Managing one location is difficult enough, so how does a small business owner manage multiple locations?
That's a question that Jared Ross has faced since he started Toronto-based Veda Takeout Inc. in 2005. There are now four locations of Veda, a "healthy Indian-inspired takeout" restaurant. The company's ability to grow by adding locations is a result of deliberate choices that Mr. Ross made at startup and along the way.
Mr. Ross would never have predicted that he'd own a chain of Indian restaurants. With a background in wealth management at a Canadian bank, he enrolled in an MBA program in 2002 and, while still in school, he began to look for promising entrepreneurial opportunities. He started to notice restaurants because, like most students, he was always trying to find food that was good, quick and inexpensive.
"There were Indian restaurants and fast-food restaurants," he recalls. "This was in the early days of the trend towards healthy eating, so there were a few restaurants emphasizing healthy food, but not many."
He wondered about the possibility of linking these three concepts – fast, healthy, Indian food – together.
Going into the restaurant business was completely new for Mr. Ross so he did everything he could to "disprove" the concept. "I spent a year and a half looking for reasons why it wouldn't work, but I couldn't find any, so I decided to go ahead," he says.
He wanted Veda to be a growth-oriented company, which, in the restaurant business, means adding new locations. Right from the beginning, therefore, he made choices that would make managing multiple locations easier.
Mr. Ross realized that, first and foremost, he had to have great food that people wanted to eat. He also knew that he had to have a fairly narrow menu to be able to produce it quickly and replicate it across multiple locations.
Accordingly, he spent a great deal of time doing market research on recipes that people liked. He took an Indian cooking course and had up to 20 people over each weekend for taste tests. "I sat there with a giant spreadsheet and got people to tell me what they liked and didn't like about the eight different versions of butter chicken they were testing," he recalls.
Once he had a set of recipes and a chef who shared his philosophy – Veda food is less spicy than traditional Indian food to appeal to the North American palate, and less oily to be healthier – he started to look for a location. This proved difficult because landlords were wary of Indian cooking smells on the ground floor of office and condo buildings.
He finally found a location in Toronto's Yorkville district but it wasn't ideal. "At that time, the area was much less developed than it is now. There were no condos near here and no clustering of restaurants that would make people want to come to this area to eat," Mr. Ross says. "We struggled for a couple of years to get visibility."
However, Mr. Ross turned this problem into an opportunity, loosening his dependence on physical location by starting a delivery service that opened the business to a much larger geographic area. This initiative was successful; delivery sales now account for 25 per cent of revenue.
At the outset, Mr. Ross realized that branding and marketing the Veda concept were going to be critical in growing across locations. Rather than hire an outside consultant for a one-time engagement, he brought on Matthew Surlaya, a young and eager advertising grad willing to take a chance on a new venture. Mr. Ross says that being able to draw on Mr. Surlaya's in-house marketing skills on an ongoing basis has contributed enormously to his ability to grow. Mr. Ross is the company's president and Mr. Surlaya is its manager of branding and IT development.
Over the next seven years, Mr. Ross opened up three more Veda locations, two in buildings on the main University of Toronto campus, in 2007 and 2009, and one this past summer at University and Dundas, close to a group of hospitals. To manage across these locations, he pays close attention to as much standardizing as possible.
Since Mr. Ross believes food consistency to be critical, all the cooking is done in a central location. This means not only that food in all of Veda restaurants is cooked using the same recipes, but that it all comes from the same batch. The cooking takes place in the original, flagship Yorkville location and is distributed to the other locations each morning.
To ensure that the right food is at the right place at the right time, Mr. Ross needs to be able to estimate demand at each location on each day of the week. He has systems in place that allow him to predict that, and to tweak the prediction if there are events, such as large conferences, in the area. As well, he has a driver on call at all times who can deliver food to a location within 10 minutes if there is unexpected demand and something is running out.
Mr. Ross also needs to be able to manage change to his menu in a standardized manner. It is slow to change because, as he puts it, "every time I try to take something off and replace it with something new, I get complaints from loyal customers who want their favourite dish put back on the menu."
However, he has made recipe changes to accommodate dietary restrictions. "All of our food is nut-free, all of our meat is halal, and all of our curries, including the rice, are gluten-free."
The "all" in this statement is important; for example, if only some of its meat was halal, there would be exceptions in recipes, in menu options, in estimating demand, and in training staff , which would make it more difficult to manage across multiple locations.
Training and managing staff across locations is something else that Mr. Ross pays close attention to. He has a training manual for new hires that details everything, including how he wants staff to interact with customers, so that customer service is consistently at a high level. New hires have an orientation and shadow existing staff for a few shifts. There are regular staff meetings and location managers who understand the Veda philosophy and how it needs to be sustained.
Veda now has 40 employees. Each location is producing double-digit returns and the company has enjoyed double-digit profitability each year since it was founded. Mr. Ross is in a comfortable position with the business now, but is looking for the next stage of growth.
In particular, he is investigating the possibility of extending his standardized multiple location system into a franchising model to produce even greater geographic reach.
Special to The Globe and Mail
Becky Reuber is a professor of strategic management in the Rotman School of Management of the University of Toronto.
This is the latest in a regular series of case studies by a rotating group of business professors from across the country. They appear every Friday on the Small Business website.
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