Business is booming; is it time to expand? By Tracey Hordern
With busier lifestyles and diminishing leisure time, consumers are increasingly turning to restaurants to save them precious hours, while providing the opportunity to socialise and relax.
As long as pressure builds on our hectic lives and work encroaches on our leisure time, this trend is only expected to grow—and savvy restaurateurs know it. One response to our growing patronage of restaurants is reflected in the growth of restaurants expanding their businesses by opening across multiple venues.
It’s not only hatted restaurants that are building on their brand; cafés, burger bars and sushi trains have all heard the call of expansion. The ultimate aims of any service-based business is to achieve greater market penetration, to burnish its brand, and to develop multiple income streams. For example, The Urban Purveyor Group (UPG)—owners of the Saké and Bavarian Bier Café brands—has taken on a massive expansion program: the recent acquisition of Fratelli Fresh brings the group to a total of 26 venues, 10 brands and more than 2,000 staff.
Expansion is not without its risks, of course—witness the recent failure of the Keystone Group—but, as the industry becomes leaner and smarter in response to ever-tightening profit margins, the restaurant group is likely to become increasingly prominent.
Economies of scale
One of the more obvious advantages of opening a number of restaurants under a single brand is ‘business 101’—economies of scale. This centralised approach can save both time and money, as administration, staffing, ordering and marketing are brought under the one umbrella.
Another commercial advantage for a group versus a single restaurant is the enhanced market power that can be leveraged for preferential treatment from suppliers. This can potentially translate into favoured access to best quality produce and greater savings for the group.
Success breeds success
With a long and well-respected career within the Australian hospitality industry, Sam Christie is best known for joining forces with chef Martin Boetz in 1999, when they opened Longrain Restaurant and Bar in Sydney’s Surry Hills. In 2005, they expanded, opening another Longrain in Melbourne.
Christie remembers fondly when he and Boetz decided to introduce Longrain’s winning formula to Melbourne. “We were going gangbusters in Sydney,” he recalls. “And, like many Sydney-siders, we loved Melbourne and we both had great friends and industry contacts in the city—many urging us to bring Longrain to Melbourne. We knew it was possible, because we knew we had a solid foundation from which to expand.”
Similarly, restaurateur Frank Dilernia cites the success of his first venture, Tapavino, as the impetus to further expand his brand. “I had a great team and we were smashing it. That success morphed into wanting more,” he explains. “Tapavino was a sherry bar and Spanish wine bar and for the next venture, I personally wanted it to be more about food.
The home advantage
Described as Tapavino’s “big brother,” Balcon by Tapavino was launched conveniently close to its predecessor in Sydney’s CBD to both critical and popular acclaim. It also led to the possibilty of opening a third venue.
While Dilernia expanded his business within the confines of Sydney, Sam Christie and partner Martin Boetz gambled on setting up Longrain in another city.
“The first thing we realised was we needed a Melbourne partner,” says Christie. “It’s almost impossible without talent on the ground, and a Melbourne partner would be able to steer us through all the intricacies of that city.
“The logistics, from simple things such as waste disposal to securing the best suppliers; these could only come with insider knowledge and without that, we could have made some very costly mistakes.”
Challenges on the menu
“Once we found our partner, it was still two years until we opened Longrain in Melbourne,” says Christie. “But we soon learnt that there were some major differences between what Sydney diners wanted and what the Melbourne market expected.”
Christie unapologetically describes the first two years for Longrain Melbourne as tough. “Thai food is hugely popular in Sydney and we soon realised that tastes were different in Melbourne,” he says. “Also, without a solid base of regulars that we enjoyed in Sydney, we really had to earn Melbourne’s respect and adapt to the market and their tastes.”
Frank Dilernia approached opening a second restaurant knowing it would have its challenges. “There’s always delays and it can be frustrating getting things done. Plus, now there are so many compliance issues and a lot of regulations to adhere to.”
Dilernia was also financially realistic. “If you’re looking to open a restaurant of any consequence today, it costs of a minimum of $100,000—and that’s before you actually do anything. The price of consultancy plus all the other start-up costs involved are huge. And for many, sadly, it can be prohibitively expensive.”
Now working towards opening Born by Tapavino at Barangaroo, the newest location for the Tapavino team, Dilernia is excited at the prospect of bringing food from the Galicia region of Spain, plus some of the most exciting boutique and artisan wines from around Spain, to the Australian market.
For Dilernia, a self-described “hands-on operator”, he knows even when successful, an expanding business can take it out of you personally. “Time away from the business is crucial,” he stresses. “And that goes for my staff, I don’t expect them to work crazy hours either, because that’s how you lose good staff and fail.
“Equally, when I realise that someone is not the right fit for my business, I get rid of those people as quickly as possible. You really only want to surround yourself with people who are positive and are happy to work with you.”
For Sam Christie, the logistics and constant travel between Sydney and Melbourne was taxing. “I was commuting to Melbourne about 30 times a year,” he recalls. “It was exhausting and with young children at the time, it was very hard on the family. But at the same time, from that venture in another city, I made new and lifelong friends.”
While no two businesses are the same, there are common denominators to success. Whether it’s Longrain taking their formula to another state, or Sam Christie branching out by opening The Apollo with his new partner, Jonathan Barthelmess, and more recently his Japanese venture, Cho Cho San—all ventures built on solid foundations of hard-earned and learned success.
Christie cites finding the right staff as non-negotiable for ongoing success. That, and serving up a consistent level of quality. “Without consistency and a commitment to constantly improve, you have nothing to build upon.”
For Frank Dilernia, it’s all about teamwork. “I’m not scared of hard work and I expect my team to be the same,” he says. “By paying wages above the market, you ensure that you attract the best people. It’s also vitally important to retain the best staff, but ultimately, you need a positive team culture from the top down. It’s paramount to success—especially in this industry.”