Opening a Second Restaurant Location? Consider These Important Things First

To be a restaurant owner brings its highs and lows (what profession doesn’t?) You can do what you do every day, but you also have a huge amount of responsibility on your shoulders. Nonetheless, you have found success in establishing and operating your first restaurant, so much so that you are planning a second.

Due to the success of your first restaurant, you might be excited to add a new one. Because of this success, however, you may also be afraid as to how the business will be affected by the arrival of a second restaurant location.

There is no simple, clear way of knowing whether you are prepared to open a second (or 20th) restaurant location. However, before you begin planning, here are some essential questions to ask yourself.

  • Is your restaurant so busy it’s difficult to deal with crowds?
  • Are your customers driving long distances to visit your restaurant?
  • Do you have plenty of cash flow?
  • Do you believe that opening a second location will increase your capital?
  • Are you ready and able to put in long hours to launch the new restaurant?

If yes is your answer to all of these, then congrats! You’re likely prepared to open another restaurant. Before you do, though, here are some important things to think about.

Do You Have Steady Cash Flow?

Consider the cost before you jump into launching another restaurant. You’ve already created the groundwork to open a venue, and you know how much money is required to get your project off the ground. So far you’ve been successful, but have you time to do everything again?

When you have enough cash flow to finance the new location, you are probably ready to open a second location. But beware of using the profit from your existing location to break new ground. If you take this risk you don’t want to lose your existing profits

When you have enough cash flow to finance the new location, you are probably ready to open a second location.

One choice is to obtain capital from an outside source, particularly from investors who concentrate more on expanding their investments than on making immediate profits. But debt with high return rates is always risky, but even more so when your new location is unlikely to turn a profit for the majority of the first year.

Have You Found the Right Location?

You’ve heard it said, time and time again, location, location, location. But in this case, it’s important to consider where you’ll open your second restaurant in relation to your first restaurant’s location. Opening too close to your flagship could weaken your customer base. On the other hand, it could be an ideal solution to open a second location nearby if your product is trending and there is low competition.

If it’s too close, consider opening further away from your existing restaurant to attract a slightly different audience. As always, the population of the area, demographics, and market will need to be weighed. You’ll likely want to look elsewhere if you intend to open a Mexican restaurant in a town that already has 7 competitors.

If possible, try a ‘pop-up restaurant’ where you are considering to open your next location.

If possible, try a ‘pop-up restaurant’ where you are considering to open your next location. This is a great way to test the concept in a new market. This allows you to measure the audience, demand, and popularity to see whether it fits properly.

You can either make it a mobile kitchen or rent an empty space that once held a restaurant when you launch the pop-up. Arrange a dining area and advertise the pop-up in a way that clearly indicates its temporary aspect.

Have your employees explain to your guests the purpose of the pop-up and ask your guests for feedback. You will get opinions as to whether or not people want to see your restaurant become a more permanent location in the area. From this point, you can choose whether to open up there or to start searching for a new location.

Do You Have the Right Team & Resources in Place?

You’ve got the cash flow, you’ve found a suitable location but now think about the long-term. If you want your second location to succeed, you will need to train and retain a quality team. You can’t be in two locations at once as the owner (unless you have magic powers) so you have to make sure you can trust the people who operate your restaurants.

You’ll need to be as involved as possible at the start of your second location. By this point, your first restaurant should be a well-oiled machine, thriving on its own enough that you can trust the current staff in charge is doing well. You’ve already set quality standards at your first restaurant, and setting your new location up for equal success is just as crucial. In the early stages, being highly involved as the owner can help ensure that your operations run as they should.

During the early days, devote your attention to the new locations so that you are hands-on in preparing your new employees for success.

To ensure that things are operating as efficiently as possible, monitor each area of the restaurant; front of house and back. When changes are needed, it is best to get these out of the way quickly. Spend your energy on this new location and ensure that you give it the attention it needs to run successfully and grow.

Is it Time to Rebrand?

You may get too large and grow beyond the previous brand identity of your restaurant. This is often a good thing! But if you never invested the time to create your brand with a vision of the future, it can cause problems for you as you expand into new markets with your second restaurant.

Let’s imagine you’re a little Italian restaurant. Your first location has been established and the restaurant has been successful. Fast forward a few years, and you’ve launched three new locations in your area. At this point, you’ve been presented an opportunity to expand your restaurant into new states/cities beyond your current market.

Your name, unfortunately, is ItalianKitchenOhio.com. This could be a major issue and a valid reason to rebrand.

This is a fairly regular occurrence in businesses that grow rapidly. Your business that started with humble beginnings has now outgrown itself. Suddenly, you moved from the small local cafe to an up-and-coming restaurant enterprise. Ensure that you are setting your business up for long-term success with a brand refresh, or complete brand overhaul.

Because your first restaurant experienced so much success, it’s common for restaurateurs to consider opening another location. It’s exciting to think and dream about it, but it also means many possible risks that you have to face. Before you step into it, make absolutely sure that you’ve thought through all the details, and every scenario to make sure that you make an informed decision. And after all of those considerations, if you believe you’re all set, I hope you experience huge success with your new location!

Location Isn’t Everything – 7 Ways Your Restaurant Can Still Thrive Despite a Bad Location

If you are planning to run a food-related business, you will almost always hear about how crucial location is. Many restaurateurs say that if you cannot open at the right location, you might as well not open at all.

Unfortunately, the perfect location may not be attainable for you. Space might already be occupied. The rent might be too steep. The neighborhood may already be too saturated by competitors. Or worse yet, you may find yourself in a bad location as you read this.

So, what are you going to do? Are you going to let this stop you? Should you go for it? Or just give up and blame it on your location?

Yes, there are times that a bad location can kill your restaurant. However, there are times when you can overcome this shortcoming. In fact, given the right strategy, you can use a bad location to your advantage.

What Is Considered as A Bad Location for A Restaurant?

Any location can be a good location for a food business. Why? Because people need to eat. And, there are people everywhere. However, to make a restaurant work, you need enough people to eat at your restaurant so that you can cover your expenses and hopefully make a profit.

Here are some reasons that a location could be considered “bad.”

Population & Neighborhood Type

When there are simply not enough people in the neighborhood, that may not be a good location for you to open a restaurant. For example, if the available space is in a residential area, that could potentially be a bad place for a restaurant.

Your lunch service is probably going to be non-existent because people are either in school or at work. You may still generate some profit if people choose your place at dinnertime, but you have to attract a lot of these people in order for your restaurant to survive.

Accessibility & Parking

Poor accessibility is another setback for a restaurant location. If the building where you plan to open does not offer any parking space, you will definitely turn off a lot of potential customers. For rooftop restaurants, a building with no elevator is not something you’d want to consider.

Market Profile & Demographic

Even if the area where you plan to open sees a lot of foot traffic, if your theme doesn’t suit the market’s needs, that is still a bad location. For example, if you are planning on opening a fine-dining restaurant and are offered a space near a university, you will probably not be seeing a lot of patrons.

Dispelling the Myth About Location Being Everything

One thing that you have to remember though is that location is just one of three major things to consider when opening a restaurant. Some great establishment has been known to thrive despite being situated in some hidden nook.

How did they become successful? They focused on the other two factors: food and service. If you have no other choice but to get a space that is not the most ideal for your type of food establishment, you need to make sure that your food is excellent and the service that you offer is impeccable.

A good example of a restaurateur who has succeeded despite location challenges is Joseph Gidman, owner of Cafe Cusco and Van Gogh’s Eeterie.

Both of his restaurants are located in a part of town that has battled perceptions of being dangerous, run down, and depressed. Yet, his two restaurants have been experiencing overwhelming success because he decided to not use his “bad location” as an excuse.

I sat down with Joseph to ask him a few questions about what he attributes his success to, and here is an excerpt from that interview:

“When it opened it was a terrible location because the area felt dangerous and run-down. There was a perceived danger because it was a low-income area.” But he didn’t let the negative stigma bother him, and decided to take a different approach.

“We basically made a point to always, always, always, accentuate the positives. We knew there were negative thoughts and views, but we ignored the negative and only focused on the positive aspects of the location.”

Another aspect that he attributed his success to is the fact that his restaurants were “so unique and different. There wasn’t another place or option to get that style of food.”

He acknowledged, “sometimes the location is the factor, but,” he says, “sometimes you need to look around you. Sometimes people stay in their doors and think it’s the area and not them.”

Joseph also suggested that if other restaurants in the area are succeeding, then it may not be a location, it may be you. “People have to be open to acknowledging what they are doing is failing and change their mode of operation.” Yet, the bottom line, Joseph says, is that “a bad business is going to fail no matter where it is – no matter if it’s a good location or bad location.”

This is just one example of a restaurant who didn’t let a “bad location” stop them from experiencing success, and I’m sure there are many, many more. But if your restaurant is struggling and you think your location is the big reason, here are some ideas that could help.

1. Fine-Tune Your Restaurant’s Unique Selling Point (USP)

What makes your restaurant concept unique?

What sets you apart from the other establishments that are already in the neighborhood? You need to focus on this instead of dwelling about the site where your restaurant will be situated.

Take time to sit down and pretend that you are a customer. Think of all the reasons why that customer will choose your establishment over another. One of the first things that you need to consider is a special service that you can offer your clientele.

Can you offer valet parking if the location has issues with parking space? Do you want to have a “money back” offer should the customer not be fully satisfied with the quality of your food?

How about your food? What makes it special? Will your restaurant offer the best wine selection in the area? Will you be using special ingredients? Some restaurants stand out because they use ingredients that have been specially imported from certain locations.

For example, some restaurants import real Kobe beef from Japan. This is a huge pull for patrons who are interested in trying this type of meat.

Don’t forget about the ambiance. Some patrons come to a food place simply so they could take pictures of the interesting interior.

Is it great for an intimate dining experience or will you be catering to large groups? Will there be unique items on display? Is there a theme? Consider these for your USP and lean into it.

Once you have your USP in place, you can use it to craft your marketing plan. Remember, your unique selling point needs to be “unique”. Additionally, you need to be able to back this up.

If you promise to use the freshest, imported ingredients, you need to really use the freshest imported ingredients in your dishes. Otherwise, your patrons will not make the effort of visiting you in your not-so-ideal location.

2. Serve Great Food and Provide Amazing Service

Since your business is about food, your success will actually hinge on your food. You can be situated in the middle of a high foot traffic location with great visibility but if your food is not good, you will still fail.

Know that if people discover how amazing your food is, they will make the time and effort to visit your restaurant no matter where you are.

Additionally, being unique can only take you so far. Serving something that patrons haven’t tried before will be enough to attract first-time customers. However, it is the quality of your food that will make them come back.

Instead of putting all your money in rent, why not invest in hiring great cooks?

Invest in better ingredients. Hire knowledgeable servers.

By providing your customers with the best dining experience, they will no longer remember the inconvenience of getting to your establishment. You can be situated at the top of a building with no elevator and you will still have patrons lining up to get in.

Work on creating a signature dish that is not offered by any other restaurants nearby. Have your servers learn the names of your patrons.
Tell them to go the extra mile in giving the customers what they need. These are the thing that will have customers coming back no matter how bad your restaurant’s location is.

3. Invest in Effective Marketing

Even restaurants that are situated in great locations still need to employ great restaurant marketing strategies because there are so many other food establishments around. If you have a bad location, you need to work harder to get the word out about your food establishment.

Again, instead of forcing yourself to pay exorbitant rent, use the rent money you’d save to aggressively “sell” your restaurant.

Luckily, you don’t have to work too hard or spend too much on marketing forever. You can ease up on marketing once the customers discover your establishment.

Start with marketing on a grass-roots level. Target the people who are already in the vicinity of your restaurant. Distribute fliers and put up posters within a few miles of your area.

You can even take help from a restaurant marketing agency. Will cost you some money but it works. They will be able to give some good restaurant tips, that will help you in the long run. Also, you will get to know about restaurant technology and different restaurant trends.

If your restaurant will be situated in a hidden location, you need to make your signage really very visible. Creative signages that attract attention will serve you well.

Work on incorporating your specials, promos, and discounts to convince anybody who would see it give your joint a try. You don’t have to limit yourself to static signages.

Invest in eye-catching paper bags and, if you are going to offer food delivery, invest in signages for your delivery vehicles.

Don’t forget to invest in online marketing. In fact, this could be the most important aspect of your marketing campaign. Establish a good social media presence. Post pictures of your dishes, your restaurant’s interiors, and your customers on Facebook and Instagram.

Encourage your customers to post reviews about your establishment. List your joint on Yelp and Zomato. Pay for a good website. You can post promo coupons and tie this site with your loyalty programs.

4. Consider Offering Delivery Options

If you are going to be situated at an out-of-the-way location, it is a must to give your patrons another way for them to get to your food. If they cannot come to you, bring the food to them.

This is why it is important for your restaurant to have a website. This way, your customers can opt to get their food delivered by ordering online. You can also have a phone line installed so that customers can phone in their orders.

There are now so many delivery services offered that you don’t even have to buy your own delivery vehicles. But if you do decide to invest in that, make it work doubly hard for you by equipping it with good signage.

Consider also offering delivery guarantees and other promos that will encourage more customers to keep on buying food from your establishment.

You can offer free side-dishes if they reach a certain amount per order. Or you can give them discounts if the food doesn’t reach them in a timely manner.

5. Establish A Loyalty Program That Is Worth the Customer’s While

Having a loyalty program will give your patrons extra reasons to keep coming back to your establishment. Of course, you have to first give the customers a reason to come back besides the chance to get free meals.

Once people know that you provide great food and good service, you will be able to entice them to join your loyalty program.

Make the offers worth the customer’s time and effort. You can offer free meals for a certain number of visits. You can also offer special dishes only to the people who are members of the program.

This also cultivates a sense of exclusivity. When people see other patron’s getting served special dishes, they’d be compelled to join your program.

How do you do it? You can have an application made where your patrons can create an account and sign up for your loyalty program. This is probably the most effective way to enforce a loyalty program as it eliminates the need for a customer to bring physical cards.

Additionally, since people are always on their phones, you can easily remind them about your promos. You can also go the traditional punch card route and give your customers a physical card which they have to show every time they dine at your establishment.

You can offer free meals or desserts for a certain number of ‘punches”. There are also automatic reward systems that you can explore. Although this may have an additional cost.

6. Collaborate with Other Businesses in Your Area

Developing ties with other businesses in your area is a good idea if you want to beat the competition and overcome the barriers posed by your bad location.

For example, you can provide food for a late screening at a nearby cinema. You can also cater to special events at nearby schools or libraries.

This is a good way for people to discover your restaurant. While there, you can distribute flyers and promo pamphlets that can encourage your potential customers to give your joint a try.

7. Know Your Market by Doing Extensive Research

Before committing to a location, find out why the space is available. Inquire about what happened to the other business that closed up. Learning from the failures of others can help you avoid doing the same thing.

Find out what cuisine people enjoy in that area. Make sure that your menu corresponds to that. For example, if you plan on opening near a school, make sure that your food and price point suit the taste and budget of your possible patrons.

If you find out that the lunch crowd is going to be your meal ticket, adjust your food lineup and bolster the number of your servers during that time.

Determine what type of food is already being served in your area. This will help you identify what will make your establishment stand out. If there are already two or three vegan restaurants in your neighborhood, what can you do to make your food stand out?

Conclusion

While having a good location is ideal, it is not very easy to come by. This does not mean that it is the end of the line for your restaurant dream.

There are so many things that you can do in order to overcome this shortcoming.

Remember to focus on your food and service. Give your customers enough reasons to seek you out no matter where you are.

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