Hacker News Reader

Comment by bikamonki | Hacker News Reader

A friend bootstrapped his fastfood tiny chain to 5 locations and a couple of mill in revenue in two years. Low financial leverage, happy customers.

An expert told him to hire experts to keep growing it. Now he's down to two locations, high in debt and uncertainty.

Corpo bois are not founders, they know nothing of growing a startup. The have never produced value from thin air. They are just good at playing the corpo role. Job security is their main concern.

View on HN

This is partly why I enjoyed working at, and respected, my old company so much. Having owners who had been burned by terrible managers in the past, and who had families to support made a big difference in terms of the risks that we would and could take. I never worried about losing my job. Rather than try and find seed funding, we just took on projects that we knew could deliver, built relationships that allowed us to continue those projects and slowly grew the business out.

Seems a particularly bad strategy for restaurants, seen countless restaurants that started as one location with queues down the block, to two locations then eventually they're at 5 or more and you go and the food is awful, like the ingredients might all be correct but the way its prepared just tastes gross compared to what it used to be because the process or the passion hasn't transferred correctly.

The odd one manages it but too many just end up with low talent, low invested staff slopping out bad food that has none of the implementation or taste that funded the expansion and the whole things slowly collapses in on itself.

One thing you learn about the restaurant industry during expansion is maintaining talent and culture is not easy. Alot of these restaurant cultures succeed if there is either a top level culture passed down by two or more founders, or its instilled from a family culture

This happened with a local burger chain - once they grew beyond 3 locations that were relatively close together, the quality at all of them dropped significantly. My guess is that the founder put managers in place who weren't as passionate and went more hands-off, leading to the the slide in quality.

What did they do that was so bad that it cost him 3 locations?

Probably load up on financing to expand. Expansion floundered and they had to unload unprofitable and profitable locations to cover the debt.

Why didn't he have the ability to foresee the idea was bad?

portnoy is not the op

Usually its an over leverage issue. He extends credit to the very limit and then something goes wonky, maybe a few things at once and the core business takes a hit.

Also, the more reach the less control (by design/definition) and QC is always a risk in that scenario.

Am also wondering if part of the problem might have been timing. Did have 5 locations during the pandemic?

... although, having said that, the financing thing that another commentor mentioned I've read is often a problem of over expansion.

> What did they do that was so bad that it cost him 3 locations?

Skilfully timed when growing and succeeding. Unlucky timing when failing.

Reply on news.ycombinator.com