Your Restaurant Business Expansion

So many restaurants fail when they try to expand, They need to do the proper research, and they think that if they succeed in one market, they’re bound to follow in another. It’s not true. Here are four key types of analysis you need to do on your current concept before you start putting your expansion plan into action

Restaurant Customer Analysis

Do a deep dive into the habits of your current and potential customers. Learn which menu items they prefer and which new restaurant trends are taking off in their area. For example, you can use your restaurant’s CRM system to collect data about menu item popularity and learn what your biggest spenders are buying. Conduct qualitative and quantitative research and reach out to these big spenders to ask them what they want to see in a new concept.

When researching your restaurant expansion, search Eater for popular restaurants in the area and visit them. See what guests are talking about and observe the demographics at these restaurants. Are they younger and would prefer to see new and exciting items on the menu, or are they older and prefer classic, traditional dishes? Incorporate all these findings into your new location.

Restaurant Site and Service Modelling

Before expanding a restaurant business, take a second to visualize what this new place will look like. You may want to try something different. For example, if you're a fast-casual restaurant, you may want to experiment with adding restaurant kiosks to speed up throughput. Or, if you're a full-service restaurant, you may want to try adding mobile POS tablets to improve table turn time. Write down all your ideas for your new restaurant, and create a small blueprint of the kitchen and front of the house.

For example, the frozen yogurt chain Orange Leaf uses a strategic site-modeling plan when selecting good areas for a second location in a new market. The site-modeling program includes two units — traditional stores and kiosks — the latter of which is a recently introduced lower-cost alternative.

"Most of our [traditional] stores are in strip centers built within the last two years. We are not taking retired spaces or looking for conversions of other frozen yogurt shops. We're taking over a vanilla shell," explained Vincent Provenzano, franchise development manager, to Restaurant Development + Design Magazine. Orange Leaf has been adding over 100 new locations every year.

Restaurant Sales Cash Flow

"Most of our [traditional] stores are in strip centers built within the last two years. We are not taking retired spaces or looking for conversions of other frozen yogurt shops. We're taking over a vanilla shell," explained Vincent Provenzano, franchise development manager, to Restaurant Development + Design Magazine. Orange Leaf has been adding over 100 new locations every year.

Customer spending contributes to a restaurant’s cash flow. But to open a new restaurant, you need to have a clear view of cash flow growth percentages over time and a concrete goal for what success at this new location will look like, including a date for break-even. Determining how your cash flow impacts the business, whether coming in from customers or going out through expensive equipment repairs, will help you make the right decisions when choosing which vendors and partners to help open your new restaurant.

Restaurant SWOT Analysis

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats, and if you’ve already opened up a restaurant, you’ve probably done an informal report. A SWOT analysis allows you to organize your thoughts and ask critical questions before expanding a restaurant business. What are the strengths and weaknesses of the current restaurant? What opportunities lay ahead for the new concept based on our past successes? What threats might loom in becoming popular in this new area? Include a SWOT analysis in your business plan for the new restaurant to visualize your path to success.

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