How Successful Restaurants Can Grow to Multiple Locations

There are two philosophies about growing a restaurant beyond the first unit:

  • To create something special, get good at it, then try to do it again
  • To create a model from the beginning that is built to grow

Both have their merits and flaws. By creating something with love and that makes the owner happy, the concept stands a good chance that it will get the attention it needs to be successful. Owners wring their hands over guest complaints, costs are kept in check by a watchful eye, and sales are often driven by the owner’s stature in the community. Those restaurants that succeed this way will validate that the concept works. The downside is that these restaurants are often run by emotion…without any other system than the owner’s ability to see problems and react accordingly. Owners struggle to take vacations and the thing that makes the concept successful is often sheer will and effort rather than through thoughtful planning and structure. What’s worse, the toil and sweat that goes into perfecting that first unit can make the owner thing twice about trying to do it again with the same concept.

The flip side is to develop a concept from scratch with the intent to expand. In this scenario, systems are vital and owner’s often have no interest in working in the business themselves. They are often created as an answer buying an off-the-shelf franchise where franchisees tithe 5% to 9% of sales to the brand owners (say Subway or Chick-Fil-A). The sentiment is, “why can’t I create something scalable myself?” As a champion of systems, efficiency, and structure, these owners can easily detach from unit-one to expand to multiple units and even penetrate multiple markets. It’s not a passion project – it’s a business venture.  The downside is that a self-started franchise takes time to incubate and stabilize. Margins are tight and economies of scale are not yet in place, so it sits heavy in the water as the first unit won’t throw off enough cash to allow the owner to quit their jobs and focus all of their attention on one store. If the goal is to franchise to others, the concept needs to be more than a good idea – it needs to prove itself through expanding to multiple units in one market while successfully breaking into at least one other market. Profitability is the end goal so they are often developed without a soul, devoid of passion or love…and, as such, it may never connect with its first community.

The answer, for independent operators who are passionate about launching a restaurant and who also want to strike it rich, lands somewhere in the middle.

  • Make sure the offering is not overly complex. In the 22 Immutable Laws of Branding, by Al and Laura Ries, the law of contraction says, “a brand becomes stronger when you narrow its focus.” Being everything to everyone is difficult to sustain, let alone replicate.
  • Make sure the operating model is simple enough that you don’t have to hire managers with advanced degrees to operate it. If operating the first model requires hard-to-find talents or skills, then you’ll struggle to find new manages when you grow or replacements for managers who don’t deliver results.
  • Plan and study the first one, then give it time to mature. When you launch a new restaurant that is unique (even if it sells burgers, it is a new brand), remember that you have brought a new product to market and you need to get consumers to change habits to visit you instead of their old restaurant haunts. Remember, your first restaurant will have warts, so it will not be a prototype for future restaurants. It’s somewhat of a lab. Pay attention, adjust where necessary, and bake your learnings into the second unit. The first unit isn’t a throw away…but it will likely never be as efficient or profitable as subsequent units…unless nostalgia kicks in years later after the brand has become wildly popular. People love to visit the first Starbuck’s in Seattle, which started as a by-the-pound, whole bean retailer for home coffee brewing (Starbucked by Taylor Clark), and looks / feels nothing like a contemporary Starbuck’s coffee shop.
  • Owners should NOT maintain a role that requires their physical presence every day. There is indeed truth to the adage, “if you want something done right, do it yourself,” but unless your restaurant can operate with others at the helm, then your concept will really become just another job for you. From day one, focus on organizing the work and tweaking systems to deliver your brand so others can be held accountable for driving those systems.
  • Create a great restaurant…then find a location that gives that restaurant the best chances of survival OR identify a location you want to be in …then develop a concept that serves that market the best. What you SHOULDN’T do is decide on your concept and your location at the same time. I recommend creating a concept that suits a type of market with a lot of similar markets. Proximity to your house is not a wise factor to consider when trying to create a scalable, duplicatable concept as you can only plant one unit near you. However, if your ideal location happens to be near you and your market represents similar markets elsewhere, it’s perfectly fine to create a concept that services that market.
  • Struggle through the boredom. Nipping, tucking, massaging, perfecting, organizing and otherwise primping the same concept can eventually get boring. Once that concept is successful, there is temptation to do it all over again but with a new concept. It’s wiser to stick with that same concept until you get the prototype right, so you can expand to other markets. The perfected concept will be a money-making machine that will feed your creativity for years to come and you can experiment with new concepts on the back of the first concept to your heart’s content.

Restaurants are, by nature, emotional businesses. Customers often decide to eat or drink in a particular restaurant because it makes them feel a certain way, beyond the utility of eating to get full. Rating sites like Yelp, TripAdvisor, Zagat and Eater are popular outlets for consumers to gather and share their experiences to an audience hungry for what they have to say. Dentists often reach out to us with plans to plunk their savings down on a restaurant venture but I have yet to come across a restaurant owner who wanted to break away from the restaurant business to open a dental practice. As emotional investments, would-be restaurant millionaires should harbor some passion for their restaurant project. At the same time, to become that millionaire, would-be restaurateurs should plan to launch with systems and structure that allow them to grow.

Ray Camillo – Founder & CEO, Blue Orbit Restaurant Consulting

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