Let's jump right into it

The right kind of capital

Not all capital and funding is good capital, even if the interest terms are favorable. Then what is “good” capital? Good capital is based on what you want for your business now and in the future. If your capital is coming from a bank, do you have a previous history with them, have you had experience with their customer service, do they have existing customers in your vertical of the foodservice industry.

You should question the entity that may supply you with a loan to reduce the number of sleepless nights and headaches that could accrue from an incompetent, inexperienced, or over-extended lender. If your capital is coming from you or your family questions you should ask, could your capital serve as collateral for a loan rather than spending your own cash upfront? Is your own capital best used on a new prospect? Is your own capital riskless and no strings attached?

Meaning, that you are not spending capital that would be initially used for other responsibilities and liabilities, even though the opportunity for another source of revenue presents itself. Understanding what good capital is, is not about whether or not your investment is sound but rather is your capital from XYZ best used for XYZ endeavors.

Spreading your customer to thin

As a brand, you want to make sure you are expanding for the right reasons. Expanding to outpace competition or grow as fast as possible, will often leave your business in a worse position than if you were to have made slower adjustments. When opening up your next location you want to make sure you have either hit 60-80% capacity output of your existing location.

When it comes to restaurants, distance is important and generally, each location should have a reach of 20 miles. Being cautious of where you are growing is important in making sure you do not stretch your customers too thin. Also, this is your business, so you will have to be responsible for its operations, make sure you have adequate experience, and the mental capacity to handle expansion is important, regardless if it's a franchise or company-owned.

Keeping a growth pace that you can handle will be the key thing to consider and watch out for when opening your next location.

Brand consistency

Making sure your brand is consistent across all locations is a viable thing a business should maintain, especially with the possibility of how different areas bring on different customer bases. Making sure menu offerings are offered across all locations and the quality of service is fairly similar regardless of which location a customer may be at.

Permits

If you already have an existing restaurant location, you probably already know about the whole permit process and what permits are needed, however, it is still best to check with a lawyer familiar with the new area you plan on building at if new or different permits are required, in addition to your online research.

This is also very important if you are opening a new brand with different business offerings rather than a new brand location and even if it is a new brand location but with a few different capabilities.