Due to the limited initial resources, scaling up as a start-up restaurant business with an initial capital of $50,000 does not and should not necessarily involve opening a new restaurant. First of all, a small restaurant may scale up by introducing an option of or putting additional emphasis on takeout, especially since 60% of US consumers order a takeout at least once a week (Sajvaj, 2021). While often viewed as a coping mechanism to react to the Covid-19 pandemic, the takeout focus may be a viable option for growth and not only crisis adaptation (Vig and Agarval, 2021). Another opportunity to scale up as a small restaurant would be creating special breakfast and brunch hours options catered to the target customer base to maximize the output during the high-traffic hours (Keyser, Marella and Clay, 2017). Both these examples allow scaling up the operation without the logistical and administrative strain of opening a new restaurant.
In terms of opening a new venue, opportunities may also come in different shapes. One way of scaling up the operation of a small restaurant business would be offering delivery options. The “Ghost kitchen” model, which eschews dining space in favor of kitchen as a logistical hub and a network of couriers, deserves special consideration as a middle ground between opening an entirely new venue and scaling up the existing one (Khan, 2020; Muller, 2018). Finally, opening a new venue within three years is unlikely, given the modest profit margins in the industry, but still technically possible fourth option for scaling up. In this case, the business would need to pay special attention to the location profile (Yang, Roehl, and Huang, 2017). Similarly, the business owner should be reasonably certain of the possibility to hire and train sufficient personnel, which statistically is one of the most acute problems in the restaurant business (NRA, 2021). If a location within a densely populated area with a demographic profile corresponding to the business’s orientation is available at an affordable price and the business is confident regarding the necessary workforce expansion, this option may be viable.
Keyser, R. S., Marella, V. K. and Clay, K. (2017). ‘Lean restaurants: Improving the dining experience.’ Journal of Higher Education Theory and Practice, 17(7), pp. 67-79.
Khan, M. A. (2020). ‘Technological disruptions in restaurant services: Impact of innovations and delivery services.’ Journal of Hospitality and Tourism Research, 44(1), 109634802090863.
Muller, C. (2018). Restaurant delivery: Are the “ODP” the industry’s “OTA”? Part I.
National Restaurant Association [NRA]. (2021). National statistics. Web.
Sajvaj, S. (2021). How to scale your restaurant business in 4 easy steps.
Vig, S. and Agarwal, R. N. (2021).’Repercussions of COVID-19 on small restaurant entrepreneurs: The Indian context.’ Strategic Change, 30(2), pp. 145-152.
Yang, Y., Roehl, W. S. and Huang, J.-H. (2017). ‘Understanding and projecting the restaurantscape: The influence of neighborhood sociodemographic characteristics on restaurant location.’ International Journal of Hospitality Management, 67, pp., 33-45.