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How to Grow your Restaurant Business?

Food & Beverage operators who’ve successfully set-up their first restaurant or kiosk, often find it hard to figure out how they should grow. Whether to choose the franchise route, go in for a joint venture, or simply grow organically, is often confusing.

Let’s look at an informed approach by which these questions can be answered decisively, but first things first.

Why do you want to grow?

Flattered by a prospective investor, a restaurateur with a successful outlet once began his expansion journey by giving up a controlling share of 51% to his new partner. They agreed it was realistic to roll out 3 new outlets in their first year, but within a few months found that they couldn’t agree on the locations. The reason – the restaurateur was driven more by his love for the brand, while the investor simply had a cold, hard financial perspective. Regardless of who was right, the restaurateur found himself regretting the partnership. Essentially he had not thought through the extent to which brand reach and financial return motivated him to grow in the first place. Furthermore, he hadn’t discussed specifics of what was right for the business with his future partner before signing him up.

Asking yourself what is right for you and for your business is a good place to start.

Where are you now?

The owner of an eatery had created what appeared to be an interesting business model. The production process of the outlet mirrored that of McDonald’s. A pancake for instance was made by placing a mould on the griddle with a prescribed volume of batter poured into it. This was followed by a predetermined cooking temperature and prescribed time on either side of the pancake, till it was done to perfection. Everything was great, except that the outlet was losing money.

Its target audience found the product expensive in relation to better quality options and more economically available ones nearby. On pointing this out to him, he responded that in order for the brand to be “scalable”, he saw wisdom in procuring high standard raw materials, even if they were at a higher cost and meant absorbing losses temporarily. I maintained that since we would get no discount or cost benefit for scaling up, at least from this vendor, we should procure it from elsewhere or manufacture it ourselves. He disagreed, and eventually was forced to shut down his business.

The point here is that all existing restaurants have flaws. Planning their scale up without:

  1. Differentiating between the acceptable flaws & the potentially fatal ones and
  2. Doing something about the flaws that matter, before actually growing the business can be disastrous.

Correct the key mistakes in your existing outlet before thinking about growth.

What attitudes might help during growth?

I once raced 100cc motorcycles for a company called sports-craft in Mumbai. The intriguing bunch of experts that I raced with comprised of automobile engineers and mechanics who understood their vehicles well. Their sole agenda was to move their vehicles from point A to point B in the shortest possible time with the risk and potential damage duly considered. This is very much like our own agenda of moving businesses from where they are currently at to where we would like them to be, as quickly as possible. In that sense, you are in fact racing with time.

Amongst other things, an attitude of racing means:

To race, you require a vehicle, a track, and of course a driver.

If your business format represents the type of vehicle in the race, let’s see what your driver and track symbolise.

Your drivers are inevitably the market demand and your own desire to serve your audiences and profit from them.

The track is the infrastructure, including government policy, licensing, real estate, manpower etc. If you find these things challenging, rather than simply complain about them, see what you can do to help bring about improvements. Invest effort in supporting the transformation of these problems via trade bodies, federations and associations that represent the sector. They can influence change in the long run, and therefore supporting them will help overcome these issues and give you a voice in the direction of change. This process however will be slow. Recognising that and focussing on areas over which we have greater control in our business, will serve us well.

Prepare yourself for growth with a racer’s attitude and focus on what is important.

What aspects should you focus on?

Keep a balance between wearing your restaurateur hat and your investor hat. Don’t get caught up in either one.

To summarise

 


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