Creating a data-driven restaurant expansion strategy is a crucial step that you need to go through when opening a new restaurant.
While building on the success of your existing restaurants seems feasible on paper, there are no guarantees that a new restaurant in an entirely new location will perform as expected.
Many variables come into play here, like the criteria for choosing the new location, marketing, consistency, and of course, competition.
There are also risks associated with expanding your restaurant business, especially since it requires a significant investment. More restaurants mean your losses will multiply during uncertain times such as pandemics, wars, or economic disruptions.
In this guide, we’ll walk you through the steps of creating a restaurant expansion strategy for your F&B business.
1. Think About the New Location
Scouting a location for your new restaurant can make or break its success. Ideally, you should look for a location that shares as many similarities with the locations of your current restaurants as possible.
For instance, if most of your restaurants are near suburban areas where most residents are families, your best bet is to find a similar location for your new restaurant to replicate its success.
It’s also important to choose a delivery-friendly location. Your restaurant should be centrally located within close proximity to the highest online order volume and most delivery drivers.
2. Create a Business Plan
Creating a business plan for your new restaurant based on your restaurant’s new location is essential. A great approach here is to use what has already worked for your current restaurants and improve on it in your new business plan, as well as fine-tweak it based on the new location.
Your business plan should include:
- Competitor analysis. Learning who your competitors are, the types of customers they attract, and whether there are any collaboration opportunities with them must be detailed in your business plan.
- Sales volume from nearby residents, workers, and window shoppers. If your new restaurant targets office workers, placing it in a residential area won’t make any sense.
3. Calculate Your Budget and Expenses
Once you’ve formulated a business plan, think about your finances. What’s your estimated budget for the new restaurant? How much will your initial and overhead monthly expenses be?
Getting rough estimates for these numbers will help you determine the profitability of the new restaurant and understand the associated risks.
4. Decide Whether You’ll Replicate the Existing Menu or Make a New One
When it comes to expanding your restaurant, you have two options: either go for the same exact menu or create an entirely new one.
Both approaches are fine; it all depends on your customers’ preferences in the new location. Will people in that location be interested in your existing menu? Or should you omit or add some new items?
You can find the answers to these questions with a data-driven approach. How are your competitors performing in the new location? Are certain menu items more popular than others?
If you’re still unsure, you can try replicating the menu and analyzing its performance for further improvements.
5. Get the Required Permits and Licenses
Planning a new restaurant means that you must obtain all the permits and licenses required in the new location. These may include:
- Certificate of Occupancy
- Business License
- Food Service License
- Employer Identification Number (EIN)
- Sign Permit
- Seller’s Permit
- Live Entertainment License
- Food Handler’s Permit
- Valet Parking Permit
- Employee Health Permit
Of course, you may not have to apply for all of these permits and licenses, depending on the nature of your restaurant. For example, if your restaurant doesn’t offer live entertainment, you don’t need to apply for a live entertainment license.
6. Think About How You’ll Handle Online Orders
Providing a convenient online ordering experience is vital for the success of your new restaurant. The demand for online food ordering has skyrocketed in the past few years amid the pandemic.
Not taking care of that part in your new restaurant will make you miss out on significant takeout sales volume. You can either manage online orders on your website with an online ordering system or outsource the process to third-party food delivery apps and solutions. Just make sure you create a master menu that can be automatically adjusted in real-time to prevent your customers from mistakenly ordering an out-of-stock item.
7. Plan and Prepare Your Materials and Kitchen Equipment
Material planning for your new restaurant involves stocking up your inventory with essential ingredients, food, drinks, and other items you need for food preparation.
You also need to create a customized kitchen that contains all the appliances and tools needed to efficiently create the items on your new menu. Think ovens, gas/electric ranges, ventilation, mixers, food processors, microwaves, sinks, freezers, etc.
A good practice here is to create an inclusive list of items with their prices and add it to your business plan. This will help you get an idea of the initial expenses you should expect when opening your new restaurant.
8. Hire Staff
Once you’ve laid the foundation for your new restaurant, you’ll have to hire staff.
First, you need to hire a new head chef to help you with the menu. If the chef is familiar with local customer food preferences, they can make it easier to decide whether to use the same menu or tweak it a bit. They’ll also have added their own touch to the recipes and other culinary aspects.
Your head chef should also have leadership skills to train and manage staff.
9. Build a Marketing Plan
If no one knows about your new restaurant, you’ll barely get any sales.
Since you’ve already established your brand name in other locations, creating a buzz about your new restaurant’s location should be easy since you’ll use your existing reputation.
Create a marketing plan that aims to replicate the success of your brand in the new location. Here are some tactics that you can implement:
- Offer complimentary meals or discounts in the first few opening days
- Spread the word through social media channels and ad platforms like Google Ads
- Announce the opening of the new restaurant on your existing website
- Let customers in your existing locations know about the new restaurant’s location with hoardings or consultation desks
10. Analyze Your Customers’ Data
Once your restaurant is up and running, collecting data about your customers and analyzing it will help you fine-tune the experience for them and cater to their needs. Utilizing a data-driven approach will not only help you retain customers but also attract more customers down the line.
It’s also important to create a consistent experience for your customers with guest profiles. For example, if a customer is lactose intolerant, this should be included in their profile. So the next time they order an item from your new restaurant, it must be free of dairy products, either by substituting the dairy ingredients or eliminating them completely.
Grow Your Restaurant Business Faster and Risk-Free With Brito Cloud Kitchens
Brito Cloud Kitchens takes the restaurant expansion strategy off your plate by handling the entire life cycle for you.
From data-driven market research and resource planning to full kitchen operations and order fulfillment, Brito ticks all the boxes! We also create customized sales reports and revenue analytics to continuously improve your brand’s performance.
Taking advantage of the rising popularity of online food ordering, we enable you to run a delivery-first restaurant model that helps you reach a wider audience, minus the risks and costs associated with coming in brick and mortar.
With Brito, you’ll be able to launch your brand in the new location within 3-4 weeks of signing the contract. You also don’t have to worry about kitchen management, staff hiring, delivery processing, or marketing since we handle it all!
Fill out this form now so we can discuss your restaurant’s growth potential with Brito!