Today on my way to dinner, a restaurant I have never been to before one of my passengers made me go a very odd way. Along my travels I found a vacant pizza shop. After turning around and getting the number from the window I spoke with the landlord & was inside within an hour. This store is 4 miles as the crows fly( maybe I said that wrong) from my current shop but in no way shape or form competing with my place now, actually about a 1/4 mile outside of our delivery range. The store needs TLC and equipment but really a small investment. So my questions are
1- was it physically & mentally taxing opening the second store? Obviously ill be working 7 days a week but does it lighten the load with a full staff already trained and systems and recipes that are proven to work in this area?
2- how do you manage yourself and your time. Do you spend a certain amount of hours at each of surprise bounce around to keep people on their toes?
3- do you do most of your prep in one location and use other stores as “express” stores?
In my experience, it sucks to have two stores. In general, you will make less money with two stores, and your quality at the second store suffers.
If you can make a plan to open 4 stores and use this one as a step on the way, then it might be a good idea. With 4 stores, you can put a manager in each one and start to supervise things, and do central marketing. With only two stores, you pretty much have to spend 40-50 hours in your main store, and that doesn’t leave adequate time to deal with the second location.
Also, 4 miles away is just too close.
Aside from the proximity question raised above, my experience was the opposite. I owned a second store for 10 years. There are substantial savings in several areas:
Food cost. Savings are about 2 points on the higher volume. On 500K sales that is 10K.
Labor. With cross training, cross scheduling and combined prep you can run two stores with less cost than 2X the first store. Scheduling, food buying, hiring/training can all be combined. I ran two stores for ten years with five key holders where it takes three for me to run one store. One general manager can do all the employee scheduling, payroll stuff, food buying etc for both. As an example, in a month where I now run $14K in labor I used to run two stores for 20K. That was a savings both in real dollars and also in % of sales.
Insurance. Your second store will cost about 50% of the first store assuming they are combined in one corp entity with same majority ownership.
Marketing. Costs for two stores will be a lot less than 2X one store. If you are spending 20K to market one store, I would expect your costs for two stores to be 30K and produce more impact for both. Combined printing costs, internet costs etc etc.
Banking costs. Most of your fee based expenses will be much lower or zero for the second store.
It is important for you as the owner to focus on systems and quality or as pointed out above your quality may suffer but it can be done. I made 3X as much money with 2 stores as I do with one even though the one I sold/closed (I sold the real estate and the store closed) was the lower sales volume. I am sorry I ever sold it.
How old is the shop you are looking at.
If it was there for several years you might be looking at a lot of upgrades to meet the current codes.
Handicapped rest rooms, Ventilation codes, Fire protection and many other things have changed.
Don’t let anyone tell you that the facility is grand fathered in. That only applies to the original owner. As you will be a new operation you will have to bring everything up to the current codes.
The place is old but has only been closed 4 months. I will make the landlord bring everything up to code before I even have my lawyer involved.
4 miles where I am is an eternity. I stop delivering at 3 miles and my delivery guys already go to far.
Bodega- did you do all of your prep at one location?
Yes, we made dough, sauce and chopped veggies as well as cheese (VCM) all at one location. We had the equipment and the storage to do that which allowed us to operate out of a space that would otherwise have been too small at the second location. It is also far more time efficient to make 16 batches of dough in one place at one time than to make 8 twice in different places.
For us it seemed like a grand idea. How easy just duplicate what we already had going. Seems easy enough…
We operated a 2nd store for about four years. Our original store at that time had been open 12 years. We thought it was a good idea because we were running things great at the original place. We had begun to be absentee owners while doing our build out. We didn’t think the place needed much work (advice 1 double your budget) or equipment.
What we came to realize during the four years:
Double store double trouble from coolers, heat, air, ovens, mixer, plumbing you name it.
Our original store was a success, in part, because we were a part of it for 12 years. People love to see us…even if we are there every now and again…while the 2nd store was open our original store definately took a hit because we were not there much.
Don’t borrow your way into a dream. We borrowed money thinking we would have no problem meeting the bills. True and False…At times the original store had to carry some of the costs. If you have the CASH to make this happen and an emergency fund and want to spend your money on this dream…go for it!
Now that we are back to one store and been open almost 20 years I will never have a second store. I enjoy time off. I enjoy being debt free. I enjoy time off. I am able to spend time working with our community on community events and building business that way- which is alot of fun. I have been able to take a vacation or two or three every year since we have closed the second store.
When we opened our original store we were young. We didn’t mind doubles everyday. We had a dream and went after it. Dreams change…now that I am older I enjoy time off and money to spend.
Think about what you you want in a few years…by all means if you have the will and the cash to make it happen go for it!
Have to totally agree with Kris. We have about the same EXACT scenario. First store open 10 years doing well. Opened 2nd store thinking we were just going to double our profits. We still have to devote 90% of our time and energy to the first store because it’s the one making the money that has sustained the 2nd store for the last 3 years. Second store we’ve had to trust people doing their job and taking care of things (didn’t always happen). We can’t be in two places at once and we certainly couldn’t let the first store suffer because it was the money maker. Before we opened the second store, we too were at a place where we didn’t have to be there much and were enjoying our time off and making pretty decent money. After we opened our second store, it was double the headaches and double the work. However, after almost 3 1/2 years we are starting to see some significant changes in the second store and it’s finally coming around and starting to make a little money. We signed a 5 year lease and are now considering closing it down at the end of the lease. But only because we want to live a more leisurely and less stressful life than we have had for the past 3 years. It’s nice if you can find people to take care of things and run it for you…but the hardest part is trying to keep 2 stores fully staffed.
Just my two cents.
I’m still pretty young, but I can say with near certainty that one day around retirement age I will look back at my entire career - both restaurant related and not - and still consider opening a second location to be my biggest error.
Pizzamancer said exactly what I learned from the process… If you’re going to expand, you need to EXPAND. I wouldn’t expand again unless I had the cash in the bank (and the managers in the system) to do four locations. Two locations is no-mans land.
On the question of proximity, my second store was 5 miles from my first as the crow flies. I thought it was far enough. The day the place opened, sales at my first store dropped 25% and never fully recovered. It was somewhat of a franchise (long story) so it was partially offset by royalty. But not nearly enough.
The second location closed about a month ago. I’d put that moment of joy right up there with my children being born. And wouldn’t you know it, my 1st store sales have jumped about 20%.
Piper…good for you…I get it that is for sure! Plan a much needed vacation ASAP!
As for you Houston hang tough. The best piece of advice I got while trying to decide to close was…The heck with the cheese just let me out of the trap. LOL
We bought our second store 4 months after we opened our first and concentrated efforts on the areas of efficiency from day one. The potential for cost savings is real. As pointed out by others, so is the potential for multiplying problems. This is particularly true if your personal focus is too close to the small operational details which consume the hours and distract an owner from looking forward an appropriate distance to manage the business. Not the end of the world when you spend all your time in one place, but could lead to problems when you try to do it in more than one place at a time.
I was trying to sell both places together but eventually took an offer for one to raise cash for an unrelated third business in 2008. If I could have that decision back I would undo it in a minute and go back to having the two stores.
If you decide to move forward, the way to sucess is available, but not operating as a single location owner typically does. Delegate some key responsibilities (and pay someone for taking them) to free up time to focus on realizing the benefits available to the new combined operation.
Unfortunately I fall with everyone else on the board, when we sold our second store it was a blessing, I felt every moment I was being separated and pulled into different directions.
We saved on the same items that was mentioned but it came at a great sacrifice. I am not at all saying I would not entertain a second and third store but as a franchisee and collecting royalties.
Even someday having a commissary as well to stock the store.
But that is a WHOLE different ball of wax.