Open Three and You're a Mini Chain

By: Lloyd M. Gordon, President
GEC CONSULTANTS, INC.
Skokie, IL 60076

Part I

Many restaurateurs believe that they can run a restaurant successfully, they can open a second restaurant. Some years ago I wrote an article in Food Industry News discussing the problem of opening a second restaurant. Now I'm asked repeatedly "Is there any difference between opening a second restaurant and opening a third?" My answer is "Yes, a big difference."

Let's take an example of a local restaurateur (name changed for anonymity). John is a chef. He and his wife Marie opened a 110 seat restaurant with a service bar in a Chicago neighborhood in 1988. John did the cooking, purchasing and menu planning and his wife handled the waitresses and hosted the dining room. Although it was a struggle at first, their restaurant became successful and made money the second year and every year thereafter. Because of the quality of his food and his marketing John drew large clientele from the northwest suburbs. When these people dined they kept asking John's wife Maria why John didn't open in the northwest suburbs. Finally in 1992 John found a location in a suburban strip mall and he opened a 135 seat restaurant with a bar. John left his wife in charge of the original restaurant and named as chef his sous chef whom he had trained. John went to the new restaurant and together with a former maitre d in one of the O'Hare area hotels, they opened the second restaurant using the name of the first restaurant and calling it John's North.

The original restaurant maintained its viability and produced a profit and the second restaurant also, quickly became popular and very profitable. In 1995 John and Maria looked over their suitable operations and believed that they had a sufficiently loyal staff adequate technical expertise and suitable financial where with all to open a third restaurant. This is where the problems began.

No Problems - John had no problem finding a third location in a far west suburb. He had no problem with his banks in securing the capital needed to fund the opening. He proposed to maintain the same general menu and style of presentation and hoped that this would enable him to give the third restaurant a rapid start.

The Problems Begin - Then John ran into some problems. First, a reliable work staff. When he opened the second restaurant he used the basic staff of his first restaurant. Volunteers were selected to staff the second restaurant. This worked out very well. High moral in both the first and second restaurant teams infused similar feelings to new employees in both restaurants. But, in the third restaurant, his existing employees were not anxious to volunteer to work in the western suburb and to give up what they knew as a good "sure thing" in their existing jobs.

John had to spend a lot of time and money advertising for help in both city and western suburban papers and interviewing and reinterviewing, especially to get key people. Second, once he had recruited these people and made the selection he had to bring them to one of his other restaurants to train. This was costly. Training time was planned to be 30 days prior to opening actually dragged out to nearly 120 days. After 30 days the surplus of employees in the two restaurants undermined the efficiency and rhythmic flow of the work which had been established over the years. Thirdly, because of the extended time necessary to open the restaurant many of the originally hired employees resigned to take jobs in actively open restaurants. When the restaurant finally opened one third of the people that had been trained and had remained did not show up for work as scheduled.

PART II - The Problem Continued

Problem #2 - Construction. Restaurant number three was in an end L of a new strip mall containing 20 units and was reputed to be the new commercial center of this western community. However, delays by the developer's general contractor prevented John's completing construction on schedule. A further complication was that John was actively running one restaurant and seriously supervising the second. He was now stretched very thin and was unable to devote all the time he felt was needed to make the trips to the new restaurant to oversee it's progress. His general contractor realizing that the mall's delays apparently took the opportunity to use his subcontractors on other construction projects further aggravating the build-out schedule.

Mr. Lloyd M. Gordon, President of GEC Consultants, Inc. has an MBA from the University of Chicago. He has concepted more than 390 restaurants and has been consulting for over 44 years. He helps people enter the restaurant industry, points the way to profitability, and helps keep them successful. To discuss "Open Three and You're a Mini Chain - Part I" he can be reached at 847-674-6310.

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