a server in a restaurant helping many guests on a long table

Are you feeling great about your restaurant’s progress? If so, the question of how to expand a restaurant business is probably coming up more and more. Restaurant expansion is a consideration for owners who have experienced tremendous growth, but it requires careful thought about a number of decisions. Replicating the existing restaurant or bar is one option, while others go with the “similar, but not the same” concept. Still, others try to find a new revenue stream from the business they are already operating, such as adding a catering division.

Whether you’re a food truck turning brick-and-mortar, a restaurant location growing with catering, or a solo establishment looking for a new location, you’re up for a new challenge.

Going through the process of becoming a restaurant owner is an undertaking in its own right, but figuring out how to expand a restaurant business can be just as complex. Since you’re not starting a “new” restaurant, however, you have the advantage of building on the strong foundation that you’ve already created.

Business owner is using laptop

Follow these steps as you embark on your restaurant expansion.

1. Decide if the timing is right

Sometimes desire to grow sets in when it’s not an opportune time. Only consider expansion if a natural progression has taken place and you’re in a scenario in which you have financial security. You also need to have strong support staff if you’re going to be splitting your time between two different locations or business arms. If you can’t physically be in your restaurant, make sure you trust the people who are. Finally, think about how the time of year might factor in. For instance, if you’re busier in the summer months, spring might be a great time to for a soft launch and to get the word out so that your new business enjoys a seasonal boost.

2. Map out your restaurant expansion business plan

Don’t take on a new business or a major expansion without a clear idea on how to proceed. Putting together a restaurant expansion business plan, just as you did the first time around, will paint a clear picture of the real opportunity in front of you. It will clearly show if expansion is a good idea based on an assessment of resources, operations, financials, and the competitive marketplace, among other data points.

Above all else, putting together a business plan lets you take the pieces of your current restaurant that worked well, and try a new approach with the aspects that were problematic the first time around.

Restaurant manager discussing with chef in kitchen. Cook preparing a dish with restaurant owner standing by.

3. Carefully select a new site

If your expansion involves a new location, you’ll have to do your due diligence in scouting the area well. You want to be able to draw new clientele, not just attract your existing customers. Plus, you want to fulfill a real neighborhood need, not move in next to a similar establishment that’s been around for years. In other words, do some competitive research by reading online review sites, following their social media feeds, and getting familiar with the area in person.

You also need to consider the demographics of the new location. Is it a college town or a high-income suburb? A young family community or a metro hub that draws an after-work crowd? Whatever the answer, you want to be sure that you can create a dining experience and hire a staff that will appeal to the diners in the area.

Ready to expand? You’ll need a Restaurant Expense Tracker.

4. Investigate all possibilities

Sometimes expansion is simply adding new services to an existing restaurant. The expansion in services may include banquet sales, catering, new menu items and wine tasting parties. These creative ideas allow for more offerings and new marketplace participation without acquiring a new location. Whether you’re adding a party room, serving up a new express lunch take-out menu, or offering cooking demonstrations on slower weeknights, there are many ways to expand food businesses.

Some questions to consider when scaling:

  • What type of catering service might complement your current business? A catering audience may be different than your restaurant patrons. Think about what types of events would be the most lucrative to specialize in.
  • What are you best at, and what is trending? Think about what you are known for, and do a little bit of field research to see what your competitors are doing. Perhaps you can tap into current fads like dinner prep kits, heat-and-eat single-serve meals, or specialty dining parties like barbeque or clam boils. Or, a bigger space can allow for private functions like paint and sip parties, bingo brunches, and more.
  • Do you want to offer a full-service catering program, or just offer pick up? A full-service catering program offers the complete dining experience, can serve at events, and comes with a fully trained, fully staffed program. If that is beyond your scope right now, you can still offer catering trays for pick up.

Female restaurant manager working at counter

5. Consider funding options

Hopefully if you’re looking to expand, it means you’re doing well with your core business. So as you continue to invest into a restaurant expansion, you want to be savvy about your finances. For instance, you might consider a Merchant Cash Advance (MCA) loan, which typically has terms of 3 to 18 months since it comes with less risk than traditional loans. For many small business owners, MCAs may also be easier to obtain than loans, especially in economically uncertain times.

Also worth noting is that it’s OK to share resources with your current restaurant as long as you’re not sacrificing quality or the level of customer service.

6. Maintain your standards and stay true to your customers

No matter which direction you choose to take your restaurant business, don’t lose sight of what you’ve already built and the core values of your first location. Try to maintain a similar vibe for your new endeavor that feels authentic to your brand.

Finally, don’t forget about your customers. You’ve arrived at a certain level of success because of them, so always keep them top of mind throughout any expansion process. The last thing you want is to alienate your guests.

Wanting to scale and grow is only natural, but it’s important to have a restaurant expansion strategy if you want to do so successfully. Think through the strategies above, and cook up the restaurant expansion plan that works for you.

You don’t need to be an accountant to calculate food or labor costs or forecast your sales, you simply need a budget and a good expenses spreadsheet.

Get Yours
Written by   |  
Dawn Papandrea is freelance writer based in New York. Her work has appeared in numerous publications including Family Circle, WomansDay.com, and more. She loves trying new restaurants with her family and friends in her spare time.