Franchise Restaurant Expansion – Are You Ready?

For the last few years I have been doing some work for a large coffee franchise as mentioned in my last post. This franchise has in the past gone through some enormous growth in unit numbers but is still basically an owner operator business with the majority of franchisees owning only one store.

As per most coffee stores, average check is low and cost of goods, with a commodity like coffee, is high and does vary greatly with the market.

The single most asked question from the franchisees is….. should I open a second store?

My answer in 85% of the cases has been a resounding no!!

I know that it is a bit of a blanket answer but, just because you have a successful business does not mean that you can translate that success into a second store.

It does not matter how good you are, there will always be some dilution of your skills, standards and business acumen when you are spread out over twice as many outlets. You cannot be in two places at once which means that you will have to take a big step and trust someone else to do the important things that you have always done yourself.

So where are you going to get this clone of yourself? From your existing store of course. Now you have taken your best employee and moved them to the new store leaving the second best to take up the slack. Good thinking considering you will only be at your existing store 50% of the time. Oops, that’s wrong because the new store will take up a larger percentage of your time for at least the first three months. That means with you spending only 30% of your time at your existing store your second best employee is looking after your livelihood!

Geez what is wrong with this scenario?

Let’s also take into account the added financial burden as well as significantly more hours spent at work and less time with loved ones. We all know how much stress these add to our lives.

It is not impossible and many people become successful multi-unit franchisees, but plenty of care and forethought are needed prior to this decision. Months if not years of planning and successional training are required to ensure even the operational aspects are in place let alone the financial planning and forecasts needed.

So if you are planning to expand for the first time, good luck and good planning.

RStevens

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