Imagine this scenario. Your restaurant is overflowing with customers, and you have tables booked for weeks, profits are incredible, and customers are pouring in to taste your food. Do you think it’s the right time to expand your restaurant and establish yourself in a different location? Yes, it is.
Whether it’s your first restaurant or the tenth, expansion is a calculative decision to make for your business. Planning your finances is a key step—it will help you execute this development seamlessly.
The Financial Checklist
Evaluate Your Current Model: The advantage of expanding your restaurant over starting a new one is that you have a proven model. This can give you operational or financial references. When you draw the budget for your second venture, evaluate the success of your first one. Replicate or tweak it as per the inferences you have derived from this exercise.
Research Market Trends: Market trends will affect your expansion plans adversely. Research recent industry trends and make a note of the latest advancements to implement to your restaurant. For example, restaurants might be using kiosks for self ordering. Your first restaurant might be doing exceptionally well without this feature, but would likely be better to include it in your next project.
Pick a Location: Is your restaurant in a locality buzzing with people or is it a small cafe in a residential area? How much of your success do you owe to the location of your restaurant? If you are paying exorbitant rents to increase footfalls to your restaurant, you have to put that down in your expansion budget.
Hire and Train Staff: Expanding your restaurant means it is time to let go of helicopter-parenting your business. Hiring the right (and trust-worthy) staff can help you here. You might want to look for experienced people to take up prime roles in your outlets. Poaching them from renowned establishments might cost you a chunk of your money.
Concentrate on Consistency and Quality: Your business expansion should not affect your restaurant's quality or brand consistency. Customers expect your restaurant’s unique selling points at all of your outlets. Consistency in food, ambiance, delivery packaging, and customer service is essential. Note the costs for executing the same.
Put in a Marketing Effort: Marketing your new outlets is as important as marketing your first restaurant. Notify your customers that you have opened up a branch in their neighborhood. Allocate the budget for local newspaper ads, flyers, digital ads, banners, and TV commercials
Invest in the Right POS: Once you’ve expanded your restaurant, it is crucial to have all the information from your outlets handy. Using software that can easily scale up from one to many locations can save you time. Analyze the best POS software tailor-made for restaurants that will suit your business needs and invest in it.
It doesn't end with expansion. You also need to maintain your newly expanded business. You might have seen some restaurant chains where one outlet did exceptionally well, but customers didn’t prefer it in another location. This inconsistency might have been due to a few misses in the above factors. Having a steady cash flow from your primary outlet and the new ones is crucial to maintain the quality of your restaurant in all its locations.