Mapping Out Your Expansion Plan
Nearly all surveyed restaurant leaders who opened another location in the last year said that they felt prepared. Still, the grand opening didn't happen overnight. For the majority (73%) of leaders, the entire process took between six months and 1.5 years from start to finish.
Remember, various factors can influence the time it takes for you to open your next restaurant. Whether you're starting a project from scratch versus moving into an existing restaurant establishment or dealing with niche city and state regulations are just a couple examples. Let's take a look at the process in depth so you can roughly know what to plan for.
Collect funding. When it comes to raising the capital you need for your new restaurant, you have options. You can choose to self-fund through existing restaurant proceeds, or you can also work with private equity investors or take out loans from traditional financial institutions. Each method has its pros and cons related to the amount of risk involved and timing. For instance, if you invest in your next restaurant completely by yourself, you can generally move faster, you don't have to answer to any third-parties, and you get to keep all your proceeds. But you do risk losing all the money if things don't go as planned. Learn more about different funding options to make the best choice for your team.
2. Select and acquire real estate. Of the restaurant leaders Square surveyed, 24% said this task was the most time-consuming part of their latest opening. If you're opening a new location from scratch, you could have contract work and construction tasks involved. Consider starting this process early on to do your best to avoid any major delays.
3. Get the necessary licenses and permits. It takes several required licenses and permits to start a restaurant. But depending on what your plans for expansion look like, whether you're offering new menu items like alcohol or growing into a new city, you may need different or additional licenses and permits. Check your local city and state government websites for the best guidance.
“We’ve tried to be very strategic with the last three openings. We’ve tried to target iconic, tourist-heavy locations so that we can develop a baseline foot traffic that would be able to sustain the restaurant. We opened at Ghirardelli Square, at the end of the Huntington Beach Pier, and within Grand Central Market. All three of those locations are pretty busy almost every single day. That helps us get to the baseline so that we’re not so dependent on consumer trends and seasonality.”
4. Solidify your menu and offerings. You might be considering testing new menu concepts with your next locations. While you start to learn about your community, it's popular to lean into what works well at your current restaurant(s). Sixty-nine percent of surveyed restaurant owners said they referenced customer feedback while optimizing menus, including pricing, for the newest locations. More than half relied on their real-time sales data (60%) and historical data (51%) to guide the process.
5. Look into new equipment and technology. The technology you use to run your restaurant may need to evolve as you scale. About half (49%) of the restaurant owners said they added a kitchen display system, the most popular tech item, when they scaled their footprint. Another 42% of surveyed leaders said they added kiosks. Both these tools help restaurants fulfill more orders with ease. However, 39% of restaurant leaders reported that they would have benefited from having additional technology — the ability to manage and oversee locations through a singular technology system being most popular.
6. Build your team. As part of staffing your next location, you may need to adjust existing staffing schedules, make new hires to cover daily operations, and even build out a dedicated leadership team to oversee the bigger picture aspects of the business. For 63% of surveyed restaurant leaders, recruiting staff was a challenge during their latest openings. To help make the process easier, start by posting job descriptions with clearly defined role responsibilities, benefits, and opportunities for career growth.
7. Market your new business. It's not enough to simply open another location for your business to thrive. It's equally important to communicate your expansion plans with your community. One in four (26%) of surveyed restaurant leaders reported that technology solutions related to reaching customers (like marketing and loyalty programs) had the greatest impact on their business as they scaled. In addition to these solutions, strategies like participating in community events and posting updates about your expansion on social media can help bring in early customers.
Prepare your team for opening day. Your grand opening is your restaurant's first impression with the community. To make it a success, make sure to have enough staff on hand who are well-trained for service. Part of that involves providing them with easy-to-use technology.
