Menu For Success: Financing A Second Restaurant
Menu for Success: Financing A Second Restaurant How savvy restaurateurs can stay ahead when success, and growth, come knocking
Nothing tastes better than success—especially when you can multiply it by two. Any restaurateur will wax euphoric recalling when a first customer took that first delicious bite on opening day. Maintaining that ‘taste test’ in other ways-- great food and a well-operating business-- is the magical alchemy of successful restaurant owners—and the ideal ingredients for opening a second location or a new foodie venture altogether. But restaurants are fickle businesses, operating with tricky finances. Historically, many restaurateurs have failed when opening a “part deux” of their business. The best advice: take your time and tread optimistically, but with caution.
Catering to Change An owner needs to be both savvy magician and brave pioneer about every decision he or she makes when daring to expand. A successful restaurant needs to fight complacency by trying new things, but its ability to truly flourish depends on everything from the right location, and the weather, to the latest popular diet (yes, keto is still happening). And when you decide to build on your earlier success and launch your next venture, there are a host of new pain points to consider. An owner may not be able to rely solely on the tactics that worked when setting up that first location.
Often restaurant owners will try to replicate their original formula –same marketing, same staffing structure, same vendor list-- in their second business only to find that the initial recipe for success requires adjustment for the second time around. Different ingredients, from different vendors, need to be purchased, potentially losing bulk buying rates they'd previously arranged. There are also the regrettable, unforeseen expenses (equipment breaking down) for which every owner needs a financial lifeline. Rarely can a restaurateur pull from a first location’s budget to finance all the things that come with expansion.
Reframing, Rebranding, Re-staffing Remembering why a business was successful in the first place is integral: It’s all about a positive customer experience—and that’s not just a result of creative cuisine. There’s a challenge in not neglecting the original restaurant by stealing the best staff away from it. Instead, core staff members of the original business should be selected to train the newbies in the second location so it can be run as efficiently as the first. And, depending upon how much staff ends up getting hired—with staffing costs and benefits rising—it might make sense to hire an HR Director to manage the team. Merchant Financing, offered by American Express, can help manage a restaurant’s seasonality, and can also help expand staff with payments that come out gradually with the flow of business, depending upon how the business of the day moves.
Sustainable Success American Express can also help a second business location turn day-to-day challenges into opportunities, as a partner who has the expertise to support this latest venture by serving up strategic credit lines with graduated payback. They can be customized for flexibility and will support ever-changing finance sheets. Its loan program, Working Capital Terms, offers variable payback windows and a float period so that owners can focus on getting the second location up and running before worrying about returning a loan—and it pays within two days, offering a 30-, 60- or 90-day term. This brings an owner peace of mind: he or she is less likely to be worried about loan payments when experimenting with new ingredients or can feel free to hire the necessary amount of staff to get the second location off the ground and buzzing. And then, eventually, once the reservation book gets full--since three times is always the charm—an owner can open that next location.
