Initiating a restaurant business is a profitable opportunity in India. Also, it is one of the most preferred businesses for the young entrepreneurs. However, it’s not an easy business. The intent of crafting this article is to provide a step-by-step guide to start a restaurant in India with valuable inputs. Broadly, this article caters to a business plan or project profile sample format with establishment cost. Additionally, it includes other most crucial aspects of starting a restaurant business including market, location, interior, staffing etc.
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.
Basically, the restaurant business comes under the food retail segment. Currently, it is a Rs 75000 crore industry according to the industry experts. Also, it is growing at an annual rate of 7%. Some of the highest growing segments are quick service restaurant, casual dining, cafe and fine dining. Apart from these the pub, bar, lounges, sports bar and clubs are getting popular these days.
In this scenario, starting a restaurant business is a highly lucrative opportunity for the entrepreneurs. However, it is a demanding career. It needs a lot of dedication, long hard work, proper planning and the willingness to face startup challenges.
12 Crucial Aspects in Starting Restaurant Business in India
Step 1: Check if the Restaurant Business is 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 habit, buying nature and the pricing strategy of your restaurant. Also, you need to be extremely good at accounting. So, check yourself whether it is a business for you or not. And if you find the answer NO, then the rest of this article is purely a wastage of time for you.
Step 2: 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 preference of the local demographics. After deciding the concept, you can determine the menu, interior theme, sitting style etc.
Step 3: Franchise or Own Brand
Currently, you can find a lot of national and international brands that are offering franchise opportunity 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 own brand, you don’t need to share the profit. Additionally, you don’t need to spend money as 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 4: Craft the Business Plan including Startup Cost
In initiating a franchise outlet, the parent company will provide you a cost structure. However, in opening your own brand, you will need to craft a project report. In this business, the financial analysis plays the most pivotal role. Here we have listed some of the major costs.
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 cost (if any).
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.
You will need to arrange the kitchen equipment and tools. It may include different crockery sets, burners, storage, refrigerators, microwave and other gadgets or utensils.
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.
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.
The restaurant needs different types of personnel including chef, water, counter staff etc. So, you need to calculate the manpower resource you need and the approximate cost of the salary overhead.
You need to invest some money in marketing and promotion. So, you need to prepare a marketing plan and calculate the promotional activity cost.
Step 5: Arrange the Finance for the Restaurant Business
After calculating the startup budget, you will need to get finance ready for opening the restaurant. If you are a first generation entrepreneur, then it’s better to start the restaurant with your own fund. However, you can also apply for the bank loan or venture capital investment. Usually, banks ask for the collateral security. So, you need to arrange that. On the other hand, angel investors look for profit potential, expansion plan, and business model. And after satisfying about these factors, you can avail the finance. Also, you can open the restaurant on the partnership basis to get the financial help.
Step 6: Select a Restaurant Name & 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. Actually, the name and logo give the first impression to the customers of your brand. So, keep you name Simple, Relevant & Catchy. Additionally, ensure that the restaurant name is marketable and has the 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 7: License & Permission for Restaurant Business
First of all, the specific license requirement 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.
Business registration is the must. Apart from running the restaurant as the proprietorship, you have to register the company as LLP or Pvt. Ltd or Ltd Company
Professional Tax Registration
Professional Tax registration is also the must. You can pay the tax either quarterly or yearly basis.
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.
Obtain the Trade License from the local Municipal Authority. It is a must. And only the local corporation can issue this license.
FSSAI stands for Food Safety and Standards Authority of India. For a restaurant or eatery operation, FSSAI registration is the must.
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.
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.
Step 8: Select a 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.
The wide visibility is the crucial factor in the restaurant business. Also, try to occupy a space on the ground floor. However, it is not applicable to the find dine or food court restaurants. Providing the parking facility is the must these days. Finally, you must acquire a commercial property and NOC from your immediate neighbors.
Step 9: Establish the Brick & Mortar Restaurant
Now its 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 jobe done rightfully. Depending on the concept, you will need to provide the ambiance. Color 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 10: 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 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 11: Craft the Menu and Tariff
Depending on the restaurant concept, style and taste of the local demographics, you have to craft a menu and pricing of that. 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 the inventory cost. Also, provide the foods that need ingredients that are available in the local market easily.
Step 12: Arrange Quality Suppliers
Getting the fresh ingredients at your doorstep on the regular basis is crucial for smooth operation. Ensure, that the suppliers provide the quality and up to the mark materials for restaurant use. Also, check the price for the bulk purchase. Try to have at least more that one vendor in each segment.
The restaurant business is definitely a self-rewarding career for the passionate individuals. However, it requires proper planning and dedicated implementation to get long term success.