Considering Opening a Second Restaurant Location? Here's What You Should Know

by Dhiren Bhatia / May 11, 2020

If you’re considering expanding your restaurant by adding another location, things are probably going very well for your restaurant.

If so, congratulations are in order. A bustling restaurant with a full dining room and lines of people waiting for reservations can be exciting. You may have always dreamed of expanding your restaurant and watching it grow into even more communities, and your opportunity to do that might be at hand.

The knowledge and experience you gained from opening your restaurant’s first location will make opening another one a bit easier in some ways. But in other ways, each new restaurant is a very unique experience. Its different location and different staff can make it a completely different challenge than your first restaurant. Plus, owners and upper level managers will have to deal with a new and expanded set of responsibilities.

It pays to be cautious. Too many mis-steps in opening a second restaurant location can start to affect the success of the original location, either in the form of wasted cash or damage to your restaurant’s brand.

Here’s what you need to know before you consider opening a second restaurant location.

You Need a Business Plan

You should approach your new location as an entirely new business, and plan for it with the same diligence you did with your first restaurant location. As we explained in our post on opening a new restaurant, that means taking the following steps.

  • Clarify its place in the market - You can’t locate your new spot too close to the old one, or the locations might compete with one another. But if the new location is in a completely different neighborhood, your clients and culture might change. Will you give the new restaurant location a little bit of its own character, or do you want to replicate the original location exactly? These kinds of questions will affect how you plan your menu and build the rest of your marketing and business plan.

  • Nail down the costs. Don’t make any assumptions about the new location when it comes to the costs of things like insurance, staffing, marketing, and construction. A new building can have vastly different infrastructure with very different expenses. Marketing your new location could possibly be a little easier thanks to brand recognition from your past location — but it all depends on how far apart the locations are and how well-known your original location is. And there may be added complexities when it comes to procuring the food and materials you need to operate in the new location. Be thorough as you make your plan so you can make sure you have the capital required.

  • Project revenue and profitability - A new location with a different seating capacity, different food costs, and a different staff will certainly have different revenue and profitability projections. You need to know exactly what your new restaurant needs to succeed financially, independent of your original location.

You Need the Right Team in Place

If your restaurant is doing so well right now that you’re considering expanding, the odds are good that you have a solid team in place at your original restaurant location. 

However, you should prepare for the fact that adding a new location can change the dynamics of that team, and in some cases it can even be a blow to morale. 

There will necessarily be changes in job responsibilities as your restaurant expands. Owners will be managing a larger staff and have a whole new set of logistical responsibilities to contend with, which means they won’t have the same amount of time and energy to deal with their responsibilities of day-to-day restaurant management. 

They may decide to promote someone to handle those responsibilities and assist them, which can shake up existing management structures. Many restaurateurs also decide to move existing employees to the new location so that they can bring some of the original location’s experience and culture.

Depending on how this is handled, this can cause problems. Some staffers may feel neglected or left out if they aren’t asked to be a part of the new location, and others may resent things like a new commute, a new boss, or parking requirements at the new location. 

To prevent these kinds of stumbling blocks and keep morale high, let your restaurant team know about plans well in advance and involve them in decisions if possible. Anticipate how moving some of staff will make the rest of your team feel and try to address those feelings in advance. 

You Need Scalable Software Tools

For modern restaurants, the backbone of all restaurant operations is a cloud-based point of sale system. The POS system connects with accounting, inventory, and marketing apps to create a comprehensive web-based system to run the entire restaurant. 

The top POS systems on the market today allow restaurateurs to scale up quickly and handle multiple locations easily and centrally.

Your POS system should be able to handle the following when it comes to multiple locations:

  • Reports - Managers should be able to see financial and operational data from multiple locations in real-time easily, both combined and individually.

  • Staff - Employee accounts should be available in the systems for both restaurant locations. Their skills and personal details, once entered, should be accessible to managers at any location.

  • Menus - It should be simple for restaurant owners to duplicate menus for each new restaurant location, but also make menu modifications for new locations as necessary. 

  • Customer accounts - If you have a marketing system in place for your customers, their loyalty points, rewards, purchases, and dining histories should be consistent for all new locations.

  • Gift cards - Restaurant patrons should be able to purchase a gift card online or at any individual restaurant location with confidence that they can use it at any location.

  • Add-ons and integrations - Part of the beauty of modern, cloud-based software is its ability to connect with an ever-growing number of software tools. Restaurateurs are connecting their POS systems to everything from staff scheduling software to web stores to sell their gift cards and branded merchandise online. These apps might not scale as well as the bigger, more robust POS systems that they’re integrated with. That’s something you need to know before you get ready to add a new location.

This may sound a little complicated. 

However, don’t be fooled into thinking that your restaurant requires an expensive, complicated ERP system to handle these software needs as you grow. 

Every restaurant owner should be keeping a close eye on overhead costs, and ERP systems often require a large upfront investment. Plus, in many cases, ERP systems are bulky and unnecessary for your needs. 

In comparison, modern POS software is nimble and scalable, and you can buy more as your business grows. Just because a software program is bigger or more expensive doesn't mean it's better.

If you’re concerned about the ability of your existing software to scale with your restaurant, we hope you contact us at Cloudscape Technologies. 

We specialize in empowering restaurateurs to install and implement the best cloud-based solutions on the market today. We even install the software on-site and support you through onboarding. Our goal is to empower restaurant owners to continue focusing on the work of growing their restaurants while we handle the huge project of getting your software completely up and running.

Click here to learn more about our services for restaurants.

Tags: Restaurant Tips Small Business Tips Expansion
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