Are you Thinking of Expanding into Multiple Locations?

As hospitality economics have changed in Australia, we have seen the rise of more and more restaurant, pub and café groups as operators realise that economy of scale is desirable in order to make good profit margins. This has created the need for skilled group operations managers and group general managers to lead these groups. These were roles that were quite rare 25 years ago, but now we are being asked to recruit, train and develop people to fill these positions quite regularly.

Having risen from a venue manager’s position to a group manager many years ago while I was in the fast food industry, I can confidently relate that going from leading one venue to leading multiple venues is quite a step-up. Think of it this way — it’s comparatively easy to lead a team and control one business when you are physically there a lot of the time; but controlling a number of businesses from a distance when you are only physically there for brief periods is quite problematic, unless you’ve been taught the right way to approach the new job.

When successful venue managers are promoted without proper guidance, they tend to try to manage multiple venues the way they managed one. This usually results in them running themselves ragged trying to micro-manage all the businesses under their control. You can’t do this without working stupid hours and carrying a great deal of stress. When I am mentoring people into this role, I find it useful to explain: ‘You don’t have to manage 5 (or 6, or whatever) businesses the way you are thinking; you just have to manage 5 subordinate managers, and ensure that they — in turn — manage their businesses effectively.

This introduces the need for a certain kind of ruthlessness that many people struggle with. If you tolerate a weak manager underneath you, guess who has to fill the void? If you have several weak managers underneath you, the group manager’s job will become a nightmare quite quickly and you will become bogged, propping-up the weak managers. Enlightened self-interest needs to prevail at this point. If you don’t replace the weak managers with effective people, the spotlight will inevitably come on to you and as a result you risk being seen as ineffective, or you will crumble under an unsustainable workload.

The job becomes relatively comfortable when you have competent people underneath you, but this situation is often only temporary unless you have effective succession plans in place, and you have well prepared people ready to step-up when you lose a key subordinate. This means that one of the key responsibilities of a group management position is to set-up and maintain a key staff development program that will provide for future key staff as natural attrition creates vacancies.

The other key to success in the role is to set-up a reporting system that gives you a good understanding of what is happening in the businesses you oversee, without having to be there. You need to know when things are going well so you can stay away, and you need to know when to go to a business to apply corrective action when things are not going the way you want.

Normally, the information you need includes: regular Mystery Shop customer perception reports, weekly sales/labour reports, monthly profit and loss reports and exit interviews of any staff who leave — i.e. monitor the key issues: customer satisfaction and sales skills, profitability and staff morale and stability.

One of the trickier aspects of a group role is the need to curtail some of your subordinate manager’s autonomy. If you want to develop people in order to facilitate graceful expansion, you need consistent management systems in each of your business units. In other words, if every manager recruits, trains and leads the same way, you can shift staff who you wish to develop from one business to another and they will move into a system of management they know and understand. If you allow your managers to do their own thing, and you want to shift someone to develop them, they will have to learn a new, different system to the one they were used to. This makes succession planning quite difficult and elongates the time necessary to develop effective managers.

If you are considering expanding your business into multiple locations, you need to think carefully about how you need to manage into the future. I have seen a number of companies descend into chaos because they have tried to expand without an understanding of how to do this gracefully. The limiting factor to your growth is not opportunity, but rather the available supply of appropriately skilled people.