How to open a second hospitality site: When is the time right?

21 September 2023 by

For restaurateurs, expanding can be one of the hardest challenges of a hospitality career. Some of the industry's leading figures speak about how they navigate the pitfalls

Picture the scene: you've just achieved a career dream of opening your own restaurant. Custom is good, the numbers are sound, reviews are favourable and – as you expected – your every waking minute is consumed by its running. Then also, lurking at the back of your mind, is the conundrum: do I stick or twist? Should I open a second site? And should I do it now, later, or postpone it indefinitely?

"Going from one to two or three sites is the hardest, hardest part of building a restaurant group," says Mitch Tonks, founder of restaurant group Rockfish. "Unless you've got vast sums of money behind you, as well as a clear vision, then you're still building a team, building the energy, creating customer and staff loyalty and you're having to do that all as an entrepreneur that is centrally focused to the business."

Opening one site is hard. But opening a second site means doing it all over again – this time with much higher levels of expectation as well as another business to run. "I'm no musician, but the tricky second album is a good analogy," says James Robson, co-founder of Fallow, London. How do you decide whether to take the plunge? How do you go about it? And how can you avoid the pitfalls that have tripped up many a restaurateur?

When is the right time to expand?

The first message is: there is never a right time. "You're never ready to do your second site," says Robson, who this year is opening two new sites in London to accompany Fallow, which opened in 2021. "But the issue is that if you wait until you are completely ready, the chances are you've lost your momentum; your energy may have gone by then."

Judging momentum is a key way of knowing the time could be right, says Huzefa Sajawal, founder of London-based Indo-Chinese restaurant group Fatt Pundit. "Once you know there is enough demand at your first site, and you can't cater to as many people who want to come, that's the best indication for you to move onto the second. Your Saturdays obviously get booked out first, and then the Fridays and then the weekdays and then that gives you the confidence that if you take it to another site, there will be demand there as well."

Those whose businesses work in close synchronicity with their location will find that expansion plans are more tied to available sites rather than momentum. Luke Davis is founder of Rockwater, a bar and restaurant based on the Hove seafront. For his second and third sites, he is expanding into two beachfront properties in Sandbanks and Branksome Chine, Poole: "You're going to be guided by your instinct because the timing is never going to be perfect. Most people told me I was mad, but there's no right way to do it. I knew the locations were right, I knew the demographics were right, and I wasn't going to find better sites in this country ever again. So it was either wait for the perfect time or miss them."

Customers lead the way

Others might find they are led by their customers. "For the first six months of opening I said I never would open a restaurant again," says Mathew Carver, founder of the Cheese Bar, which opened in Camden, London, in 2017, serving cooked cheese dishes. "But that pain dulls after a while. Speaking to our customers, I realised there was demand for a slightly different offering to what we had, from people who want to try cheeses in their raw state." The result was Pick & Cheese, a conveyor-­belt-style restaurant which opened in London's Seven Dials in 2020.

Speaking to our customers, I realised there was demand for a slightly different offering to what we had

"The most important thing is you have to make sure that it doesn't come and bite you back," says Alexis Gauthier, who opened London fine-diner Gauthier Soho in 2010, before waiting 11 years to launch casual vegan concept 123V, which opened in 2021 in Fenwick department store in London's Mayfair.

"You have to understand that the world is not waiting for you to open another restaurant. For many years, I thought: I can't duplicate myself. I need to respect my customers. If I put my name above the door, they need to know I'm in the restaurant and I will look after them."

If timed poorly, expanding before you are ready can have the worst possible effect: undoing all the good work of the first site. "The biggest risk is not being able to be consistent with your standards," says Sajawal. "It's very important that you don't expand too quickly if you don't have a team who can deliver what people loved about the original site."

And if that's not enough, there's another danger lurking on the horizon, says Tonks: "The other risk is financial. If site two doesn't work, it's like a plughole effect. It will pull down site one. And it won't just drain the finances, it'll drain you mentally as well."

Making more money from more restaurants

While more sites can sometimes equal more money, depending on the model, that isn't always the case, says Tonks. "You'll probably find yourself in a position where you're not making much more money than you were when you had one restaurant. You'll have had to assemble a team of highly skilled operations people around you and that costs money. You've probably got debt that you've taken on. You've got administrative costs that you didn't have before. You then need to drive scale to get over that. That sort of hump is usually about three to five units."

For Tonks, rewards are as much professional as financial: "I'm driven by the love doing it. I really believe in what we are doing."

For staff, a second site is a huge opportunity for career progression. "Everyone's got a staffing cycle," says Robson. "The way I look at it is you invest in and train team members for a year. The second year is a bit about giving back and mentoring them to more maturity. By the time you're getting to third or fourth year, quite often people want to progress. And if you haven't got the roles for them to move up into within your company, there's only one way to create movement and that is open a second side."

For operators, the reward is not only staff retention, but an opportunity to keep both restaurants at top of their game. "Say you open a place, you've got amazing energy, you've got teams that are buzzing and reviewers coming in," says Robson. "That does fade after a while and then you've got to work out – what are you going to do? Usually the answer is do a second site, promote your staff and then bring some fresh energy into your original site."

Finding the right site for you

"Finding the right site is key," says Sajawal. "And it's one of the most difficult things and the biggest decision you're going to make, because effectively you're making a decision for the next 15 years. It is a massive commitment."

Where do you launch site number two? Should you open up a completely new market or open near your first and fight for the same customers? Sajawal had a simple plan for his second and third sites. "I wanted the second site to be a 15- to 20-minute walking distance, so I could keep an eye on both. I wanted to make a triangle so they are all about 15 minutes walk from each other, but also in markets that are quite different. The Marylebone crowd is different from the Soho crowd which is different from the Covent Garden crowd."

For those in cities or towns that might not sustain two similar concepts, second sites might not be site-led. Tonks said he hadn't considered a second Rockfish until he walked past the perfect premises in Plymouth, an hour's drive from the original in Dartmouth.

Do a second site, promote your staff and then bring some fresh energy into your original site

Wherever you choose – make sure you know the area like the back of your hand before you sign the contract, says Robson. "When you are getting close [to signing], you've got to go and sit in local coffee shops to understand the area. You've got to sit there on a Monday morning, on a Thursday night, on a rainy Sunday and a sunny Saturday. You've got to do your research to understand your market."

And don't be afraid of competition, adds Robson. "Caffè Nero, Starbucks and Costa Coffee all happily sit next to each other. McDonald's and KFC happily sit next to each other. If an area is good, it can take more than one restaurant. Just look at Mountain [in Soho, London] opening so close to Kiln and Sabor."

Deciding on a concept

When it comes to deciding whether to replicate site one or launch an entirely new concept, there is no right answer. But there are pros and cons to each. Gauthier decided that it would be impossible to replicate his Soho fine dining restaurant and instead decided to launch casual dining concept 123V.

"When the site is a gastronomic restaurant with the name of the chef about the door, I think it's important that number two is not number one tweaked. It has to have its own identity and personality," he says However, beyond two sites, a large portfolio of different restaurants can become unwieldy, says Tonks. "For me, I think the only way to build a multi-site business is to create something that's built on the same core values and the same culture. I think it would be incredibly difficult to run a portfolio of restaurants that are all different."

Carver did exactly that when he opened a second site – pivoting from a restaurant serving hot cheese dishes to a bar offering conveyor belt cheese – and can see both sides of the coin. "I think this opening a second site that is completely different is making life a bit more challenging than you need.

"Everything from the menu to service to operations is really different. It's like starting again. However, we now have three restaurants that are very different. And what that does mean is people who come to London for the week might visit all three. Whereas, if they were the same menu offering I don't know if people would visit more than once."

How to staff your new restaurant

"Staffing is probably the hardest part of expanding," says MJMK co-founder Jake Kasumov, who opened Portuguese restaurant Casa do Frango in London Bridge 2017, adding further sites in Shoreditch in 2019, Picadilly in 2022 and Victoria in 2023.

"When we had one site, we spent most of our time there and we had a lot more control over what was happening, especially in recruitment, onboarding, training and so on. As soon as you get into two sites, the whole game changes."

Throw into the mix arguably the worst staffing crisis the industry has ever seen, and finding new recruits who can live and breathe the DNA of the restaurant is harder than ever.

"Systems and processes, especially when it comes to recruitment and development, are so important," continues Kasumov. "It's ensuring that anyone who joins has the same experience, that they all act the same way and offer the same sort of approach and level of hospitality. That is the hardest thing to achieve."

Essential to that is creating a healthy staff culture, says Tonks. "The thing that keeps staff together is good culture, and good culture comes from the top of the business. If you look at all the great businesses – Hawksmoor, Dishoom – they have great culture and people want to go and work there, which is why they're able to open sites and make it work. Act it, be it, and you'll be very surprised at how good culture breeds good culture. In the same way, bad culture breeds bad culture. Any toxicity in a business can spread like wildfire and bring it down in months."

Thinking about a third

If all goes to plan and a second site hits the ground running, that question will start lurking again: stick or twist? "My only advice would be to take a pause each time and make sure you are in a position where if you add something else you're going to be able to manage it," says Carver. "I actually found two to three the hardest. Suddenly you've got lots more people and need lots more processes and lots more of everything else."

However, for those that succeed, the rewards are out there. "If you build a successful business of 10, 12, 14 sites, there can be lots of money to be made in a sale or profit," says Tonks. "But it really is a steep, hard learning curve to get to that level and maintain consistency."

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