you’re already running one successful establishment, picking the right location was already one of the most important steps to opening up your first restaurant.
Thankfully, the process should be a little easier this time around since you already know what to look for – you know what works for you. Most of the time, it’s not just about the food, it’s about the clientele. What are your top demographics? If your best customers are business people who work in the vicinity of your original restaurant, don’t assume that you’ll be able to duplicate your success without them.
If the concept of your second location does not differ greatly from the concept of your first restaurant, make sure that your next location is not trying to capitalize on the same exact group of people. Make sure that it’s far enough away from your first location, but at the same time, try to find a consistent demographic.
If your target audience is college students, don’t open up your second restaurant near the same campus. Try to find a location that allows you to cater to a different group of the same demographic.
Do You Have the Needed Capital?
As you already know, being that you’ve already done it, opening a second restaurant location is not cheap. Even if your first location is doing very well, that certainly doesn’t mean that it’s generating enough income to support your plans to the open a second one.
The good thing is that you already have an idea of what it costs and you are aware of the type of expenses that go into it. You’re going to need to pay rent for your new location. Is the projected second location in an area that’s cheaper than your current one? How much new equipment do you need? How many employees are you planning to hire? How much is renovating and furnishing your new location going to run you?
There’s a good chance that you might have to end up taking out a loan for the new location. Thankfully, there are plenty of options for getting restaurant loans. If you need to go that route, and you are probably going to, make sure to take a long hard look at your options to decide what’s best for your restaurant. Don’t be afraid to mix and match loan types to get the best results.
The bottom line is that opening a second restaurant location is not easy. There are many prerequisite circumstances that needs to be in place before you can even start thinking in that direction.
But once you have checked off most of those requirements, the good news is that this is going to be somewhat familiar territory for you. You’re already successfully running one restaurant, which means that you have already beaten the odds. You’ve been through it and you know what it takes to succeed in this very crowded vertical.
However, it’s important to remember that running one successful eatery doesn’t guarantee the success of another one. Take your time and make sure that you aren’t cutting any corners the second time around and above all, do your homework before taking the leap.
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