All indicators are flashing: Pandemic fallout has passed, inflation isn’t running away anymore, the supply chain seems to be coming back under control. the cost of most goods is down – and the labor crunch is still bad (it’s always bad), but getting better.
Does that mean it’s time to expand? It depends on individual circumstances, but Sabato Sagaria has some serious experience to help out. He was chief restaurant officer of Danny Meyer’s Union Square Hospitality Group in New York City, where he oversaw the opening of nine concepts, before becoming president of casual-dining chain Bartaco, growing it from 13 to 22 restaurants. Now he’s a founding partner of Apres Cru Hospitality, which invests in growing companies and provides strategic insights. Among those investments are the restaurants of Marc Forgione in New York City and Ludo Lefebvre in Los Angeles. He recently laid out his thoughts on when and how to expand.
KNOW WHAT YOU WANT
Although there’s no checklist that applies to every situation, your current restaurant must already be working, Sagaria says.
BEFORE EXPANDING, ASK YOURSELF:
- Do you have a successful blueprint that you can use to scale?
- Is it financially successful?
- Does it resonate with guests?
- Do you have a game plan to execute it in a new space?
- Why are you expanding?
- Do you actually have the time and money to run another restaurant?
“Understand what your needs are, and you can use that as a filter to make sure that you’re staying true to what that is,” Sagaria says.
Make sure there’s enough financing and other resources before shopping for real estate, “because as soon as you do find a space, the clock is ticking and time equals dollars instantly,” Sagaria says. Anticipate delays, and understand that if you’re not in the black within six months – ideally within three months – it might be time to re-evaluate.
“To be successful (profitable quickly) is something that you need to do, but it also depends on your investors’ expectations,” he says.
If you want to open more than one restaurant at once, then things get more complicated and becomes what Sagaria calls “like playing checkers.”
- What do I have to get done today?
- What do I have to start lining up now? In six weeks? Three months?
- What permits are needed? What’s the lead time? Again, anticipate delays.
- Can I have staff in place within six to eight weeks from opening?
- 1f there’s a new partner, can I get the agreement in order before starting?
“Truly understand how those dominoes need to fall,” Sagaria says. Otherwise, the process can get stalled – and that gets expensive quickly.
“If you’re (expanding) across multiple projects and you’re not thinking ahead, it just really starts to backlog. And again, the clock is ticking,” he says, adding, “Anything involving gas is also something that’s going to take a lot of time and planning.”
WHAT ABOUT A DIFFERENT CONCEPT?
Do you have a full-service restaurant, but want to start selling chicken sandwiches in a fast-casual setting? In some ways, you’ll be starting from scratch – but in other ways, you won’t be, Sagaria says.
- Surround yourself with the best people from the first project.
- Leverage current systems for the new one – accounting, payroll, point-of-sale, human resources.
- Determine design and marketing; they will be different.
- Understand a different clientele. What is somebody looking for when they’re grabbing lunch to-go in 20 minutes versus having a two-and-a-half-hour dinner? Those are very different expectations that you need to deliver on.
- Reevaluate your tech stack. “Do you need to work with more third-party delivery companies? Ordering kiosks? It depends on how much technology you want to leverage,” he says. “There’s more tech opportunity in many ways for quick-service concepts.”
If you want to add a bar, open a takeout window or add an event space to what you already have, you must consider other factors.