Should I open another cafe?
This is a common question that successful café and restaurant owners ask themselves at some point during their hospitality journey.
The idea that I have mastered one business, so of course I can master another one or two, is good in theory but is very different and can quite often end up placing financial stress on all related businesses.
The above question usually comes about through boredom or ego, we can tell you first- hand that both reasons will set you up to fail and that ‘ego is not your amigo’!
We opened a third restaurant when we simply did not need to do, after launching a couple of successful restaurants we thought that everything we touched turned to gold, of course that was our ego talking and in fact it didn’t turn to gold, it turned to @$%*. We closed that restaurant within two years, lost a bunch of money and had our egos brought back to reality, a very valuable lesson that will not be forgotten anytime soon.
We Are Ready to Grow
Of course, there are times when a business is ready to grow and the second site is a good idea, however for this to happen there needs to be a lot of work on the structure and the operations of the first business. Key staff members need to be put in place, a well thought out business plan, execution of the plan and all the stars need to align for this to happen.
First and foremost the reason to expand needs to be a sound one and done for the right reason, solely to make more money or so that you can brag about being a multiple site owner, will not support your growth strategy or end well.
Considering that opening a second business:
• Provides the potential to develop your current staff into future leaders of the industry, by allowing you to employ more staff and grow your talent pool, which in turn challenges you personally and allows you to become a better leader
• May provide an important products and services to the community and inject money into the economy so that other small businesses such as bakers and farmers can continue to provide for their families.
• To generate a return on your investment, this is an important goal and is extremely important to measure, you must make a profit
The second most important factor is that your current business needs to be able to operate at a sustainable level without you in it daily. This can only be done through strong systems, policies, and procedures and through your people, never think that you can do it alone.
Manage Your Expectations
You also need to be honest with yourself and manage your own expectations, as your existing business will not be as profitable with you not in it and you should not expect it to be (I can hear you thinking, did he just say that?). Now this is a very very difficult theory to live with but it’s true, do you really think that your staff will think the same way that you do? Or that they are willing to work as hard as you do? Or treat your customers as well as you do? The reality is as a total they will not.
Let’s put some framework around this theory, once you have come to terms with this fact it is then your job to put the appropriate systems, policies and procedures and people in place to limit your exposure to a decline in profits. We used to call this ‘damage control’ however that may be a bit harsh, but it does give you an understanding of how seriously to take this fact.
This is a really important step in your growth strategy as this is the start of you mentally preparing for a second or possibly third site. Being able to walk away from your first baby knowing that you have done everything that you can to ensure that it is left in the best possible position to maintain its success gives you the mental freedom to focus on site number two and beyond.
Success is Not Guaranteed
Another theory that needs to be challenged is that the second site will be successful because the first site is, you may chose to duplicate the site name and the menu or even create a complete new brand, however most second or third sites will come with their own set of unique challenges, complications and success is not guaranteed.
Don’t just expect it to be successful, plan for it to be successful, take the time to complete a new business plan, financial plan, go through a strict site selection process, build it like it’s your first and you need to save every cent for working capital, be hungry for it to succeed and be up for the fight.
There are multiple studies that show businesses which plan grow 30% faster than those that don’t, so don’t leave it to chance as you may just be risking the lot! Be prepared for the second and third sites to be all consuming, but don’t forget your passion for the first site, remember that the first baby is the reason you are able to open more. The first baby in some way becomes more important than ever and should never be neglected and will need to be shown some love and attention from time to time.
In summarising the above when you are true to yourself, your staff and expect that opening a second or third site will not be easy, nor guaranteed to succeed and may put pressure on the first born, then you may just be ready to start the new journey.
This journey is hard work and should not be viewed in any other way, however implementing the appropriate policies and procedures and planning like it’s your first are some of the key elements that will put you in the best position to succeed. Tread carefully, go into it with your eyes wide open, talk to people who have been there before and don’t be too proud to ask for help as a bit of guidance can turn what is a struggle into success.
Julian Mero MBA
With over 20 years experience in Senior Executive roles, Julian is experienced in retail partnerships and has extensive knowledge in what it takes to run a successful business. Associate of Food Beverage Logic helps you acknowledge the gaps in your knowledge and teaches you to plan your journey so that after you leave here, you can execute your plan with full confidence that you’re on the right path, making informed decisions because you’ve taken all the guesswork out of it.