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Pepe Stepensky
Click here to read the previous column in this series, about how to set prices.
Editor’s Note: This is the 18th edition of a regular column on www.elrestaurante.com. Pepe Stepensky, a veteran restaurateur and a long-time member of the el Restaurante Advisory Panel, is offering his advice to any el Restaurante reader with a question. When he does not have a specific question to answer, he will write about the steps to opening and running a restaurant. Click here to email him a question.
By Pepe Stepensky
Opening a new restaurant is never a casual decision. It’s a calculated risk—one that requires a clear strategy, a tested concept, and a strong understanding of both your numbers and your customers. As someone who owns and operates several fast-casual restaurants and a catering business in San Diego,I’ve learned that expansion only makes sense when it’s backed by a mix of intuition, experience, and hard data.
In my experience, expansion isn’t always the smartest move. Sometimes, a struggling new location can start pulling resources and attention away from a successful one, ultimately hurting both.
So how do you know it’s time to grow? Here are the factors that have shaped my decisions over the years—and the lessons I’ve learned from opening, managing, and refining multiple locations.
1. Start with a Proven Concept
Before anything else, the concept has to work. You need to be confident that your idea resonates with customers—not just once, but consistently.
When we launched our first concept, we didn’t immediately start thinking about the second location. Instead, we focused on fine-tuning the menu, improving service, and building a loyal customer base. Only after seeing sustained success and repeat business did we begin to ask: Can this be duplicated? If the answer was yes, then came the deeper question: Should it be?
Proof of concept means more than just being popular. It means that your systems—recipes, training, operations, and vendor relationships—are solid enough to scale. You can have the best tacos in town, but if the only person who can make them is your cousin working the grill, you don’t have a scalable model.
You need to create manuals, recipe books, policies and a very defined philosophy and be consistent in your way to cook.
2. Location Isn’t Everything… But It’s Close
A great concept in the wrong location will struggle. That’s why location scouting is more than just looking for foot traffic or parking. You have to study the neighborhood—its demographics, income level, work and school patterns, tourist activity (in my case Seaport Village in San Diego), and what other businesses are thriving nearby.
When we opened our first location in Seaport Village, we knew the area had a built-in customer base—tourists, locals walking the waterfront, and employees from nearby offices. But we still asked ourselves: Does this location match our concept? In our case, it did. A burger joint with quick service and outdoor seating fit right in.
For our Mexican concept, we again chose Seaport because we already had insight into the flow of customers in the area. That reduced risk. When you already understand how the location functions—what time it gets busy, what people are looking for—you’re better equipped to make a new venture work.
3. To Duplicate or Diversify?
There’s always the temptation to duplicate a winning formula. If one taco shop works, why not open five more?
The key is not just in duplicating, but duplicating correctly. If your concept is highly dependent on specific labor, local ingredients, or one-of-a-kind ambience, duplication may not be easy—or wise. On the other hand, if your systems and ingredients are standardized, and you’ve trained your team well, you can recreate the experience elsewhere.
But diversification can also be a smart move. That’s why we didn’t just stick with tacos, we allowed ourselves to tap into completely different cravings and mealtime occasions—all while staying within the fast-casual space.
Each new concept was a way to serve a different customer mood or preference without competing directly with our existing locations. That also gave us more resilience during slower seasons or economic shifts.
Remember, a fast food concept, a fast casual concept, and a full-service restaurant are three very different animals. I’ll dive deeper into this topic in my next article—stay tuned!
4. Costs: The Real Deciding Factor
No matter how good your food or how perfect the location, if the numbers don’t make sense, don’t do it.
Speaking from personal experience, I’ve learned over the years that you can’t move forward with confidence unless you know your numbers down to the last penny.
Opening a new restaurant isn’t just about startup costs—buildout, furniture, equipment, and permits. You also have to factor in marketing, staff training, supply chain setup, and at least 3–6 months of operating losses while you build momentum. Too many operators make the mistake of underestimating the cash cushion needed. Remember: working capital is a very important factor to keep in mind. It is not just the construction cost.
We’ve always approached new locations with two big questions:
• Can we fund this without jeopardizing existing operations?
• How long until we expect it to break even, and is that timeline realistic?
Also, reusing existing infrastructure—like choosing a site that was already a restaurant—can save you significant dollars. So can reusing menu items, branding, and even staff between locations.
And I have bad news for you, there are factors not included in this formula that might affect the success of a new location and they are out of your control. The pandemic was a good example, one that almost killed my operation. But even then we got creative and were able to stay open.
5. When You’re Ready—Don’t Wait Too Long
There’s a point where waiting becomes riskier than acting. If your current operation is strong, your systems are replicable, and the market is calling for more, expansion can be the best way to grow sustainably.
But do it deliberately. Talk to your team. Consult your accountant. Spend time at the potential new site at different times of day. Talk to neighboring business owners. Imagine your worst-case scenario, and see if you can survive it.
In my experience, the best time to open a new location is when you’re succeeding not because of hustle and luck, but because of systems and stability. That’s when you can truly scale—not just your food, but your brand, your vision, and your legacy.
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