How do you know if you are ready to open your next venue?

First up, there is no perfect formula for this. I wish there was. But over the years in our own hospitality group, we often got ahead of ourselves, the adrenaline and excitement of opening a new venue was often too hard to ignore, and rather than asking ourselves whether we were really ready, we would just jump ahead and do it. While it all worked out in the end, the poor performance we would see across our existing venues when we opened a new one actually ended up slowing our growth as we were spending so much time fighting fires. (And there was a fair bit more stress that we lived through than we probably needed to!)

As with most of my stories we were slow learners, and had to be burnt a number of times before we really started to get our act together with how we thought about growth and opening new venues.

Eventually we would run the ruler across ourselves and ask ourselves a whole bunch of questions in what turned out to be three key areas of People, Operations, and Finance.

I don’t want you to think these are all hard and fast rules, they are a set of questions and “rules of thumb” to challenge yourself on whether you are ready or not. It’s quite possible you will come across an opportunity that is so good, that you might need to jump in before you are totally ready. That’s OK as well, you should just expect more bumps in your existing venue/operations and finances that you’ll need to sort out.

People

This was always the biggest question for us.

We realised we needed our hiring, training, and development systems to be solid enough that our best people were actually getting restless. We wanted them thinking “what’s next for me here,” so we could give them that next opportunity.

We learned the hard way that if your plan is just to entirely hire externally to run the new venue, you probably are not ready.

The key question I asked myself was,

If one or two of our best people stepped up to lead the new venue, did we have the next layer of good people ready to fill their shoes at our current venue/s?
 

Some of the people systems we realised we needed working really well were:

• A recruitment and hiring process that delivers quality frontline team members. (I would still always be involved in the hiring of managers or more senior team members. Outsource this at your peril)
• Effective frontline induction and training
• Management development pathways
• Regular weekly management meetings or huddles that actually delivered improvements to the business.

Operations

This was the next big test.

I used to ask myself, What would actually happen if I went away for eight weeks and only joined the weekly management meeting? (Sometimes I was brave enough to actually do it!)

If the answer was that things would probably hold steady, or even improve, then I felt like we were on solid ground.

For us, this meant getting these systems really tight,

• A consistent sales or customer experience process. We called ours a selling system, but i’m sure there is a better name for this. Anyway the important result is that it doesn’t matter who is working, customers are getting a very similar experience whenever they visit your venue.
•  Detailed daily operational checklists for opening, closing, atmosphere, cleaning, health and safety that always get done.
• Solid shift reporting by every manager and then a great weekly management meeting to make sure nothing from the shift reports gets left behind.

We wanted these to be so ingrained that the team did them without thinking, even if I was not around.

Finance

This is where I see so many good operators get tripped up. We were no different early on.

Before opening the next venue, I needed to know that our financial reporting was both accurate and consistent.

I would ask myself,

• Do we have a monthly Profit and Loss report we trust?
• Are we getting unexpected results in our financials? (If it was happening more than two or three months a year, I knew we had problems to solve.)
• Is our combined Wage Cost plus Cost of Goods sitting at 60 percent or less. (50-55% is where the very best operators get to.)
•  Does our balance sheet show at least 50 percent equity?

I also found it incredibly helpful to get our accountant to forecast what our balance sheet and cashflow would look like one month after opening the new venue. I wanted to see if we could keep equity over 40 percent even then.

The finance systems and reports that made the biggest difference in keeping our venue performance consistent were,

• Accurate daily sales forecasting v actual revenue achieved
• Daily and weekly tracking of rostered versus actual wages, reconciled to payroll weekly.
• Calculated versus actual Cost of Goods results, reconciled monthly to our Profit and Loss report
• Daily and weekly variance tracking of expected versus actual revenue
• Weekly tracking of our top sellers with the expected margins vs the actual margins we achieved.
•  Supplier tenders with agreed versus actual prices paid tracked each week
• A menu sign off process to ensure expected margins were accurate

Remember - There’s definitely no perfect plan for growth, but asking the right questions ahead of time can save you a world of pain. For us, getting honest about whether our people, operations, and financial systems were truly ready made all the difference. It didn’t guarantee success, but it gave us a far better shot at growing sustainably without burning out our teams or hurting our existing venues.

If you’ve worked through these areas and can answer most of the questions with confidence or at least with a clear plan, then chances are, you’re closer to being ready than most. And if you can’t yet? That’s not failure. That’s just your opportunity to strengthen the foundations before your next big leap.

It took us a few false starts to learn that growth isn’t just about chasing the next shiny thing, it’s about making sure the engine you’ve already built is strong enough to power it.

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