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The Key to Selecting Your Second Location

Congrats!  You are successful with your first location.  You’ve got the operations down, the management kinks worked out, and a loyal customer following.  You’ve been open 2 years, and you know what you are doing.  Hey, it’s time to expand, right?

This is where it gets tricky. It’s time to tread very carefully.  As many multiple location owners will tell you, that second location can be a real beast. 

A business owner of 3 successful restaurants once told me, “When you open your second location, your life goes to hell.”  He’s right.  The opening of your second location can actually double your headaches and stress.

Why is that?  Well, first of all, you basically have to double everything.  Sounds simple enough, until you start thinking about what’s really involved.  Sure, there’s the obvious numbers stuff like rent, insurance, inventory, payroll, etc.  But there are a lot of hidden pain points that can be easily overlooked.

When you open your second location, just remember your staffing issues will double such as no-shows, hiring, firing, phone calls from staff, emails from staff.  Then you’ve got the training issues of how to keep everyone up-to-speed, in-the-know, and on-the-same-page.  Follow that up with general operations challenges such as maintenance, repairs, inventory delivery, and keeping track of assets.  These seemingly innocent aspects can really wear you down over time. 

You also have the site selection to be very careful about.  Not only do you have to consider the primary factors as target audience density, nearby competition, traffic flow, brand fit, accessibility, parking, etc.  But also what impact this second location will have on your first location.

Most business owners expand in a way that maximizes their geographic coverage and reach in a given metropolitan area.  So they will try to pick a location in a completely separate part of town with acceptable demos and reasonable rent.  Sometimes these are more than 30 minutes apart.  Not a bad idea, and this will certainly work.

But there is a much better alternative, think about promixity instead of geographic coverage.

The critical factor is “proximity.”  What exactly is “proximity?”  Proximity is the distance between the first and second location.  It is uber important for two reasons.

First: Drive Time.  Since you are most likely serving the role as Owner/District Manager/Manager you are the one that has to drive back and forth between locations when problems arise.  So every time you need to check, review, monitor an issue at a location you are introducing a drive time factor into your day.  What use to be one-stop shopping with one location, now creates several trips across town often in the same day.  So if it’s 30 minutes between locations, you may have just created an extra hour or two of drive time, daily.  Ouch.

Second: Marketing.  Proximity also creates a sense of familiarity with new clients and better leverages your marking efforts.  You can focus on one area instead of a shot-gun approach in varying parts of town.

A successful way to pick that second location is to look carefully at your site selection factors.  Pick the best, most profitable location nearest your first location that will not cannibalize sales between the two. 

It’s far better to build a strong base, rather than try to establish stand-alone beachheads across a metropolitan area.  This will ward of competition and also allow your fan base to bleed over on the edges into your new territory. 

Opening that new location won’t be easy, but then again, that’s the challenge you live for, right?  Just consider proximity when selecting that second location, and you will be glad you did.

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About Jason Duncan

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Jason Duncan has been helping companies manage operations through technological tools for over 10 years. He is president of ManagerComplete, a cloud-based application that helps manage multiple locations. You can reach him at, phone 866-505-2233. or twitter @ManagerComplete.

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Franchise Operations