Most entrepreneurs have lofty visions for their businesses. In foodservice, this is usually moving beyond the confines of their first restaurant. For some, this might just be expanding into a bigger property. But for many restaurant owners, ambitions include their brand becoming a feature in the lives of diners across the country, or even globally.
This kind of expansion certainly doesn’t happen overnight, and few entrepreneurs have the know-how and resources to immediately open multiple restaurants in various locations. As such, the steady path toward a healthy and national expansion begins with a step across state lines. This can be more complicated and a bigger risk than opening up a new location in the same state. It’s no surprise that owners are not always sure they are ready for such a move.
We’re going to take a look at what elements can indicate it is time to leap cross-state expansions.
A restaurant may well be popular in the local area, but that doesn’t necessarily mean that it’s appropriate to be moving across state lines. It’s important to remember that many elements factor into an eatery’s success—not the least of which is the reputation that the owners may have built up among community members. The way they run their company or present their food resonates with locals, but they haven’t necessarily built the same rapport elsewhere.
This means that before venturing to other states, restaurant owners need to understand whether there is a demand for what they provide. Sometimes this can be clear from out-of-town customers themselves. Particularly in tourism towns, it is not uncommon for enthusiastic diners to report how they need what a restaurant is offering in their community. Indeed, by keeping an executive online presence, posting content—videos, images, menus, blog posts—which promotes the unique approach to their business, restaurateurs can gauge reactions regarding out-of-state demand from followers.
However, it is perhaps more important to conduct some solid, fact-based research. It is essential to review potential areas for expansion to understand whether there is space in the new community for the restaurant’s approach to dining or the type of food they offer. Is there enough interest that the profits generated could justify the local rent costs? It would certainly be unwise to pitch up in an area that already has well-established restaurants of a similar kind. Alongside the competition in the area, it’s wise to review the type of traffic that comes through—are there a lot of visitors for tourism or events, is it largely commuter based that prefer drive-thrus to sit-down dining?
Alongside establishing demand, a move across state lines isn’t wise until owners establish that it is practical and prudent to do so. In general, this can be assisted by some thorough preparation. Food entrepreneurs should seek legal advice regarding what regulations are different from those present in their own state. Cleanliness standards, business licensing legislation, even certification requirements can vary from state to state. To stay legally compliant, owners must take time to understand the needs of the target state. Knowing this information can empower restaurateurs to start seeking out the best-qualified personnel to take care of the day-to-day running of the business.
From there, it’s important to open tentative discussions with current providers in the supply chain. Are they able to provide services to the new restaurant? If not, owners will need to research which local equivalents can provide equipment, ingredients, and services of the same high standards that are expected at the home location.
One of the most important practical elements that restaurateurs must consider is finance. Gaining an understanding of rentals in the new state, alongside the various taxes, insurance needs, and local pay rates can help owners to understand whether they are in a position to expand into that location. Indeed, it is not just the current business liquidity that should be considered, but also the fine details of how customers are likely to pay in the new environment. Particularly if the intended premises is in a bigger city, a growing number of customers will expect to make mobile payments rather than credit card transactions. Alongside having the apparatus in place to make this possible, businesses must also make certain there are sufficient cybersecurity protocols in place to keep diners and the business safe. Leadership must prepare to offer secure WiFi for customer use, and use apps that have robust encryption in place.
Restaurants don’t succeed by the efforts of a single entrepreneur. The staff and support system that surrounds the business is one of the primary contributors to effective growth. As such, food service owners should only consider expanding across state lines once they have a strong and trustworthy team in place.
This is likely to include staff that is capable of unilaterally running the current restaurant location at times when the owners are overseeing the operations of the new premises. Restaurateurs will find this particularly vital in the early stages of the expansion where their time and attention will largely be focused on getting the property ready for the opening and making certain that everything is running smoothly afterward. Indeed, it can be wise to promote trustworthy members of staff to management positions in the current location and if workers are willing to relocate to the new state.
It’s equally important to establish a solid network of reliable freelancers and temporary laborers to undertake activities leading up to the opening of the new location. There will be a lot of small but important tasks to complete that owners can’t handle on their own. Outsourcing these aspects, particularly specialist tasks such as graphic design, website management, and security system installation will save owners a huge amount of time that can be better spent overseeing elements of business operations that benefit from their own expertise. Using freelancers also tends to make life a little less stressful during a time that the pressure can be overwhelming.
Opening a new restaurant in a different state can be a daunting prospect, but also an ultimately rewarding one. It is vital to undertake sufficient research on the demand for services, prepare elements that make the move practical, and establish a strong team to help along the way.
Jori Hamilton is an experienced writer from the Northwestern U.S. She covers a wide range of topics and, because she spent over six years in the restaurant business before writing full-time, takes a particular interest in covering topics related to the food and beverage industry. To learn more about Jori, you can follow her on Twitter.