Should You REALLY Open That 2nd Restaurant?

Oct 10, 2016
2 min read

I have a friend who just called me up over the weekend to consult on an existing business (currently as a shareholder) nearby Plaza Mont Kiara for consideration of his own set-up in Desa Park City. This is where this week’s blog is heading its way..

I once approached an owner of one of the most successful independent restaurants in KL and asked why he never expanded beyond one location. His reply, "Every time I considered opening another restaurant, I always thought of something else I could be doing to make more money at this one." In a survey conducted, well over half of our members and acquaintances, who now own one restaurant, say they plan on opening a second location within 2 years. Considering the time, resources and risk entailed in opening a second restaurant, many operators would do well to ask themselves if they are already doing all they can to maximize the sales and profitability in their existing operation. Here's a shortlist of activities that could provide as much or more profit potential than a second restaurant at fraction of the investment and risk:

Add a new dining room for banquets and overflow seating. Still a sizable investment but substantially less than a new location with less risk.
Get serious about outside catering and/or delivery. You may already be doing this but are you maximizing your potential? Some restaurants make more profit on catering than in their dining room. For example, Shogun2U in Kuchai Lama does nearly $1 million, over 30% of its annual sales, in delivery.
Have a birthday club or promo. If you don't have a promotion to bring customers into your restaurant on the day or month of their birthday you should. One of our clients increased his sales 52% over 3 years with a fabulous birthday offer. (Eat for FREE with T&C applied)
Customer database marketing. Smart independents, more than ever, are focusing their marketing efforts and dollars where they generate the most return, on their existing customers base. Many have seen sales increases in excess of 20% a year.