There are lot of questions when it comes to start a restaurant. Being the fastest growing business in India, many entrepreneurs dream of opening a restaurant business or startup. If you are one of those ambitious businessmen, I suggest this article is just for you.
This article includes the step by step guide on how to start a restaurant business in India.
Table of contents
- How to start a restaurant business plan
- Decide the concept of your restaurant/food parlour
- Start A Restaurant -Get investment to fund your restaurant business
- Evaluate all restaurants cost involved for starting a restaurant
- License for starting a restaurant
- Recruiting manpower
- Designing a menu
- Arrangement of suppliers and vendors – Start a Restaurant
- Installation of the right type of technology – Start a Restaurant
How to start a restaurant business plan
Decide the concept of your restaurant/food parlour
Having a clear idea about what you want from your restaurant and how much are you willing to invest in your restaurant is highly crucial. The Average Price per Customer (APC) gives you a fair idea about the average amount of money a customer would spend in your restaurant. Once you have decided on your budget, it is advisable to move to select the theme and cuisine of the restaurant. Next, you should prepare a business plan for your restaurant as it would help you in planning the future development of your restaurant business, and you can present it to any potential investor.
Start A Restaurant -Get investment to fund your restaurant business
Most people kiss goodbye to their dreams about opening a restaurant business because of insufficient capital. Take proper notes of how much are you willing to invest in this business only then will you have a fair idea about how much more you need to keep this dream running. There are several ways in which you can arrange for funds or capital.
Self-funding: Self-funding is the safest option but it is viable only when you have enough money in your account and starting a joint venture and splitting the partnerships reduces the risk of investment.
Loan– Most restaurants owners take loans from banks but you must qualify to receive the facility. Banks look for collaterals or someone who can underwrite the loan to proceed with the process.
VC/ Angel funding: Getting investors on board can be difficult, especially if yours is a first-time venture. Investors usually look for your restaurant venture’s growth potential, quality, and the scalability of your business model. The performance of your first few outlets is taken into consideration before one agrees to invest in your business.
Evaluate all restaurants cost involved for starting a restaurant
The cost incurred should be planned carefully.
Food Costs– Food cost is the cost of all the raw materials used in preparing a dish. Ideally, the food cost should be around 30% of your menu price. You should finalize the vendors for sourcing the raw materials beforehand to ensure a smooth supply of stock ingredients.
Labour Costs – Labour cost is the second most important restaurant cost that adds up to the expenditures while opening a restaurant. We have discussed the manpower you need to start a restaurant in detail, ahead.
Overhead Costs– Overhead costs are the other expenses that are not related to food or labor. These include:
Rent– The rent covers a significant part of your restaurant costs, and is profoundly affected by the location of the restaurant. However, the rent should never exceed 10% of your total revenues.
Interiors– You can decide on the interiors based on your restaurant concept and theme, and your budget.
Kitchen equipment– Purchasing the right quality equipment may seem heavy on the pockets, but they always recover their costs in the long run.
License– Restaurant licenses are an essential expense of your restaurant, and cannot be ignored. Based on your establishment type, the license fee varies. We have covered the topic of the restaurant license in detail below.
POS– The new age, modern technology POS can smoothen your restaurant operations like never before. The price of POS depends on its features and functionalities, which should be chosen considering your restaurant needs. We have covered the topic of POS below in detail.
Marketing– You should ideally spend 1-2% of your revenues on marketing your restaurant. There should be a perfect balance between offline and online marketing. Word of mouth marketing, along with digital marketing can do wonders for your restaurant.
One of the most important factors to consider while making a decision to open a restaurant is LOCATION. It is the most important because it determines the success of your restaurant. Another essential thing to do is to first identify your competitors and secondly understand their business models. The competition is to be based on just in terms of cuisine but all the type of dining service they are offering to their customers such as casual dining, fine dining, QSR, etc. Evaluating the competition would help you understand the type of customers that hovers in the area, their pocket size, and their preferences.
License for starting a restaurant
In order to legalize your business obtaining a license from the government is necessary. Here’s a list of licenses required to open a restaurant.
Trade license from the municipal corporation- Depending on the size of the restaurant, the cost incurred is from Rs 10,000 to 1 lakh. However, the actual license fee ranges from Rs 5000 to 10,000 for a small restaurant. The licenses are issued for a financial year and need to be renewed in March every year.
FSSAI-One needs to get a license from the Food Safety and Standards Authority of India (FSSAI) to operate a food business. The size of your venture, turnover, installed capacity, location, etc. are factors in obtaining an FSSAI license and costs around Rs 5000 to 10000.
GST Registration– Restaurants are required to register under GST and get their GSTIN Number. GST registration is state-specific, so if your restaurant has outlets in different states, then you need to have a separate registration for each state.
Professional Tax license– You need a professional tax license for employing salaried staff. This is payable on a monthly basis for all restaurant staff earning above Rs 10,000.
Liquor License– Obtaining a liquor license is the trickiest of all and is also pretty expensive. It is advisable to apply for the liquor license early, as this permit takes a lot of time as well.
Business Registration– You need to register your business as a partnership firm or a Pvt Ltd company. You’ll need to file annual returns, audit your finances, etc. Hire a CA to help you with the economics of your business.
Recruiting the correct ability and holding them is probably the greatest test while maintaining a café business in India. Space employing through reference is an all-around acknowledged with existing workers alluding to the loved ones. As a first-time restaurateur, you can enlist through the customary way: set up a notice in the paper set up ‘We’re employing’ banners or recruit through organizations. There are likewise numerous dynamic gatherings on Facebook and LinkedIn, from where you can source ability.
Designing a menu
Having a good menu is very essential for starting a restaurant. Smarter the menu design better the engagement and spending on food by customers. Items served should be easily cooked and must have ingredients that are available, every ingredient should have more than one food item to be cooked by it that will help keep the costs low.
You should have a cuisine and then put in dishes wanted by customers.
Arrangement of suppliers and vendors – Start a Restaurant
To have easy access to cheaper ingredients, it is necessary that you have a good relationship with more than two vendors. Having access to more vendors in each category will help you to compare quality, quantity and its price and also acts as a backup if one vendor fails to meet your requirement.
It is necessary to have stocks saved two days prior to selling which can be used beforehand in case of emergency. Products must be quality checked every day before closing and before selecting a vendor it is important to check their TIN (trade verification number) before you give them your restaurant’s supply contact.
Installation of the right type of technology – Start a Restaurant
Technology available in a restaurant is one of the most vital and ignored part of managing a restaurant. After the rise in technology, robust POS has come up with a number of integrated features that has streamlined the restaurant operations to great extent.
Owning a restaurant is a great idea however starting a business from the very beginning and making it to the top is pretty hard. Hope after this article we were able to educate you about how to start a restaurant business in India that too without any experience.