Growing Pains

Bridging the Multisite Valley of Death
Jamie Frew
 • 
Oct 2020
4 min read

In the startup world, the ‘valley of death’ describes the early period where high operating costs can sink a business.

Hospitality & Retail face a very similar challenge as they scale site numbers.

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The story often goes something like this…

So you’ve finally taken the leap and opened your first restaurant, bar or shop. You control all aspects of the business whilst on the floor, amongst the action. The energy and passion you bring is palpable and rubs off on staff around you.

Things are going well and you’re confident you have a strong concept.

You find a second site and a GM you trust with day-to-day operations — the first non-flexible salary. The concept scales.

Two sites are great, but you’re not yet able to achieve economy of scale. You make it to 4 sites, 4 GMs and too many staff members to remember their names. All of a sudden this is starting to look very different from that little restaurant you opened a couple of years ago. Another layer of management is needed to look after the day to day operations.

Head office costs have gone through the roof — full-time finance, marketing, managers. And site revenue is nowhere near offsetting that cost.

You’re face to face with the valley of death.

How do you bridge it?

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A few years ago, an American Express advert claimed 90% of restaurants fail during the first year of operation. This has since been discredited but studies still show ¼ fail in the first year and just 40% are still standing after 3 years.

These worrying statistics suggest the majority are unable to bridge the valley of death.

So.. what are the warning signs?

  • Constant pressure to open sites to cover central management costs 🏘
  • Stores have their own individual operating procedures 🏠
  • Staff turnover is high and training is over stretching the team 🙆️
  • Inexperienced managers are trusted with the business out of necessity 👶
  • Internal audits flag crucial issues — firefighting rather than prevention 🚒
  • Email threads and WhatsApp groups are out of control 📩
  • Operations are far from effortless 😢

Some of these sound familiar? Panic not, here’s 3 tools that can help

1. Office productivity tools

Slack is an office messaging tool that has shown to increase team productivity by 32% and reduce emails by 50% with an 80% increase in transparency. Creating separate channels for each store, as well as designating channels for marketing and compliance will ensure all relevant information is consolidated and accessible. Integrations with Dropbox, Google Drive and Asana (see below) make it an essential tool for internal communication.

Asana is a project management tool improving transparency and accountability through the assignment of tasks. Each project has a list of upcoming tasks alongside who is responsible for completion. This is the key in maintaining a project’s focus. Not only does Asana look great, it makes teams 1.45x more efficient and feedbacks straight into Slack.

2. Operations tools

Now head office is running smoothly, it’s time to turn your hand to the disconnect between stores and head office.

The Checklist Manifesto by Atul Gawande is a must read for any business owner requiring certain standards to be met. If you haven’t read it, then do.

“..a checklist cannot fly a plane. Instead, they provide reminders of only the most critical and important steps-the ones that even the highly skilled professional using them could miss”

These days you’d be brave/insane not to have an arsenal of checklists covering critical health and safety requirements. Trail makes operations management effortless using smart checklists as well as integrating with key software such as ePOS, HR tools — and of course Slack, Asana and hundreds more. Trail establishes actionable intelligence across the business. Problems are tackled before they even become problems.

3. ePOS

The new wave of ePOS systems such as Revel, Lightspeed and Epos Now have an ever growing list of features. Stock management allows invoicing and ordering from within the system, it’s even possible to automate orders when stock drops below a certain level. These ePOSs are so efficient and user friendly that staff retention increases and top performers can be tracked and rewarded - both critical factors when replacing a staff member costs 30k! Other features include: menu building, reporting, splitting bills, mobile order taking, customer loyalty programs and customer relationship management to name a few.

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You implement these 3 systems and not long later, your business is back on track. 8 sites has become more than manageable both organisationally and financially. You reach double figures a few months later.

What does scale really mean?

“Simply stated, it means that your business has the potential to multiply revenue with minimal incremental cost”

You have achieved scale. Effortlessly.