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After three generations of his family spent several decades running a number of restaurants, Louis Pappas decided to branch out with his wife, Nancy. In 2003, the couple began opening what is now a seven-unit chain of Louis Pappas Market Cafés. Says Louis, 50, "I've always wanted to pursue this multiunit concept." Here, he and experts offer tips on growing one location into a chain.
1. Know thyself.Colorado Springs, Colorado, strategy consultant Tom DeCotiis, who has advised a number of chain operations, says that before anything else, entrepreneurs must be clear about their motivations for going multiunit. "They may think they have to grow to make money," he says. "That's probably not the best reason." Rather than financial motivation, look for motivations such as the desire to share opportunities with others or to express a personal vision.
2. Know when to grow.If you're drawing a lot of customers from outside your normal market area, consider adding a unit, says Jerome Katz, entrepreneurship professor at St. Louis University. Ask credit card companies for your customers' ZIP codes. Then think about a place where a lot of people who resemble your customers live and shop. Says Katz, "That becomes an area for natural expansion."
