Being a restaurant owner is one of the most rewarding experiences of one's life as it involves the risks and challenging times. If you have aimed to initiate your own restaurant business in India, then this blog is just for you. First and foremost, your topmost priority should be to acquire a food business license before initiating any food business in India. Here, we would be dealing with how to start a restaurant business in India.
- Flourishing restaurant industry in India.
India has one of the biggest and fastest-growing restaurant markets in the world. It is supposed to touch the numbers of Rs. 5.99 lac crores by the end of 2022-23, growing the rate of almost 9%, according to the national restaurant association of India (NRAI) report.
- How to initiate a restaurant in India.
Looking at the number of opportunities that the Indian food business industry has to offer in the near future is tremendous. That's why one must not dawdle and should quickly get into it with food licence registration.
- Choose the right concept for your restaurant.
This is the first step while initiating the restaurant business. You will have to keep few things in your mind well before choosing a concept. The first one is how much capital it would require for investment. To know the average amount of money a customer would spend in your restaurant, you should calculate the APC (average price per customer). Then you should focus on other things such as choosing the right theme for the restaurant with suitable cuisine. The Interior of the restaurant should reflect the theme of the restaurant. It would be best if you carry out the future developmental plan to expand the restaurant business, which you can furnish to the potential investors.
- Infusing funds for your restaurant business.
Due to shortage of funds, most of the restaurant fails before even starting. That's why you should ponder upon it carefully before starting a restaurant business. First, you should decide how much capital requirement there is? Then move on to how and by which ways you can infuse the required capital into the restaurant business? Here are three ways by which you can do so;
- Self-funding – if you possess enough money to start your restaurant business, then it is better than good. Also, it is good to bring few business partners to minimalize the risk of investment.
- Loan – you can borrow the money from a bank to invest in your restaurant business. But it demands collateral security to offer you a loan.
- Angel investors and VC – if yours is the first-time venture, it becomes tough to convince the investors. Because investors usually keep their eyes on the quality, growth potential and scalability of the business model before investing in it. Performance of your first few outlets would be considered before the investment.
- Assess the overall involved cost of the restaurant.
Costs surrounding the restaurant and significant that's why they require to be assessed and planned diligently. Here are some of the involved costs of the restaurant business;
- Food cost – it is the raw material costs that are necessary while prepping the dish. Ideally, the food cost of the dish revolves around 30% of the listed menu price. To make sure of the smooth supplies of the raw material, you should finalize your vendors beforehand.
- Labour cost – it is the second most crucial cost after the food cost that adds to expenditure while initiating a restaurant business.
- Overhead cost – it is the costs that are not related to labor
or food.
- Rent – rent would be dependable on the
location of the restaurant. Nonetheless, rent must not go beyond 10% of
the total revenue.
- Interiors – this can be chosen
depending upon the theme, budget and concept of the restaurant.
- Kitchen essentials – buying the right
quality equipment might be expensive, but they always last long as well in
comparison to cheap ones.
- License - it is very vital for a
restaurant thus;, it cannot be neglected. License fees would be according
to your establishment types.
- Point of sale – POS
machines can smoothen the process of restaurants. The price of POS relies
on its functionality and features, which can be considered as per the
needs of the restaurant.
- Marketing – one or two percent of your revenue should go to your marketing. You should try to balance offline and online marketing.
- Choose the location of the restaurant aptly.
The location of the restaurant becomes crucial in determining the success of any restaurant. First, you should locate your competitors in the chosen area while assessing their progress and business model and popularity among the customers. These understandings would help you evaluate the customer base of that area, their preferences, and their willingness to spend.
Other factors to take into consideration of;
- Accessibility and visibility – it has to be visible and assessable to customers. Upper floors are not lucrative as it gives less visibility to customers. Ground floor and right in front of the road are more preferable options.
- NOC – before opening up the restaurant, you would require NOC (non-objection certificate) from a minimal three of your neighbors.
- Obtain all required licenses to initiate a restaurant business.
You are required to obtain licenses from the government to operate a restaurant business in India. The cost of acquiring these licenses differs depending upon the size of your venture. It is advisable to apply for it as soon as possible, as it is time-consuming. Equally important is to opt for online logo registration India as it provides numerous benefits along with protection. This can be done online as well. Here is the list of prominent licenses that you are required to obtain;
- Trade license from the municipal corporation – the cost would be around Rs. 10000 to 1 Lac, depending upon the size of the restaurant. For small businesses, it varies from Rs. 5000 to 10000. These licenses are issued annually and, thus, are required to be renewed each year.
- FSSAI – it is a prerequisite to operate a food business in India. The size of the venture, capacity, turnover, location and so forth are factors in acquiring the FSSAI license, and its cost varies around Rs. 5000 to 10000.
- GST – restaurants are obliged to register under GST and obtain their GSTIN number. It is state-specific, and if your restaurants are in different states, it would have to obtain a separate registration for each state.
- Professional tax license – it is necessary for employing salaried staff. It is monthly payable for employees earning more than Rs. 10000.
- Liquor license – it is very complicated, expensive and time-consuming.
- Business registration – you will have to register your business as a partnership firm or LLP, or private limited company. You are required to submit annual returns, audit your finances etc. recruit CA to assist you with your business's economics.
You are obliged to get many other licenses, such as a pollution control license, fire safety license, etc.
