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Look before you leap

Everything is going great. Your staff is professional, talented, and dependable! Your customer base is growing. You've gotten good reviews. Profits are steady. You've made every mistake in the book and you've learned your lessons. So what's the problem? You're bored. You need a challenge.

Why not open another restaurant? You've done so well with one, it's time to take the next logical step. This is no small (or even a proportional) step. It is a disproportionately colossal leap.

You may think you can take advantage of the economies of scale. Two restaurants means greater purchasing power, standardization of operating systems and recipes, centralized accounting, expanded marketing effectiveness and increased levels of personal income... maybe. At first blush, it all makes good sense. Unfortunately, this is rarely the reality.

A few years ago I attended a seminar on Restaurant Financing and Site Selection given by the NRA. The instructor, David Sher, is a noted real estate and foodservice consultant and longtime professor at Cornell's Hotel and Restaurant School. Here's how he described the difference between one restaurant and two:

With a single unit you have a restaurant; With two units you have a business.

In other words, the management principles, business infrastructure, and supervisory policies that have served you so well in your single restaurant won't handle the challenges of multi-unit responsibility.

Managing managers 

One of the biggest changes you'll face with a second unit is the shift from managing the restaurant to managing managers. In a single operation, you can easily resolve such problems as customer dissatisfaction, employee dissension, and quality control by direct personal involvement. After all, you have a vested interest in the restaurant... it's a labor of love because it's your restaurant, your responsibility, your success, your failure, and most of all, your money.

In a multi-unit environment, you'll have to delegate authority to your managers. This is where the problems start. Today's restaurant managers are only as good as the training, leadership, guidance and direction you provide. They haven't experienced the pain, the sacrifice and the frustration you have in learning to manage effectively. Often, they think reactively. You've been forced to think proactively, out of experience, pain, and with a sense of vision.

Your new role

The art of cultivating customers, accommodating governmental regulatory policies and nurturing employees is learned through the diligence and commitment of the teacher - you! And the question you must ask yourself is... "Is this the role I want to play? Is this the way I want to spend my time?" Carefully examine your motives for expansion into a second unit.

  • Is it meant to benefit you, or help the upward mobility of your aspiring managers?
  • Does the move make good economic sense, or are you possibly overextending financial resources to avoid losing key people or help pay for existing investments?
  • With the current labor crisis and shortage of qualified managers, what protects you from becoming a glorified training ground?
  • Do you have a strategy for finding and keeping good management talent?
  • Are you prepared to compete monetarily for potential management superstars whose career aspirations may outdistance your ability to provide new restaurant opportunities?
  • Are benefits like profit sharing, automobile allowances, paid vacations, medical/dental plans and equity sharing affordable in your long-term growth plan?
  • I recommend taking a couple of basic steps before you think more seriously about opening a second (or third or fourth) unit. First, take a close look at your management development program. Don't have one? If not, start one. See "Go or grow," to find out how you can literally start tomorrow.

Second, talk to your managers, and ask them to complete a simple SWOT analysis. It asks for your managers' opinions on your organization's strengths, weaknesses, opportunities and threats (We've provided a downloadable SWOT Survey here.) Your managers will have excellent insights into whether your operation is ready to expand. And if you can't talk about or include them in your expansion plans, perhaps you don't have a team that's ready to take that leap with you.

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