How to Start a Small Restaurant Business in India – Complete Guide

The restaurant business is a profitable opportunity in India. Also, it is one of the most preferred businesses for young entrepreneurs. However, it’s not an easy business. Find in this article, an expert step-by-step guide to starting a new restaurant in India with valuable inputs like market demand, costs, location, interior, staffing, and more.

Depending on the menu style, preparation methods, and pricing there are different types of restaurants you can find. These are ethnic, fast food, fast casual, casual dining, fine dining, quick service, family style, barbeque, cafe, pub, tabletop cooking, etc.

The restaurant business comes under the food retail segment. Currently, it is a Rs 75000 crore industry according to industry experts. Also, it is growing at an annual rate of 7%. Some of the highest-growing segments are quick-service restaurants, casual dining, cafe, and fine dining. Apart from these pubs, bars, lounges, and clubs are getting popular these days.

Although the restaurant business is a highly lucrative opportunity for young entrepreneurs, it takes a lot of effort to make it successful. It needs a lot of dedication, long hard work, proper planning, and the willingness to face startup challenges.

Here are the 17 Steps to Start a Restaurant Business in India:

Step 1. Check if the Restaurant Business is Suitable for You or Not.

The brick-and-mortar restaurant business can be difficult to scale successfully. It requires upfront capital expenditure, operating expenses (especially rent), and the different other issues. Additionally, keeping a restaurant alive and relevant for four or five years is extremely challenging.

You need to constantly analyze the good habits, buying nature, and pricing strategy of your restaurant. Also, you need to be extremely good at accounting. So, check whether it is a business for you or not. And if you find the answer NO, then the rest of the article is purely a waste of time for you.

Read: Best Food Business Ideas in India

Step 2. Conduct Market Research

First, identify who your potential customers are. Are they students, working professionals, families, or tourists? Choose a location with high foot traffic, such as near colleges, office areas, or popular markets. Also, analyze other restaurants in the area. What cuisines do they offer? What are their price points? How busy are they?

Market Research Checklist

Task	Description	Status
Identify Target Audience	Determine who your potential customers will be	Completed
Location Analysis	Choose a location with high foot traffic	Completed
Competitor Analysis	Analyze competitors’ offerings and customer traffic	Completed
Menu Preferences	Research popular cuisines and dishes in the area	Completed

Step 3. Decide the Restaurant Style

This is the first step you need to consider very carefully. Because the other following steps depend on this particular decision. Determining the specific restaurant style depends on your investment capacity and the eating habits or preferences of the local demographics. After deciding on the concept, you can determine the menu, interior theme, sitting style, etc.

Step 4. Franchise or Own Brand

Currently, you can find a lot of national and international brands that are offering franchise opportunities on a pan-India basis. Certainly, initiating a franchise business is an easier option than starting your own. However, opening own brand ensures certain advantages.

If you start your brand, you don’t need to share the profit. Additionally, you don’t need to spend money on the franchise fee. However, you will need to form the SOP of your own and you need to take care of the entire promotion responsibility.

Step 5. Craft the Business Plan including Startup Cost

In initiating a franchise outlet, the parent company will provide you with a cost structure. However, if you are opening your brand, you will need to craft a project report. In this business, financial analysis plays the most pivotal role. Here we have listed some of the major costs.

a) Cost of the Venue

It is the highest expense in this business. You have to calculate the rent of the place with electricity, water bills, and maintenance costs (if any).

b) Interior Cost

You will need to decorate the interior according to the restaurant theme. Broadly, it includes flooring, wall decoration, ceiling, air conditioner, lighting, music, and finally furniture.

c) Kitchen Equipment Cost

You will need to arrange the kitchen equipment and tools. It may include different crockery sets, burners, storage, refrigerators, microwaves, and other gadgets or utensils.

d) Licensing, Permission & other Pre-operative Expenses

You will need to calculate the pre-operative expense including the licensing and permissions. Also, it includes consultancy fees and Govt. fees.

e) Technology Cost

You won’t be able to run the restaurant successfully without the help of technology. You will need a customized POS software solution for keeping the daily accounting, stock inventory, etc. So, you need to calculate the cost of procuring the POS.

f) Manpower Cost

The restaurant needs different types of personnel including a chef, water, counter staff, etc. So, you need to calculate the manpower resource you need and the approximate cost of the salary overhead.

f) Marketing Expenses

You need to invest some money in marketing and promotion. So, you need to prepare a marketing plan and calculate the promotional activity cost.

Business Plan Outline

Section	Description
Executive Summary	Overview of the business and its goals
Business Model	Type of restaurant and service style
Menu	List of dishes and pricing strategy
Financial Plan	Budget, cost estimates, and revenue projections
Marketing Strategy	Plans for advertising, promotions, and customer engagement

Step 6. Arrange the Finances for the Restaurant Business

After calculating the startup budget, you will need to get finances ready for opening the restaurant. If you are a first-generation entrepreneur, then it’s better to start the restaurant with your funds. However, you can also apply for a bank loan or venture capital investment. Usually, banks ask for collateral security.

So, you need to arrange that. On the other hand, angel investors look for profit potential, expansion plans, and business models. After satisfying these factors, you can avail yourself of finance. Also, you can open the restaurant on a partnership basis to get financial help.

Step 7. Select a Restaurant Name and Logo

It is another important aspect you need to consider carefully. At the time of business registration and licensing, you will need to provide the restaurant name and logo. The name and logo give the first impression to the customers of your brand. So, keep your name simple, relevant, and catchy.

Additionally, ensure that the restaurant name is marketable and has domain availability. Before finalizing the name, check whether the domain is available or not. Because you are surely going to launch a website for your restaurant.

Step 8. License and Permits for Restaurant Business

First of all, the specific license required depends on the specific location where you operate the restaurant. However, in India, you will find some of the requirements are common. Here we have listed the basic licensing and permit requirements.

a) Business Registration

If you are planning to run a legally compliant restaurant business, registering your company is mandatory. Based on your scale of operation, select a business structure. The popular business formations in India are sole proprietorship, partnership, or Private Limited Companies.

b) Professional Tax Registration

Professional Tax registration is also a must. You can pay the tax either quarterly or yearly basis.

c) GST Registration

You will need to register with GST to get the GSTIN number. If you have more outlets in different states, then you need to apply state-wise.

d) Trade License

Obtain the Trade License from the local Municipal Authority. It is a must. And only the local corporation can issue this license.

e) FSSAI Registration

FSSAI stands for Food Safety and Standards Authority of India. For a restaurant or eatery operation, FSSAI registration is a must.

f) Liquor License

If you serve alcohol, then you will need to obtain a liquor license for your restaurant. Obtaining a liquor license requires a lot of time. Also, it is expensive.

g) Trademark Registration

Secure the logo with Trademark Registration. Initially, you can use the TM mark. And after getting the final registration, you can use the R sign.

Essential Licenses and Permits

License/Permit	Issuing Authority	Cost	Processing Time
FSSAI License	Food Safety and Standards Authority of India	₹2,000 – ₹5,000	15-30 days
GST Registration	Central Board of Indirect Taxes and Customs	Free	2-6 working days
Health/Trade License	Local Municipal Corporation	₹500 – ₹10,000	30-60 days
Fire Safety License	Local Fire Department	₹1,000 – ₹5,000	15-30 days

Step 9. Select a Proper Location

The overall success of a restaurant depends immensely on the location. In India, the metro city areas are the best places to start this business. Some of the most potential cities are Mumbai, Bangalore, Delhi NCR, Pune, Kolkata, Chennai, Hyderabad, Goa, Ahmedabad, Indore, etc. However, at present, restaurant businesses are performing well in almost all cities and towns in the country.

Good visibility is a crucial factor in the restaurant business. Also, try to occupy a space on the ground floor. However, it does not apply to the find dine or food court restaurants. Providing a parking facility is a must these days. Finally, you must acquire a commercial property and NOC from your immediate neighbours.

Step 10. Establish the Brick and Mortar Restaurant

Now it’s time to decorate the venue. Try to have a floor plan before you start working on it. Hire an experienced interior designer to get to job done rightfully. Depending on the concept, you will need to provide the ambience. Colour combination and lights play the most vital role in the interior. Procure the furniture and fixtures according to the theme of the restaurant. Decorate the outer wall also. A good quality sign is a must on the outer wall.

Step 11. Get the Resources

First of all, craft an HR plan. You need skilled and experienced employees to run the restaurant properly. Broadly, you need kitchen staff, service staff, and management staff. Also, you can think about keeping a manager.

Get the right POS (point of sale) software for your restaurant business. You need it even if you run a niche restaurant. Ask the company for a demo presentation. Before, procuring the software, check if it is effective and beneficial for your business.

Step 12. Buy Equipment

You will need to buy a range of tools and equipment to properly run a restaurant. Some of the basic types of equipment that need to be arranged are the following:

• Refrigerators/ Freezers
• Counters
• Cutting Surfaces
• Slicers
• Mixers
• Ovens
• Sinks
• Racks & Shelves

In addition, you will also need to buy chairs and tables as per sitting arrangement, condiment dispensers, salt and paper shakers, utensils, etc.

Step 13. Create the Menu and Tariff

Depending on the restaurant concept, style, and taste of the local demographics, you have to craft a menu and fix a pricing chart. Try to keep some basic food items with designer items. Also, you can offer a combo or Thali-type menu which is very popular in India. Try to keep the foods that need similar ingredients to cook. It helps in reducing inventory costs. Also, provide the foods that need ingredients that are available in the local market easily.

Step 14. Choose Quality Suppliers

Getting fresh ingredients at your doorstep regularly is crucial for smooth operation. Ensure, that the suppliers provide quality and up-to-the-mark materials for restaurant use. Also, check the price for the bulk purchase. Try to have at least more than one vendor in each segment.

You can check online sites like IndiaMART to find reliable suppliers online.

Step 15. Hire and Train Staff

Key Positions

• Chef/Cook: Skilled in preparing the restaurant’s cuisine.
• Waitstaff: Friendly and efficient in serving customers.
• Manager: Handles day-to-day operations and customer service.
• Kitchen Staff: Assists with food preparation and cleanliness.

Staff Roles and Responsibilities

Role	Responsibilities
Chef/Cook	Prepares and oversees the preparation of food
Waitstaff	Serves customers, takes orders, and manages dining area
Manager	Oversees daily operations, handles customer inquiries
Kitchen Staff	Assists in food preparation, maintains kitchen hygiene

Step 16. Marketing and Promotion

• Online Presence: Create a website and active social media profiles.
• Local Advertising: Advertise in local newspapers, radio, and community boards.
• Promotions: Offer discounts, loyalty programs, and special events.
• Partnerships: Partner with food delivery services and local businesses.

Marketing Strategies Overview

Strategy	Description	Expected Impact
Online Presence	Website, social media profiles	High
Local Advertising	Newspaper ads, radio spots, community boards	Medium
Promotions	Discounts, loyalty programs, special events	High
Partnerships	Collaborate with delivery services and local businesses	High

Step 17. Launch Your Restaurant

• Soft Opening: Host a soft opening to gather feedback and make adjustments.
• Final Preparations: Ensure all systems are operational, and staff is fully trained.
• Grand Opening: Plan a grand opening event to attract initial customers.

Launch Checklist:

Task	Description	Status
Soft Opening	Host a soft opening for feedback	Completed
Final Preparations	Ensure all systems are operational and staff is trained	Completed
Grand Opening	Plan and execute a grand opening event	Completed

Frequently Asked Questions

How much does it cost to start a small restaurant in India?

The cost can vary significantly depending on the location, size, and type of restaurant. On average, you may need anywhere between ₹10 lakh to ₹50 lakh.

What licenses are required to start a restaurant in India?

Essential licenses include FSSAI License, GST Registration, Health/Trade License, and Fire Safety License.

How can I choose the right location for my restaurant?

Consider factors such as visibility, accessibility, rental costs, space requirements, and compliance with local zoning laws.

What should be included in the restaurant’s business plan?

Key components include the business model, menu, financial plan, and marketing strategy.