restaurant business plan


Three Paths to Growing Your Restaurant Business

There are three different ways you can grow beyond being a single restaurant operator. There is nothing wrong with just owning one except that it is rare for a single location to generate enough income to ever give the owner much of a break from the day to day grind and build real passive income. The answer to that problem and the way to spread the risk inherent in the business is to own several locations. How you pull that off is the subject of this article.

Becoming a Restaurant Group

Becoming a restaurant group is the most common way that a single location owner expands their business. This is because although it might not make sense to have two of the same type of restaurant in one location or small-town area it is certainly okay to have two different kinds of restaurants owned by the same person in close proximity. Buying or starting a second restaurant of a different type in close range of the first restaurant is a good way to grow your overall restaurant business as long as you go through the same careful planning process that you went through with your first location to ensure a similar level of success.

Becoming a Chain

The second most common way to expand your business is to open a second location of your first original restaurant or bar concept. In many ways this is easier than running a group of restaurants because each unit in your chain has the same menu and the same operating procedures and if need be can share resources and pool buying for better prices and build general awareness for the brand over a wider area which will in turn attract more customers to both locations.

The downside of this is you may have to put the second location father away so as not to cannibalize the sales of your first location. Hopefully the second one doesn't have to be too far away but it the answer is out of your hands-it comes down to demographics and population density. Once in awhile you hear of restaurant owners with tow locations where each is on a different coast or even in two different countries but that is making things much harder than they need to be and is certainly not the recommended way to go.

Becoming a Franchise

A third option for growth is to go through the process of turning your restaurant or bar concept into a franchise operation. Running a franchise is much different than running a restaurant because rather than running the restaurant operation what you're actually doing is providing other restaurant operators with business support.

The cost of creating the legal documents required to create a franchise can run anywhere from $25-$100,000. It also requires that you then market the franchise opportunity to potential franchise buyers and support them in the process of planning and opening and running their own restaurants. In exchange for this help and support the franchisees pay a royalty on all of their sales and also an upfront franchise at the start that helps offset the cost of your supporting them.

When done correctly a franchise system can offer a tremendous growth opportunity for a restaurant concept because the investment for opening additional locations does not have to come from the franchise it comes from its franchisees. You only have to look as far as McDonald's, the original restaurant franchise, to see how well it can work. Just be aware that it is also a lot of work and you will be doing this while also running your restaurant or bar and it will be a learning experience all over again rather than repeating what you already know works.

No matter which way you go all you have to do is slightly revamp your restaurant business plan and then follow it the same way you did when you got your first business opened and running successfully.

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