The Gray Cat Blog

A comprehensive collection of blogs designed to assist small business owners and multiunit operators.

Multi-Unit Operations

Feb 13, 2023

Every retail operator starts with that first, single store.  They hone their operational skills; develop a “how-to-go-to-market” strategy; and hopefully find success for years to come.  Then they get the itch.  What if they could replicate this success in a second location?  A third? Or more?  How do they make that happen and what are the key elements to consider making that leap?  Let’s dig a little deeper:

Do You Have What It Takes?  It is one thing to be able to run one location if you can touch and impact everything at the location.  But how do you spread your management influence over, say, five locations?  While it is quite a difference going from running one location, to managing multiple locations, it is clearly not an anomaly.  In fact, over 50% of all retail locations are managed by multi-unit operators.  Of that number, roughly 30% run between 2 and 30 locations and over 5% of owners make it past the 100-unit mark.  There is clearly precedent for becoming a multi-unit operator.

Core Ingredients for Consideration:  First and foremost, you need to have the operating experience to blossom out to multiple locations.  In a nutshell, can you “walk the walk” when it comes to operations, and can you translate that to managing people to execute?  Next to consider is determining whether your brand is well-established and proven enough to expand.  Can you create a customer experience that can transcend transactions into experiences?  Lastly, have you assembled a strong team that is able to implement your systems and procedures even without you being present?  Consider the pros and cons of becoming a multi-unit operator:

The Pros of Multi-Unit Operations:

  • Lower variable costs
    • Volume purchasing and the ability to spread out your marketing costs
  • Could be easier to manage
    • Cross-training and optimal utilization of employees
  • Learn and Improve
    • Test items and procedures at one location, then roll-out to other locations
  • Lower fixed costs
    • Spread costs of equipment over multiple locations (i.e., a delivery vehicle)
  • Better handling of a crisis
    • Relocate inventories from one location to another if need be

The Cons of Multi-Unit Operations:

  • Could be difficult to manage
    • May stretch you too thin if you don’t learn to delegate
  • May hide problems at some units
    •  Bifurcating your unit P&L’s is a must to keep tabs on each location’s financial performance
  • Could lead to higher costs
    • If you are not watching your costs and overall operations carefully, the cost can get out of hand
  • Could lead to lower sales
    • Customers may avoid other locations if they experience service issues at one

Changing your Management Style:  Managing multiple locations versus one requires a change in management structure.  Multi-unit Leaders manage the people that manage the problems and shape the experience of every team member and guest in their market.  The individual General Managers manage the store problems themselves.  Essentially, you become a manager of people versus a store.

In summary, the success of multi-unit corporations depends on the competence, capabilities, and commitment of field managers as they embody the brand through their actions, oversee daily operations, and implement new initiatives.  They are no longer the tactical doers, but rather the managerial visionaries that align each store staff to a common goal.  If they can pull that off, a multi-unit operator can extract all the real and tangible scalable benefits that come with multi-store operations.

Want more ideas?  For more information on Multi-Unit Operations, visit the Gray Cat Learning Series:

John Matthews, President & CEO, Gray Cat Enterprises, Inc.

John Matthews is the Founder and President of Gray Cat Enterprises, Inc. a Raleigh, NC-based management consulting company. Gray Cat specializes in strategic project management and consulting for multi-unit operations; interim executive management; and strategic planning. Mr. Matthews has over 30 years of senior-level executive experience in the retail industry, involving three dynamic multi-unit companies. Mr. Matthews experience includes President of Jimmy John's Gourmet Sandwiches; Vice President of Marketing, Merchandising, Corporate Communications, Facilities and Real Estate for Clark Retail Enterprises/White Hen Pantry; and National Marketing Director at Little Caesar's Pizza! Pizza!