Problem Sloving

Overview

Knowing the first restaurant has had a super performance, the desire of increasing income and the needs of sufficient money for children's university education within 7 years, it is time for finding an optimum ways for expansion. Potential expansion will have impact on the allocation of managerial effort, human resource and financial resource on the first restaurant which may have positive or negative influence on its return. Any risks and benefits that related to the expansion are sharing between the owners. Therefore there should be a relatively same degree of risk preference level and willingness of expansion between you two owners.

Having had the second location for expansion in mind, demographic and economic statistics will help to determine the restaurant sales potential of the market area you plan to serve. Raising finance for a second restaurant is usually easier than for the first. However there are not enough funds from internally generated cash-flow, bank loan will be an alternative. In order to get the bank loan, there are certain covenants have to be met. These will not make the second business operation easier than the first one.

Second location assessment

Choosing a location is an important aspect of starting a restaurant. The characteristics of a good location are:

Traffic: Drivers passing your restaurant will become familiar with it and might stop there to eat. You can get traffic counts from a real estate firm, demographic firm, planning commission, or highway department. You will want to pick a location that has high traffic counts at the peak times you serve your food.

Visibility: If potential customers can't see you, they may not stop. A corner location is great. And even better is a free-standing building on a corner lot! Sign age also increases visibility. Especially, a sign with a read aboard that allows you to advertise your menu. Readily Accessible Parking - This is a must, customers need to be able to find a place to park or they may consider it to be more hassle than it's worth, especially if they are in a hurry.

Accessibility: Customers need to be able to get to your business with ease. Median strips that don't allow for a left-hand turn make it hard for your customers to get to your business. Highly congested traffic areas may also discourage them.

Size: Will the location handle the projected amount of customers you are planning on having?

Price: Make sure the price of the site or lease amount fits your projected break-even or you may just be buying a lot of work with no pay.

Condition of the location: how much money will it take to remodel or repair? Always check with the highway department and local agencies to see what improvements or changes are planned for the area.

Another thing to consider is whether or not this is a high crime area; people may not stop if they don't feel safe. Destruction of property, robbery and employee safety are other considerations.

Description of immediate area

-- Residential and commercial profile

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