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How to open a second restaurant location

If you’re running a restaurant business and thinking of expanding into a second location, that’s really something to feel proud of. It means you’ve most likely been successful in your first venture, have developed a strong brand and customer base, and have your cash-flow well managed.

That said, the best advice for any type of business expansion is not to take those previous successes for granted. So, don’t rush the decision and, just as you’ve done before, be prepared to give the second location the time, dedication and passion it needs to launch and thrive.

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In case those early days are a bit of a sleep-deprived fog in your memory, here’s some of the key steps you’ll need to consider:

1. The location

You chose a great location once, so now’s the time to work that magic again. Except, it isn’t really magic is it? More like a simple case of having a good understanding of your brand’s positioning and being thorough with the market research.

Think about why your current location works: Is it because you’re unique on your street? Are you in the midst of a known ‘eating’ district? Or, conversely, are you in an area where the ratio of restaurants to residents is low? Would your existing client base be eager to see more of your brand?

Spend some time researching the proposed area for your second location.  What restaurants are there already? Are they doing well? Is your concept different from the existing offer? Are there any other attractions nearby that might bring or deter customers? What are the demographics of the area and does this match your customer profile? What taxation/ permissions do you need to consider? Can you carry out some brand testing before making a final decision?

2. The business plan

As you’ve already prepared one business plan, this time around it should be a little easier. Use your knowledge of what worked well and what didn’t to formulate your new plans. To satisfy any potential lenders/ investors, make sure you cover all the essentials (service/ product offer, market analysis, customer profile, marketing, financial projections etc).

When you get down to the detail, duplicating the systems you already use can bring many benefits. Keeping things like accounting software, inventory management, technology platforms and HR practices consistent allows for manageable growth, smoother operations and brings both time and cost efficiencies.

3. The money

Having a great location and master plan is pointless if you don’t have the capital to fund the expansion. Start working on this by making a list of every expense involved in the venture, clearly defining what’s required for the start-up phase and what will be needed for ongoing revenue costs.

Do you plan to use your own funds or revenue from your existing restaurant? If that’s the case, then it’s a good idea to seek professional financial advice over how to minimise any impact on profit for your current business. If you don’t yet have sufficient funds, you may need to consider a business loan or seek external investors. Borrowing from friends/ family or crowdfunding could be other options.

4. The people

Building up your first restaurant into the thriving business it is today was most likely a totally ‘hands-on’ job. But, when opening a second restaurant, the reality check is that you cannot be in two places at once and so, this mindset has to change.

In its early stages, the new restaurant will require more of your attention so, if you haven’t done so already, now’s the time to leave a manager in charge of your first location. Choose someone that you and other staff trust and plan a schedule of check-ins to give yourself peace of mind and show everyone that they’re still highly valued.

When it comes to hiring new people for the second restaurant, look at the skills, knowledge and qualities your existing team display and use this as a guide for your hiring criteria. You should also consider how you can use seasoned staff in helping to train new recruits.

Finally, don’t be fooled into thinking you have to manage everything at the new business yourself. If there’s something you’re not so good at, whether that’s inventory management or website development, find an expert and outsource that task!

5. The stuff

What do we mean by ‘stuff’? Well we’re talking about all the furniture, equipment, supplies, food/ drink inventory, technology and systems that you need in place before you open the front doors.

We’re not going to go into what should be on that long purchasing list – you’ll have a good idea of this already – but it’s worth remembering that, as a business grows larger, it can be easier to make mistakes. So, be methodical and organised.

  • Measure spaces accurately so that everything fits exactly where it is supposed to.

  • Maintain consistency by using the same vendors for your inventory but, with larger orders to make, perhaps you’re in a position to strike a new deal!

  • Identify the technology that helps you run your business more efficiently. Something as simple as a smart, easy-to-use POS system can help you tick so many boxes – from ensuring a seamless relationship between the restaurant floor, kitchen and bar to helping you manage inventory, sales and staff performance.

Have you just launched your brand at a new location?

Either way, it’s bound to be an exciting but demanding time. At SumUp, we’d love to hear more about what you’re planning and whether we can help you meet the challenges that come with growth in the hospitality sector.

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SumUp Team