Start a Profitable Restaurant Business In India

Restaurant Business Industry in India

India is urbanising very rapidly which is fortifying the food business of India. The larger part of the women in the country is now working and the culture is developing where husband and wife both are on the Job. The income they are earning, they spend on buying food. The living standards in the nation have improved as an effect of which there has been a growing demand for food.

For Indian entrepreneurs, the restaurant business is one of the best options as a start-up. Daily the consumers of food are increasing hence the restaurant business is one of the biggest service sectors in India.

Even though there is some risk in starting a restaurant business, it may become the most satisfying adventure of your life. If you too have a dream of starting up a restaurant or searching for something to start up your entrepreneurial journey then this article is just for you.

8 Types of Restaurant Business in India

In India, there are different types of restaurants which you can start. These restaurants are mainly categorised on preparation and presentation methods. Some of these are as follows:

Cafe:

The cafe is a place mainly focused on serving beverages like coffee, tea and soups but you can also serve some light meals in a cafe like sandwiches, noodles, samosas and kachoris which are much liked by Indian consumers. Cafes may offer a range of menu items, including coffee, tea, pastries, cakes, sandwiches, salads, and light breakfast or brunch options. Many cafes source high-quality coffee beans and offer a variety of brewing methods.

Fine dining:

Fine dining restaurants are upscale dining establishments that offer a high-end culinary experience, often characterized by sophisticated cuisine, elegant decor, formal dress codes, and attentive service. These restaurants typically serve food prepared with high-quality ingredients and attention to detail, often presented in an artistic and visually appealing way.

Fine dining restaurants often feature a set menu or tasting menu, which allows customers to sample a variety of dishes and flavours in a multi-course meal.

The atmosphere in fine dining restaurants is typically formal, with dress codes often requiring patrons to dress in business attire or formal wear. The decor may include high-end furnishings, linen tablecloths etc. The service is typically attentive and personalized, with a high staff-to-customer ratio to ensure an exceptional dining experience.

Fine dining restaurants are often reserved for special occasions or romantic evenings out, and they can be expensive. Overall, fine dining restaurants offer an exclusive and luxurious dining experience, with a focus on exceptional food, wine, and service. The target customers for fine dining restaurants are affluent people living in big metro cities.

Casual Dining:

Casual dining restaurants are also full-service restaurants but they serve their meals at affordable prices. They try to keep the price of food affordable by keeping the ambience simple. Casual dining restaurants are a type of eating establishment that offers a relaxed, informal atmosphere with a diverse menu and moderate prices. Casual dining restaurants are often popular among families, friends, and groups who are looking for a comfortable and convenient place to enjoy a meal.

The menu in casual dining restaurants is typically diverse, offering a wide range of dishes such as burgers, sandwiches, salads, pasta, and seafood. The food is generally prepared quickly and served in generous portions.

The atmosphere in casual dining restaurants is generally relaxed and informal, with no dress code. Customers can usually seat themselves and interact with the staff in a friendly and casual manner.

Quick service restaurant:

Quick-service restaurants have specific menus and their food is almost ready all time. These types of restaurants are very good when people are in hurry and not in the mood to party but to have their meal as soon as possible. Customers who want to take away their food also prefer quick-service restaurants. As these restaurants have specific menus they are able to serve food at competitive prices. Chat corners and Ice-cream parlours are also part of the quick-service restaurant. Chat corner restaurants are highly popular in India and can turn into a very profitable restaurant business with minimum investment compared to other types of restaurants.

Bakery:

A bakery is a business that specialises in producing and selling baked goods such as bread, cakes, pastries, cookies, and other desserts. Bakeries can range in size from small local shops to large industrial operations, and they may offer a variety of products that are made from scratch or pre-made mixes.

Bakeries may also offer other food items such as sandwiches, soups, salads, and beverages like coffee, tea, and juice. Many bakeries have become popular meeting places for people to socialize over a cup of coffee and freshly baked pastry or bread. Some bakeries also provide catering services for special occasions like weddings, birthdays, and corporate events.

Franchise restaurant:

A franchise restaurant is a type of restaurant that is part of a larger chain of restaurants that operates under a common brand name and business model. Franchises are owned and operated by individuals or groups who have entered into a contractual agreement with the franchisor, which allows them to use the franchisor’s name, logo, products, and operating systems.

The franchisee pays an initial fee and ongoing royalties to the franchisor in exchange for the right to use the franchisor’s trademarks and business model. The franchisor provides the franchisee with training, marketing support, and ongoing assistance in operating the restaurant. Franchise restaurants typically offer a standardized menu, layout, and customer experience across all locations.

Examples of popular franchise restaurants include McDonald’s, Subway, KFC, Pizza Hut, Domino’s and Starbucks. The benefits of owning a franchise restaurant include access to a proven business model, established brand recognition, and ongoing support from the franchisor. However, franchisees must adhere to the franchisor’s rules and regulations, which can limit their creativity and autonomy.

Bar & Pubs:

A bar and pub restaurant is a type of business that serves food, drinks, and often alcoholic beverages in a casual, social setting. These restaurants typically offer a relaxed atmosphere where customers can socialise, watch sports, and enjoy live music, trivia nights, or IPL matches.

Bars and pubs often have a distinct menu that features simple but tasty food options such as burgers, sandwiches, wings, and appetisers. Many bars and pubs specialise in specific types of drinks such as craft beers, wines, cocktails, or spirits. Some bars and pubs may also have a theme, such as a sports bar that caters to fans of a particular sport or team.

Unlike traditional restaurants, bars and pubs typically have a more laid-back atmosphere and are often open later in the night. Patrons can come and go as they please and may sit at the bar or a table with friends. While alcohol is often a major attraction, many bar and pub restaurants also offer non-alcoholic beverages and food options to cater to a wider audience.

Food truck:

A food truck restaurant, also known as a food truck business, is a mobile food establishment that serves food and drinks from a truck or a special vehicle that is converted to prepare and serve food. Food trucks are often seen at events, festivals, and in high-traffic areas such as parks, downtown areas, and business districts.

Food trucks offer a wide range of food options, including street food, gourmet dishes, ethnic cuisine, desserts, and beverages. Many food trucks specialize in a specific type of food, such as burgers, south Indian dishes, Chinese dishes and other fast foods. The menu is often simple, with limited items that can be prepared quickly and easily.

Food truck restaurants have become increasingly popular in recent years due to their convenience, affordability, and unique dining experience. They offer customers the opportunity to try new and interesting foods in a casual, outdoor setting. The Food truck restaurant can serve food at a lesser price to the customer than other restaurants as the food truck’s running cost is lesser than the dining restaurant’s.

Research and Develop the idea of the Restaurant business.

Identify your target market area

Identifying the target market for a restaurant business involves understanding the characteristics of the customers who are most likely to visit your restaurant. Here are some steps you can take to identify your restaurant’s target market:

Analyse your concept: What type of restaurant are you opening? Is it a casual diner, fine dining establishment, ethnic cuisine, fast food or other niche restaurants? Each concept will appeal to a different group of customers. In the introduction part we have explained some of the types of restaurants which are popular in India.
Look at demographics: Look at the age, gender, income, education, and occupation of the people living in the area where your restaurant will be located. This will help you determine the type of customers who are frequent visitors to your restaurant.
Consider location: What is the local community like around your restaurant? Is it a tourist destination? What other types of businesses are located nearby? All of these factors can help you determine your target market.
Analyse competition: Look at the restaurants in your area and the type of customers they attract. Consider their menu, pricing, and atmosphere. This will give you an idea of the type of customers that are already enjoying restaurant service in your target area.

Conducting Market Research

Conducting market research for a restaurant business can help you research and develop the idea for running the restaurant business, understand customer needs, and make informed business decisions. Here are some steps you can take to conduct market research for your restaurant business:

Define your research objectives: Determine what information you need to gather and what you hope to achieve through your research. This will help you focus your efforts and ensure that your research is relevant to your restaurant’s business needs.
Determine your research methodology: Decide on the methods you will use to collect data, such as online surveys, focus groups, in-person interviews, or observation. Each method has its advantages and disadvantages, and you may want to use a combination of methods to gather a comprehensive picture of your market.
Recognize your target audience: Determine the specific group of people you want to survey or interview, such as current or potential customers, people in the surrounding community, or industry experts.
Design your research instrument: Develop a survey or interview guide that includes relevant questions related to your research objectives. Make sure your questions are clear, unbiased, and designed to elicit useful information.
Collect your data: Conduct your research using your chosen methodology and ensure that your sample size is sufficient to produce reliable results. Be sure to follow ethical guidelines and obtain informed consent from participants.
Analyze your data: Use appropriate statistical and qualitative techniques to analyze your data and identify trends, patterns, and insights.
Draw conclusions and make recommendations: Use your findings to draw conclusions about your market and make recommendations for your business strategy. Use these conclusions and recommendations to make your future decision in establishing a restaurant business.

Finalise the location and type of restaurant

According to the market research and surveys which you have conducted, finalise the location and type of the restaurant which you want to open. Finalising these aspects will help you to work in the right direction while planning further. Finalising these concepts will also help you in the evaluation of your restaurant business and you can create a good business plan.

Create a Business plan for your Restaurant Business in India

Creating a business plan for a restaurant business is a necessary process that helps you establish the restaurant business. This process involves several key steps. Here is a basic outline to help you get started:

Executive Summary: This section provides an overview of your restaurant business plan and should include a brief summary of your concept, target market, competitive advantage, and financial projections.
Company Description: In this section, you should provide a detailed description of your restaurant, including its legal structure, location, size, and ownership.
Market Analysis: Define your target market according to the research you have conducted. Develop a competitive strategy through your market analysis.
Menu: Create a menu that reflects your target market and your restaurant concept. Consider the pricing, portion sizes, ingredients, and cooking methods. Include pictures or descriptions of menu items to help customers understand what you offer.
Marketing and Sales: Develop a marketing plan that includes advertising, promotions, social media, events, and public relations. Determine your pricing strategy, and forecast your sales projections based on your market analysis and your menu.
Management and Staffing: Define the management structure of your restaurant, including key roles and responsibilities. Determine your staffing needs and create job descriptions for each position. Develop a training plan for new employees, including onboarding, customer service, and operational procedures.
Financial Plan: Create a detailed financial plan that includes startup costs, operating expenses, revenue projections, and profit and loss statements. Identify potential sources of funding, such as loans or investors. Include a cash flow analysis to ensure that your restaurant has sufficient cash to cover expenses.

Summarise your business plan and reiterate your restaurant concept, target market, competitive advantage, and financial projections. Emphasise your unique selling proposition and the reasons why your restaurant will be successful.

Remember, a business plan is a living document that should be updated regularly to reflect changes in the market, customer feedback, and operational performance. Use your business plan as a tool to guide your decision-making and measure your progress over time.

Complete the Legal Requirements for Starting a Food Business in India.

FSSAI Registration

The Food Safety and Standards Authority of India (FSSAI) is a lawful authority that provides a food license to all food business operators (FBO) in India. All food business operators must observe all the rules and regulations of FSSAI for food quality checks.

FSSAI is defined in The Food Safety and Standard Act 2006. FSSAI licence is necessary for everyone engaged in the processing, manufacture, distribution and sale of food commodities within India. The FSSAI license demonstrates that the restaurant’s food items satisfy the government’s food safety standards.

Hence, all restaurants and cloud kitchens must compulsorily obtain an FSSAI registration or license from the Food Safety and Standards Authority of India (FSSAI).

In the FSSAI Registration process, the Food Business Operator acquire a 14-digit number that needs to be printed on food packages or a licence should be displayed on the restaurant premises.

Food Business Operators like Dhabas, hotels and restaurants with an annual turnover of fewer than 12 lacks require an FSSAI basic licence, between 12 lakh – 20 crores require an FSSAI state licence and an annual turnover of more than 20 crores require an FSSAI central licence.

FSSAI Registration guarantees the security and safety of food products thus it is an essential document to be obtained before starting a restaurant business in India.

Business Registration

You need to register your restaurant business as a partnership firm or a Pvt Ltd company. You will have to file annual returns and audit your finances according to your registration. You can hire the services of CA to help you with the economics of your restaurant business.

The restaurant must compulsorily acquire a trade license from the municipal corporation of the area where the restaurant is going to establish. Restaurant owners require to apply for and renew their business licenses every year. A business owner also requires to receive a No Objection Certificate (NOC) from the local municipality. The No Objection Certificate from the fire department is also necessary for the restaurant business in India

Shop and Establishment Act Registration

The Shop and Establishment Act Registration is governed by the Department of Labour of the state. The Shop and Establishment Act regulates any establishment where a business is conducted. Therefore, all restaurants need to apply for and receive a Shop and Establishment Act Registration.

All states have their own Shop and Establishment Act. The general procedure for making this registration is the same in all states.

Business owners who run a business from their home without having any physical premises like a small cloud kitchen at home are also needed to obtain this Certificate. If you provide the food on online platforms like swiggy or zomato then also you need to register under Shop and Establishment Act. Every restaurant should register itself under this Act within 30 days of initiation of a restaurant business.

This Certificate is necessary when the proprietor of the business wants to avail of a loan or open a current account in a bank for the business.

GST Registration

Restaurants in India are needed to register under GST(Goods and Service Tax) compulsorily. Every state has its own GST registration. Hence, whenever you open new restaurant outlets in different states, you need to have a separate GST registration for each state.

Setting Up the Infrastructure for Starting Restaurant Business

Designing the kitchen

Designing a kitchen for a restaurant business can be a complicated task, as there are many elements to consider such as the size of the restaurant, the type of cuisine, the number of daily customers, and the budget available for designing the kitchen. Here are some general guidelines that will help you to design the kitchen for starting a restaurant business in India:

Decide the menu and food preparation process: The design of the kitchen should be based on the type of cuisine served in the restaurant. This includes identifying the appliances, equipment, and storage requirements.
Plan the layout: The layout of the kitchen should be designed to optimize efficiency and productivity. This includes creating a flow of work that allows the staff to move easily between stations and ensuring that there is enough space for equipment, storage, and staff to work safely.
Decide the size of the kitchen: The size of the kitchen will depend on the number of daily customers the restaurant serves, the type of cuisine, and the menu. Generally, at least 40% area of the total space available is allocated to the kitchen but if you are operating a small restaurant you can manage it in less than 40% area.
Select equipment and appliances: The equipment and appliances chosen should be based on the menu and food preparation process. This includes selecting commercial-grade equipment that is durable and can handle high volumes of food.
Design the storage areas: The kitchen should have designated areas for dry storage, refrigeration, and freezer storage. The storage areas should be located close to the workstations to minimize the time and effort required to access them.
Consider the ventilation system: A good ventilation system is crucial to maintain a comfortable and healthy work environment for the kitchen staff. The ventilation system should be designed to remove smoke, heat, and odours from the kitchen.
Ensure compliance with local regulations: Kitchen design must comply with local regulations, including health and safety codes, building codes, and fire codes.
Seek professional help: It is recommended to consult with a professional kitchen designer or consultant who can assist in creating a functional and efficient kitchen design that meets your needs in your budget.

By following these guidelines, you can create a kitchen that is functional, efficient and meets the needs of your restaurant business.

Staffing and training requirements

Recruiting and training staff for a restaurant business is crucial for its success. A well-trained staff will efficiently serve your customers and eventually will make your customers happy and satisfied. This will help you in the mouth publicity of your restaurant. Here are some general guidelines that will help you recruit and train staff for your restaurant business:

Recruiting Staff:

Determine staffing needs: First, determine the number and types of staff required for your restaurant business. This includes front-of-house staff (servers, hosts, bartenders, etc.) and back-of-house staff (cooks, dishwashers, etc.).
Create job descriptions: Create clear and detailed job descriptions that outline the job duties, qualifications, and requirements for each position.
Advertise the job openings: Advertise the job openings on social media, and in local newspapers to attract potential candidates.
Review resumes and applications: Review resumes and applications to identify candidates that meet the job requirements and qualifications.
Conduct interviews: Conduct interviews to assess the candidate’s skills, experience, and fit for the job.
Check references: Check references to verify the candidate’s employment history, skills, and performance.

Training Staff:

Create a training plan: Create a comprehensive training plan that covers all aspects of the job, including job duties, customer service, policies and procedures, safety, and hygiene.
Conduct orientation: Conduct orientation for new hires to introduce them to the restaurant’s culture, values, and policies.
Provide on-the-job training: Provide on-the-job training to teach new hires the specific job duties and responsibilities.
Monitor performance: Monitor the performance of new hires to ensure that they are meeting the job requirements and expectations for your restaurant business
Provide ongoing training: Provide ongoing training to staff to help them develop new skills, stay current with industry trends, and maintain high levels of execution.
Offer incentives: Offer incentives such as bonuses, promotions, and employee recognition programs to motivate and retain staff.

By following these guidelines, you can recruit and train staff that are qualified, motivated and committed to the success of your restaurant business.

Inventory management for restaurant business

Managing inventory is an essential part of running a restaurant business, as it directly impacts your final result. Here are some tips on how to manage inventory for a restaurant business:

Establish an inventory system: Establishing an inventory system helps you keep track of your stock levels, avoid overstocking, and prevent stockouts. You can use either a manual or automated system, depending on the size and complexity of your restaurant.
Set par levels: Determine the minimum amount of inventory you need to keep on hand to meet customer demand. Setting average levels helps you avoid overstocking and keep track of inventory levels.
Conduct regular inventory counts: Regular inventory counts help you keep track of your stock levels and identify any discrepancies between actual stock levels and recorded stock levels. This will help you identify any issues early on and prevent losses due to theft or spoilage.
Monitor food waste: Keep track of the food waste in your restaurant and identify the causes. This can help you adjust your inventory levels and reduce waste, saving money in the long run.
Work with reliable suppliers: Establish good relationships with reliable suppliers who can provide you with quality products at competitive prices. This will help you maintain consistency in your inventory and reduce the risk of stockouts.
Use inventory management software: Consider using inventory management software to automate the inventory tracking process. This will help you save time and reduce the risk of errors.

By implementing these inventory management practices, you can streamline your restaurant’s operations and reduce costs, ultimately helping your restaurant business become more profitable.

Marketing and Promoting Your Restaurant Business

Marketing and promoting your restaurant business is fundamental to attracting new customers and retaining existing customers. We are providing you with some tips on how to market and promote your restaurant business:

Build an online presence: In today’s digital age, having a strong online presence is crucial for any business. Create a website for your restaurant and use social media platforms to promote your restaurant business and interact with customers. Do update your restaurant on google and google maps. Upload your restaurant images so anyone who searches “restaurant near me” should see your restaurant.
Offer promotions and discounts: Offering promotions and discounts can attract new customers and encourage repeat business. Consider running specials on slow days or offering discounts to first-time customers.
Host events: Hosting events like live music nights or themed dinners can help to attract new customers and create a buzz around your restaurant.
Partner with other businesses: Partner with other businesses such as hotels or local attractions to offer package deals or cross-promotions. This can help expand your customer base and increase brand awareness.
Build relationships with the community: Build relationships with the local community by participating in community events and sponsoring local organizations. This can help you create a loyal customer base and establish a positive reputation in the community.
Offer delivery and takeout: Offering delivery and takeout options can help you reach customers who prefer to eat at home. Partner with delivery services like Zomato, Swiggy and Uber Eats to expand your reach.
Maintain a consistent brand image: Maintain a consistent brand image across all marketing channels, from your website to your social media profiles and advertising materials. This will help you establish brand recognition and create a cohesive message for your customers.

By implementing these marketing and promotional strategies, you can increase your restaurant’s visibility and attract new customers, ultimately helping your restaurant business become more successful.

Conclusion

The thought of owning a restaurant is wonderful and a dream of many. Having these key points in mind will certainly help you to achieve your dream of starting a new restaurant business in India. Beginning a new restaurant and running it successfully is not a simple task. But if you know all the fundamentals and procedures to start the business, the process is more controllable.

Hence, read through this blog and organisation your ideas better. Even if you have no experience this article will help you in opening a restaurant in India. You can also enrol for some courses which are available in the market like Start your Food Business by Sanjeev Kapoor to get a detailed idea of starting a restaurant business in India. But Before getting such courses, you should know the basics of this business which this article will help you with.

Keep yourself motivated and encouraged. We wish you all the best and all success in opening a restaurant in India.

Work illustrations by Storyset Data illustrations by Storyset