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written by | April 27, 2022

Opening a Restaurant in India in 2022

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Despite the significant dangers and long hours, running a restaurant is among the most rewarding experiences you will ever have.

Did you know?

According to the National Restaurant Association of India (NRAI) research, the restaurant business is anticipated to cross ₹5.99 lakh crores by 2022-23.

Also Read: 10 Steps to Start a Successful Food Business in India

How to Start a Restaurant in India

Given the potential of the Indian F&B market for both new and established restaurant enterprises, now is unquestionably the best opportunity to enter this lucrative field. 

 This step-by-step tutorial will answer all of your questions on how to start a restaurant in India: 

Decide the Concept of Your Restaurant

  • The first step in establishing a restaurant business is to agree on a concept. Before settling on a proposal, you must consider several factors, and the most important is the amount of funding available for investment. The Average Price per Customer (APC) offers you a good sense of how much a customer will spend on average in the restaurant. 
  • After you've decided on an idea, you'll need to think about your restaurant's decor and cuisines. The decor must match the theme of your business. Next, you must draft a business strategy, which will aid you in managing your restaurant's progression and which you may offer to any prospective investor. 

Get Investment to Fund Your Restaurant Business

  • Given the lack of funding, most ambitious restaurant owners' aspirations never get to see the light of day. It is among the most significant factors to consider when operating a restaurant. Determine how much investment is required to open a restaurant in India based on the idea of your restaurant. 
  • Kudos for overcoming the first challenge of operating a restaurant if you have sufficient savings in the bank. Opening a restaurant in collaboration is also a smart choice because it lowers the risk of investments. 
  • You can get a loan to help you realise your restaurant dreams. However, getting a loan from a bank might be difficult because they need collateral or someone to underwrite the transaction. 

Evaluate All Restaurant Costs Involved

Restaurant costs are essential for running a business and must be appropriately analysed and handled. The following are the significant expenses associated with starting a restaurant:

Food Costs - The estimated value of all the raw goods used to prepare a dish is the food cost, and the food cost might ideally be somewhere 30% of the service cost. To ensure seamless availability of stock ingredients, you need to finalise the suppliers for procuring the raw materials ahead of time.

Labour Costs - The second most significant restaurant cost that contributes to the total cost of starting a restaurant is labour.

Overhead Costs - Overhead costs are other expenses not associated with food or labour. These are some of them:

  1. Rent: The rental covers a large portion of your restaurant's expenses and is heavily influenced by the restaurant's locality. 
  1. Interiors: You can choose the decor founded on the principle and subject of your restaurant and your budget. 
  1. Kitchen equipment: Investing in high-quality equipment may seem expensive at first, but it always pays off long-term. 
  1. License: Restaurant licenses are vital for running a business and should not be overlooked. The license fee varies depending on the type of business. 
  1. POS: The new generation of current technology POS systems can make your restaurant operations run more smoothly than ever. The cost of a POS system is determined by its features and functionality, which you should select based on your restaurant's requirements. 
  2. Marketing: Preferably, you should spend 1-2 per cent of your income on restaurant promotion. Offline and online advertising should be in perfect harmony.

Also Read: Ultimate Guide to Opening a Cloud Kitchen Business in India

Decide the Location for Your Restaurant

While considering how to start a restaurant business, location is an essential issue because it might impact your restaurant's sustainability. When deciding on a site for your restaurant, it's good to look for your nearest competition, assess their growth, and learn about their marketing strategy. You must evaluate the competitors on the grounds of cuisine and the type of restaurant experience they provide to their clients (casual dining, fine dining, quick-service restaurants, etc.) Assessing the competition makes understanding the client base that lingers in that neighbourhood, their budget depth, and their taste preferences possible.

Other variables to consider while determining where to open a restaurant in India are the following:

  1. Visibility and accessibility: The restaurant should be situated in a prominent and easily accessible location. Upper-floor positions are often not deemed ideal because they have poor visibility and are hard to identify by clients. A restaurant located directly on the sidewalk and on the ground floor receives more foot traffic. 
  1. NOC: You'll also need a No Objection Certificate from at least 3 of the neighbours before starting your restaurant.

Get All Licenses Required to Start a Restaurant Business

In India, you must obtain government permission to operate a restaurant. The price of acquiring these licenses differs significantly according to the size of your business. It is best to apply for the licenses as soon as possible since they may take a long time to be issued. The following is a list of essential permits required to start a restaurant in India:

  1. Trade license from the municipal corporation: The expense incurred varies based on the scale of the restaurant and ranges from ₹10,000 to ₹1 lakh. However, the actual license charge for a small eatery varies from ₹5,000 to ₹10,000. The licenses are valid for a fiscal year and must be reissued every March. 
  1. FSSAI: To run a food business, one must first obtain a license from the Food Safety and Standards Authority of India (FSSAI). An FSSAI permit costs between ₹5,000 and ₹10,000 depending on the size of your business, revenues, capacity factor, and locality. 
  1. GST registration: Restaurants must register with the GST and obtain a GSTIN number. Because GST registration is state-specific, you'll need to register for each one separately if your business has locations in multiple states. 
  1. Professional Tax license: Hiring salaried employees necessitates the acquisition of a professional tax license. All restaurant employees earning more than ₹10,000 must pay this every month. 
  1. Liquor License: Acquiring a liquor license is the most complex and expensive out of all permits. It is best to apply for a liquor license as soon as possible, as this permission takes a long time to process. 

Get Personnel for Your Restaurant Business

Recruiting and maintaining the proper workforce is one of the most challenging aspects of running a restaurant in India. Recommendation hiring is widely recognised, with current employees recommending their friends and relatives. You can employ the usual method as a first-time restaurateur: place an ad in the newspaper, put up 'We're hiring' billboards, or hire via brokers. There is also a slew of active Facebook and LinkedIn communities where you may find talent.

It's critical to hire the best chefs for your restaurant because your cuisine is what will draw customers in. Your chef does more than just cook; he also creates your menu, considers the readily available materials, and trains and leads the team to prepare and present the meal. As a result, you'll need an experienced chef for the restaurant.

Design a Stellar Menu

Developing a menu is the next stage in launching a restaurant. A well-thought-out menu can significantly impact your restaurant's food prices. Items on the menu should always be quick to make and employ local or easily accessible ingredients. Serving dishes with similar ingredients is a good idea because it will help you save money on food and lessen the amount of waste you produce.

Arrange Suppliers and Vendors for Your Restaurant

  • For your restaurant to run smoothly, you need to have a good relationship with your suppliers and vendors. Each category must contain at least two to three vendors. It will allow you to compare rates and operate as a fallback if something goes wrong. 
  • In case of an emergency, you should always have two days' worth of merchandise in your stock. Every day, the things must be brought in the morning and verified. Your restaurant's quality and quantity inspections must be completed at the end of the day. 
  • Long-term contracts with vendors are always desirable because they assist ensure the stability of your raw resources.

Conclusion

The Indian restaurant industry has become one of the world's fastest-growing. Despite the difficulties and problems that restaurant owners have encountered in recent years, starting a restaurant in the coming years will provide new prospects for aspiring restaurateurs.

Follow Khatabook for the latest updates, news blogs, and articles related to micro, small and medium businesses (MSMEs), business tips, income tax, GST, salary, and accounting.

FAQs

Q: What is the average lifespan of a restaurant?

Ans:

A restaurant's typical lifespan is five years, and according to some statistics, up to 90% of new businesses collapse within the first year.

Q: What do restaurant owners struggle with?

Ans:

One of the most difficult challenges restaurant entrepreneurs face is restocking and inventory management. Deviation, wastage, and robbery are frequent issues that can hurt stocks and result in an unaccounted-for loss.

Q: Is taking an FSSAI licence compulsory for opening a restaurant business?

Ans:

According to the FSSAI, distributing homemade food products without a license or certification can result in a fine of upwards of ₹5 lakhs and a 6-month jail sentence. Enterprises with sales of less than ₹12 lakhs must register with the FSSAI, whereas businesses with more than ₹12 lakhs must obtain a license.

Q: Is opening a restaurant in India profitable?

Ans:

The investments made in these arrangements aren't substantial, but they do have the ability to break even in as little as 18 months. Casual Dining restaurants often have profitability of 20-25 per cent, rendering them one of the most profitable food business concepts in the restaurant market.

Q: How much does it cost to open a restaurant in India?

Ans:

In India, a restaurant can cost anything from ₹5 lakhs to ₹1 crore, and it could be more or less based on the locality, type of cuisine, customers, and prices involved.

Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.
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Disclaimer :
The information, product and services provided on this website are provided on an “as is” and “as available” basis without any warranty or representation, express or implied. Khatabook Blogs are meant purely for educational discussion of financial products and services. Khatabook does not make a guarantee that the service will meet your requirements, or that it will be uninterrupted, timely and secure, and that errors, if any, will be corrected. The material and information contained herein is for general information purposes only. Consult a professional before relying on the information to make any legal, financial or business decisions. Use this information strictly at your own risk. Khatabook will not be liable for any false, inaccurate or incomplete information present on the website. Although every effort is made to ensure that the information contained in this website is updated, relevant and accurate, Khatabook makes no guarantees about the completeness, reliability, accuracy, suitability or availability with respect to the website or the information, product, services or related graphics contained on the website for any purpose. Khatabook will not be liable for the website being temporarily unavailable, due to any technical issues or otherwise, beyond its control and for any loss or damage suffered as a result of the use of or access to, or inability to use or access to this website whatsoever.