Restaurant Expansion : When & How To Expand Your Restaurant Business
- December 19, 2023
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Jean-Philippe Serhal
Your restaurant is booming: customers are queuing for hours, online orders are overheating your delivery app machine, and your dishes are on the Instagram page of every big shot influencer.
“I should open a second location” is a thought that’s been occupying your mind for some time now, and you’re ready to take that next step. But is big demand the one and only sign you need to expand your business? And is opening a branch the only expansion strategy at your disposal?
Discover the analyses you can run to determine if it’s the right time to expand your business, and learn about the different expansion strategies you could activate to grow your business.
Table Of Contents
“I should open a second location” is a thought that’s been occupying your mind for some time now, and you’re ready to take that next step. But is big demand the one and only sign you need to expand your business? And is opening a branch the only expansion strategy at your disposal?
Discover the analyses you can run to determine if it’s the right time to expand your business, and learn about the different expansion strategies you could activate to grow your business.
Table Of Contents
1. Signs You're Ready To Expand Your Restaurant Business
The thought of expanding your business is an exciting one. It opens the door for more customers, more awareness of your brand, and increased profits. But opening a second location isn’t an easy feat : it takes funding, research, good timing, and a deep understanding of who you’re serving. That’s to say, it is imperative that you first nail your first location before moving to a new challenge, otherwise you will likely be drowned in stress, tasks, financial burden, a never ending list of emergencies and to-do lists.
So what are the clues you should look for as positive signs that your business is ready to grow?
1- Customer Demand Is Constant & Booming
The stability of and increase in customer demand is a strong sign that your concept is a success amongst consumers. You can measure the rate of demand by simply looking at the levels of business every day of the week, but also by looking into the rate of future reservations, and how they differ month by month. Another metric you could look into is the number of times your restaurant is mentioned in Top 10 lists, trendy food blogs, and influencer social media pages. If the numbers are stable and are increasing, then you might be on a solid track to success! Expanding your concept to another location could be a viable option to accommodate more customers.
2- Your Restaurant Is Profitable
A profitable concept is an expandable concept. If your current location isn’t paying the bills, then you should avoid looking into opening as a second location. Keep in mind that you could very well have a busy business, but if your finances aren’t optimized, then your profits won’t grow. Opening a new branch will come with its own bills and loans, which is why you wouldn’t want to add stress on top of the existing one generated from barely making it at the end of each month.
Several initiatives and optimization techniques can be activated, such as revamping your menu, reducing food costs, reducing food waste, and launching a marketing campaign. Focus on turning your original location to a profit before expanding a business that is currently struggling.
3- You’re Running The Show With Your Eyes Closed
It’s important to be running your business with ease before embarking on a new challenge. Your staff is on top of their tasks, your menu is performing, your inventory has reached optimal turnover rate, and customers are satisfied. No longer feeling challenged could be a sign that you’ve learned what you needed to learn from your first branch, and are ready to make space for the new skills that you will need to acquire as you start to deal with several branches.
4- You Trust Your Staff Members
Opening a new location will take your attention away from your original branch, which is why it’s key to have trust in your teammates. Having a qualified, well-trained team is a huge relief that takes weight off your shoulders when you know that your focus needs to be on the current strategy and execution to get your new branch out and operational. If you feel supported by your team and feel like you can trust them to deal with issues that are sometimes a long car ride away from you, then that’s a good sign that you may be ready to expand.
5- You’ve Streamlined Your Operations As Much As Possible
Your operations, both in the back-of-house and front-of-house, are running like a well-oiled machine. You’ve subscribed to software, namely a restaurant inventory management software to help support you with automation and data. Friction and costs are reduced to a maximum, your customers are satisfied, you entertain strong relationships with your suppliers, your dishes come out looking great, and plates come back empty. You have clear visibility onto the performance of each part of your business and tight control over each department. You know your model works, you’ve applied best practices, and you’re ready to expand.
6- You Have A Back Up Plan
Launching a new restaurant branch is risky, and anything and everything could turn sour quickly. A lot of unexpected costs, equipment breakdowns, and emergencies may come up when opening a new branch, and you need to be able to take care of these without jeopardizing the operations or financial health of your existing branch. That’s why having a backup plan is key, whether it’s financial or human resources, and why your original branch should be financially stable. There are several signs that may tell you that you are ready to embark on this new challenge. Hopefully, all of these are in the green, and whichever aren’t yet there, are being worked on. But is having it all a sign that you should duplicate your concept in just any other location and expect it to succeed? Well, that would be a dangerous assumption. Let’s discuss why.
Opening a new location will take your attention away from your original branch, which is why it’s key to have trust in your teammates. Having a qualified, well-trained team is a huge relief that takes weight off your shoulders when you know that your focus needs to be on the current strategy and execution to get your new branch out and operational. If you feel supported by your team and feel like you can trust them to deal with issues that are sometimes a long car ride away from you, then that’s a good sign that you may be ready to expand.
5- You’ve Streamlined Your Operations As Much As Possible
Your operations, both in the back-of-house and front-of-house, are running like a well-oiled machine. You’ve subscribed to software, namely a restaurant inventory management software to help support you with automation and data. Friction and costs are reduced to a maximum, your customers are satisfied, you entertain strong relationships with your suppliers, your dishes come out looking great, and plates come back empty. You have clear visibility onto the performance of each part of your business and tight control over each department. You know your model works, you’ve applied best practices, and you’re ready to expand.
6- You Have A Back Up Plan
Launching a new restaurant branch is risky, and anything and everything could turn sour quickly. A lot of unexpected costs, equipment breakdowns, and emergencies may come up when opening a new branch, and you need to be able to take care of these without jeopardizing the operations or financial health of your existing branch. That’s why having a backup plan is key, whether it’s financial or human resources, and why your original branch should be financially stable. There are several signs that may tell you that you are ready to embark on this new challenge. Hopefully, all of these are in the green, and whichever aren’t yet there, are being worked on. But is having it all a sign that you should duplicate your concept in just any other location and expect it to succeed? Well, that would be a dangerous assumption. Let’s discuss why.
2. The Restaurant Expansion Analyses You Should Run
It is not uncommon for successful restaurant owners to assume that a second location will work just as well as their first branch. It is a false and dangerous assumption, because the environment in which your location is can significantly impact the performance of your business. Every location has its own sets of advantages and risks, which is why each must be analyzed and studied independently and in detail.
Several types of analyses can be run to help you gage a greater understanding of the dynamics of your business and of the location you’d like to open in.
Several types of analyses can be run to help you gage a greater understanding of the dynamics of your business and of the location you’d like to open in.
1. Understand Your Customers It is key to gain a clear understanding of who you’re serving, and why they keep coming back. What are the habits of your customers? Where do they usually hang out? At the mall? In the park? Near their offices? What are the menu items people buy the most, and what are the items that are trending at the moment? You can find such answers in several ways :
- Observe and talk to your customers: If you see a regular, talk to them and ask them why they keep coming back. Is it the quality of the service? Is it a specific item that they like to order? Why do they order it regularly? What makes it so special to them?
- Analyze social media: what do people post about your restaurant? Is it a star dish that looks good on the ‘gram? Is it a specific area within your restaurant that looks too good not to show off to their friends? Is it the view? Find out what people post about in order to determine what you could take from this location, to the next.
- Online reviews: What are people saying about your place? What ratings are they giving you, and how are they justifying it? This can be a great place to learn about the things your customers love about your business.
2- Choose Your New Location Wisely What worked with your first location won’t necessarily also work with your second restaurant, and that’s because things will be different. For example, the residents, nearby shops (potential competition), type of foot traffic will be different. Here are a few things to keep in mind:
- Don’t go too far : Word-of-mouth is the best form of marketing. If you choose to open too far from your existing fanbase, you may need to re-invest heavily in marketing to make yourself known.
- Be where your customers are : Open where your customer base typically tends to be. If you’re a coffee shop that youngsters love, try opening in an area where they typically hang around, or where similar types of restaurants like yours operate. You will be more likely to attract like-minded customers, and also ride on your competition’s marketing that got their customers around this place, in the first place !
- Evaluate the competition : If a direct competitor is standing next to the location you’re eyeing, it may be worth considering your move. This may or may not be a good idea. You will have to run an analysis to see if your offers could cut your competition’s foot traffic, and redirect some of it to you.
- Be mindful of delivery radiuses : If you intend to also do delivery, consider a location that serves a new delivery radius, in order to serve a whole new audience of online customers.
3. Know Which Service Model To Opt For
What kind of service do your customers expect from this new location, and are there any upgrades you could bring to the table?
If you’re opening in a crowded area, where customers expect to be served quickly and take out their food, then installing kiosks may be the right approach.
If your target audience is looking to sit down and enjoy their time in your restaurant, then removing friction from the process by, for example, enabling your customers to pay from the table and split bills easily, may be worth considering.
If you’re used to serving seated customers, but would like to now serve a working population at lunch time, then you’d be looking for customers wanting to order their meal and take back to the office quickly. This means that your service model should be optimized for this way of consuming.
You shouldn’t be afraid of having several site-model plans when operating in different locations. On the contrary, adapting to your audience is a strong advantage!
What kind of service do your customers expect from this new location, and are there any upgrades you could bring to the table?
If you’re opening in a crowded area, where customers expect to be served quickly and take out their food, then installing kiosks may be the right approach.
If your target audience is looking to sit down and enjoy their time in your restaurant, then removing friction from the process by, for example, enabling your customers to pay from the table and split bills easily, may be worth considering.
If you’re used to serving seated customers, but would like to now serve a working population at lunch time, then you’d be looking for customers wanting to order their meal and take back to the office quickly. This means that your service model should be optimized for this way of consuming.
You shouldn’t be afraid of having several site-model plans when operating in different locations. On the contrary, adapting to your audience is a strong advantage!
4. Optimize Your Existing Location’s Operations
It is not uncommon for restaurant owners to regret not nailing down their operations, cutting costs as much as they could have, and building stronger relationships with their existing suppliers before opening a second location. Every operation that is not optimized can lead to a waste of time or money. And if you expand your restaurant with a second location, then the amount of time or money wasted is suddenly doubled.
You can leverage the power of restaurant analytics software to access powerful analytics related to the performance of your business, identify discrepancies, and act on them. Look at your cost analysis, inventory metrics, sales metrics, and wastage to gain a clear picture of your restaurant’s health.
If your numbers aren’t all in the green, it is imperative to address them. If external factors that are not under your control are affecting those numbers, then it is key to keep them in mind upon opening your new branch.
Ultimately, opening a new location that operates the exact same way as your first branch, and betting on its success is a risky move. It is key to understand the demographics around the location in which you plan on opening, their habits, their wants, and how you compare to neighboring competitors.
Ultimately, opening a new location that operates the exact same way as your first branch, and betting on its success is a risky move. It is key to understand the demographics around the location in which you plan on opening, their habits, their wants, and how you compare to neighboring competitors.
3. Investments You Need To Consider For Your Restaurant Expansion Plan
Launching a new branch requires capital and preparation. Here are a few points you should keep in mind, in order to launch your new restaurant successfully.
Invest In Equipment & Kitchen Design
Opening a new location is a chance for you to put to use everything you have learned managing your first branch. Was the design of your kitchen not optimized, and created chaos and friction? Was your equipment not adapted, which may have caused delay in food going out? Learn from your experience, take feedback from the team, and put those learning into practice with your new location. Make sure that the design of your kitchen also fits the business model of your choice.
Invest In Equipment & Kitchen Design
Opening a new location is a chance for you to put to use everything you have learned managing your first branch. Was the design of your kitchen not optimized, and created chaos and friction? Was your equipment not adapted, which may have caused delay in food going out? Learn from your experience, take feedback from the team, and put those learning into practice with your new location. Make sure that the design of your kitchen also fits the business model of your choice.
Invest In Qualified Staff
Launching a new restaurant is hard, which is why investing in experienced staff to help support you is key. Ensure they fit the culture and know how to work with everyone, and that they fit the customer service culture you expect to have. Provide the necessary training to get them up to speed if you have your own way of doing things. Don’t hesitate to delegate some of these tasks to members of staff who have been working with you for a long time.
Launching a new restaurant is hard, which is why investing in experienced staff to help support you is key. Ensure they fit the culture and know how to work with everyone, and that they fit the customer service culture you expect to have. Provide the necessary training to get them up to speed if you have your own way of doing things. Don’t hesitate to delegate some of these tasks to members of staff who have been working with you for a long time.
Get The Right Licenses
Yep, it’s quite important to operate within the law. Make sure you have the right licenses that allow you to serve your customers. In some countries, you may need a set of licenses, such a license to serve alcohol.
Subscribe To The Right Software
As you expand your business, having a restaurant inventory management platform built specifically for multi-branch hospitality businesses will immediately become invaluable to you. From automation to real-time insights, and from inventory software to menu engineering software, such a platform will take a lot of the heavy weight off your shoulders to run your operations smoothly.
Look for partners and investors
Opening a new branch is no easy feat. It takes work and capital, which is why partnering with experienced restaurant owners or managers can be hugely beneficial. The right partners won’t just bring financial support, but also their support via their network, their deals, and their expertise.
Plan Your Opening
Tell your customers, friends, family, staff, and anyone you know to join you on the big day. It’s a great way to get the word out about your new place. Consider inviting influencers to further boost your reach.
Invest In Marketing
Make some noise! Invest in marketing channels to reach out to your existing customers and to get new ones. Consider pushing out ads, distributing leaflets, creating social media posts, working with influencers, and setting up promotions.
Yep, it’s quite important to operate within the law. Make sure you have the right licenses that allow you to serve your customers. In some countries, you may need a set of licenses, such a license to serve alcohol.
Subscribe To The Right Software
As you expand your business, having a restaurant inventory management platform built specifically for multi-branch hospitality businesses will immediately become invaluable to you. From automation to real-time insights, and from inventory software to menu engineering software, such a platform will take a lot of the heavy weight off your shoulders to run your operations smoothly.
Look for partners and investors
Opening a new branch is no easy feat. It takes work and capital, which is why partnering with experienced restaurant owners or managers can be hugely beneficial. The right partners won’t just bring financial support, but also their support via their network, their deals, and their expertise.
Plan Your Opening
Tell your customers, friends, family, staff, and anyone you know to join you on the big day. It’s a great way to get the word out about your new place. Consider inviting influencers to further boost your reach.
Invest In Marketing
Make some noise! Invest in marketing channels to reach out to your existing customers and to get new ones. Consider pushing out ads, distributing leaflets, creating social media posts, working with influencers, and setting up promotions.
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4. Restaurant Expansion Models
If opening a brand new branch is too big of an investment or risk for you, there are other options you could look into to add a new source of income to your business :
1. Launching A Delivery Service
Food delivery has become a normal way for customers to consume. With numerous delivery apps at the disposal of consumers and with the rise of cloud kitchens and virtual brands, launching a delivery service is a low-risk decision for you.
- Launching A Delivery Service
- Launching A Catering Service
- Launching A Food Truck Business
- Launch Branded Merchandise
1. Launching A Delivery Service
Food delivery has become a normal way for customers to consume. With numerous delivery apps at the disposal of consumers and with the rise of cloud kitchens and virtual brands, launching a delivery service is a low-risk decision for you.
Depending on the business model you choose to go after, the type and scale of alterations needed to your existing way of working will vary.
2. Launching A Catering Service
Catering is a great way to help your customers organize their dream event. It’s an additional service line and additional income for you. It takes away the need to think about finding a new location, investing in fit out, and finding a large group of new staff members. However, you will need to take care of and invest in the logistics aspect of this new line of business. Getting your food to the event location on time, in an ideal temperature, and served beautifully, is key. You may need to review your menu and propose items that your customers love but also transport well. You will also need to test out your menu with your customers. This will be a test-and-learn experiment.
2. Launching A Catering Service
Catering is a great way to help your customers organize their dream event. It’s an additional service line and additional income for you. It takes away the need to think about finding a new location, investing in fit out, and finding a large group of new staff members. However, you will need to take care of and invest in the logistics aspect of this new line of business. Getting your food to the event location on time, in an ideal temperature, and served beautifully, is key. You may need to review your menu and propose items that your customers love but also transport well. You will also need to test out your menu with your customers. This will be a test-and-learn experiment.
Keep in mind that catering can include both cooking on site, and delivering a large quantity of pre-prepped food. If you opt to prepare food on site, this will require an additional investment in equipment, staff, and logistics.
3. Launch A Food Truck Business
Food trucks are all the rage. It’s a great way to build a presence by attending popular events such as festivals, to get your name out. Trucks can move around the whole country, so there’s no limit to where you can be. Food trucks aren’t a usual or popular expansion strategy, but it could be worth considering depending on your situation and goals.
4. Launch A Merchandise Store !
Are your customers big fans of your brand? Launch a set of branded items that your customers can purchase and back home with them! You can sell shirts, mugs, caps, and even bottles of your in-famous secret sauce!
3. Launch A Food Truck Business
Food trucks are all the rage. It’s a great way to build a presence by attending popular events such as festivals, to get your name out. Trucks can move around the whole country, so there’s no limit to where you can be. Food trucks aren’t a usual or popular expansion strategy, but it could be worth considering depending on your situation and goals.
4. Launch A Merchandise Store !
Are your customers big fans of your brand? Launch a set of branded items that your customers can purchase and back home with them! You can sell shirts, mugs, caps, and even bottles of your in-famous secret sauce!
5. Conlusion
Expanding your restaurant involves more than fulfilling high demand. It’s a strategic process that demands careful analysis and planning. Understanding your clientele and scrutinizing potential locations are crucial steps. It’s also essential to make smart investments in staff, equipment, licenses, and effective marketing strategies.
If the prospect of opening a new branch feels overwhelming, consider alternative expansion models like delivery services, catering, or merchandise. Remember, successful expansion isn’t solely about growing—it’s about making calculated moves toward sustainable success that aligns with your business goals and market dynamics.
If the prospect of opening a new branch feels overwhelming, consider alternative expansion models like delivery services, catering, or merchandise. Remember, successful expansion isn’t solely about growing—it’s about making calculated moves toward sustainable success that aligns with your business goals and market dynamics.
6. About Supy
Supy is a data-driven restaurant inventory management software that streamlines operations during expansion phases. It’s designed to tackle the challenges of expanding restaurants, such as handling increased inventory due to more extensive menus or additional locations, managing fluctuating demand, and optimizing space in new or existing venues. Supy’s platform supports essential expansion activities including procurement adjustments, menu diversification, detailed reporting, and analytics, ensuring food safety and quality across multiple locations. By providing precise inventory forecasting and supplier coordination, it’s an indispensable tool for efficient scaling, cost control, and maintaining customer satisfaction in an expanding restaurant business.
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