When does a business become a chain?

Starting off the topic is the subject of chain restaurants.   If a restaurant is doing well, thoughts of expanding might then be entertained.  I would assume that’s only natural in the business.  Some obviously have no interest in expanding and clearly some choose to expand.

When does a restaurant stop being a local business or eatery and move into chain territory?  Scott and I just had this discussion and I would be curious to hear your thoughts.  If you’ve been a reader of OHC for a while, you know that we try not to eat at chain restaurants.  Even if those places are only in Ohio or got their start in Ohio (think Bob Evans or Wendy’s), they are clearly chains and hold no interest to us.

Scott presented me with the example of one of our favorite places, what if they decided to open another location, would that make them a chain?

My answer was no, I would not consider that a chain.  But if they opened a third location, then yes, to me that is a chain.  Two restaurants, I think the owners would be able to handle and be very involved in the running and upkeep of the place.  Still small enough of a venture that one would get a personal feel walking into the restaurant.  The individual taste of the owner would still be present, and customer service would still feel like it is number one priority.

Three restaurants? And that’s where I think things start to slide or get pushed to the back.  I would think it would be very hard to oversee and run three restaurants.  Clearly there would have to be other people involved at the other restaurants to make sure everything is running.  The owner would then have to start delegating and start passing out more responsibility to others.

To me, it seems like it would be very hard to stay involved in the day-to-day process of running a restaurant when you’ve got three or more on your plate.

And that’s where I think it starts becoming a chain business, when the owner can’t oversee everything themselves and they need to put other people in charge.

Now I’m not talking about restaurant managers, as that is a whole other situation.  I’m talking about the owner being involved in food purchase, menu creation, and generally being on hand to address the variety of things that come up during their day.  I think, once there are three plus restaurants the attention to detail one expects from a local restaurant starts to fade.

I feel the same way about a business in general.  A local specialty shop opens, does well and opens another.  Then another and so on.  The same rules apply, once you reach so many stores owner involvement gets stretched very thin.  Tasks and responsibilities get handed off to others.

Popularity can be a double-edged sword.  You are so popular that people demand more, but if you create more there is the risk of losing individuality and gaining a generic sort of feel.  For restaurants, think Friday’s.  How generic does a Friday’s feel when you walk in?  Putting up local sports souvenirs doesn’t help the atmosphere at all.  And for businesses, think The Locker Room.  The setting and atmosphere of those places, to me, feels like, “Get in, get your stuff, and get out.”  The goal being to process  people as quickly as possible in order to meet some sort of dollar agenda by the end of the work day.

That is not something I like experiencing when I’m eating or shopping.

So what are your thoughts?  When does a business become stop being individual and become a chain?

7 thoughts on “When does a business become a chain?

  1. Kate says:

    1 – owners are not typically the ones that come up with all menus, etc and there is typically more than one owner (if we are talking money and not the person(s) that the owners are investing in)
    2 – I would say that a restaurant becomes a chain when it isn’t local any more.

    • Kate, I realize there would be others involved but I would hope that the owners would have some say in menu ideas. :) And interesting opinion! So if a restaurant opens 14 locations in central Cbus, they are still local unless they move out of Cbus?

  2. Great question! We are an online community for LOCAL food service pros, and our model only supports LOCAL INDEPENDENT Restaurants, so the topic is near and dear to us.
    Since we run local restaurant weeks as well, we have to have participation rules. No Chains allowed. Our definition:
    Less than 5 units, all located in a close geographic area, with HQ being based on the home turf. Once they get bigger than that, they usually gain buying power / leverage with local food service distributors, and therefore have a distinct advantage.
    Food Brokers, food distributors, equipment vendors, etc all want the “chain” business, and will offer substantial savings and incentives to those accounts. The Local Independent pays the price, ’cause there ain’t no free lunch. Somebody’s got to make up the difference.
    As they grow, they also add management layers and marketing. The true local guy simply has to work harder and longer and get better everyday.
    Chains have their place, and we applaud the “once local and small” folks that have made it work and have grown. But it’s still the little guy that needs us more… to survive. Support your LOCAL Independent businesses, they are the key to your community thriving!

  3. You’re probably right in that it’s the three location deal when it’s a chain, though I might still let it pass if original owners of location #1 all branch out to run their own place. But that would still probably be 3 – 4 anyway. Seattle has a lot of indies — I think the closest Friday’s that I’m aware of is 10 miles away and I dont’ even know where there’s a Chili’s. We will, though, indulge in the fast food (esp. Mc D’s breakfast) if we’re on the go and need to eat quickly.

    • A, that’s a good question and I’m not sure. My knee-jerk reaction is to say the same rule applies. But I’ll have to think about it a bit more.

  4. I tend to agree that more than 2 constitutes a chain, but I think that a distinction should be made between corporate and/or franchised places and small, family owned places with multiple locations.

    There’s a cajun place here in Indy that would be called a chain by your definition, but who’s locations and menu are overseen by the founder and who’s reputation for extremely good, affordable food and a menu that varies daily has spread by word of mouth rather than advertising. Technically it’s a chain, but not in the sense that most people would recognize.

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