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Margesh Rai
| Updated: 30 Jun, 2020 | Category: FSSAI License

A 360-Degree Guide on Starting a Restaurant Business in India

starting a restaurant business in India

Starting a restaurant business in India requires the fulfillment of legal formalities and other formalities as well. Customers gorging on the variety of mouth-watering food and having the pleasure of eye-captivating ambiance show the possibilities to restaurant business enthusiasts. In recent years, the expansion and growth of the restaurant business in India has opened the doors for those individuals who are interested in starting a restaurant business in India.

The growing restaurant business has drawn the attention of various food business enthusiasts by ensuring them financial progression. Most of the working Indians are comfortable with the concept of visiting the restaurant for a family outing and food delivered at the doorstep. It’s a way through which they will be able to preserve their time for other necessary works rather than spending time on cooking food after working day and night tirelessly.

There must be a proper restaurant business plan devised by those individuals who have set their target for starting a restaurant business in India. The appropriate business plan would let your restaurant business survive amidst the hardships and competition that you might have to encounter in the forthcoming period. Your business plan would resemble a blueprint that puts forward the idea of restaurant business owners with respect to their business.

Starting a Restaurant Business in India- Stepwise Guide

Before taking a step ahead for starting a restaurant business in India, it is mandatory for restaurant business lovers to follow the FSSAI registration and licensing procedures[1] and other licensing methods as prescribed by the government authorities and food regulatory bodies. Going through the prevailing market trend, we must have to confess that the food and beverage industry has become a highly rewarding sector for food business owners in a country like India. Therefore, the restaurant business in India holds a cluster of possibilities. This article is a tailor-made one for you if you yearn for starting a restaurant business in India.

Instead of making a delay in grabbing the massive opportunity linked with starting a restaurant business in India, you need to assemble your ideas and plans and gear up to put your feet into this productive realm. Get your business plan ready and strive to run your restaurant business by adhering to the legal as well as mandatory regulatory requirements. After acquiring licenses and fulfillment of all the obligations, you would proceed further for commencing a restaurant business anywhere in India. Given below is the stepwise 360-degree guide that will assist you in starting a restaurant business in India.

Summary of the Entire Restaurant Business Idea   

In case you have planned for starting a restaurant business in India and make it a highly successful one, you should be ready with the entire business idea for running a restaurant in a summarized form. Deciding the idea/concept for a restaurant business in advance is the first and foremost requirement. At the initial level, you need to determine the entire capital that you might have to invest in this form of the food business.

The average price per customer would give you an understanding of how much money you are going to get from one customer. Your business plan must comprise the mission and vision statement of the organization, pre-established targets, and goals of your restaurant business and information concerning ownership as well as the legal formation of the restaurants in India.

Format, Layout, Theme, and Cuisine of the Restaurant

Your restaurant business strategies must get cultivated in such a manner that it should display the format along with the layout of the restaurant. The layout and design of the restaurants differ from each other due to the different formats of all the restaurants. It’s good to lay the foundation of the theme as well as the cuisine of your restaurant.

It’s essential to have a match between the theme of the restaurant and the interiors. For instance, the interior design of a theme-based restaurant is a way distinct from the design of fast-food restaurants. Kitchen utensils, hotel staff uniforms, etc. should match pace with the brand esteem of the restaurant. All these points of considerations would aid you in constructing the future of your restaurant business in India.

Raising Funds for Meeting the Capital Requirements

The deficit of funds is one of the biggest hindrances in the lives of ambitious restaurateurs. Before venturing into the restaurant business, fund management is one of the crucial points that deserve all restaurant business dreamers’ attention. On the basis of the concept backing your restaurant, you need to make proper computations concerning your overall capital requirements. After that, you can think of raising funds by various means to kickstart your restaurant business.

Taking loans from banks is a medium of assistance to fund your restaurant business. Nevertheless, getting loans from banks involves complexities, and it’s never a hassle-free process. In order to bring a reduction in the risks associated with an investment in the restaurant business, you can plan for commencing a restaurant business by partnering or collaborating with another person. If you have sufficient money available in your bank account, then you can go with self-funding for your business.

 It’s difficult to lure the investors for a first-time venture as investors keep their eyes on the growth prospects connected with a business and its scalability for making the investments. Also, they evaluate the performance of those outlets that you have started in the past before making an investment in your project.

Restaurant Costs Assessment

  • Another step that must get the attention of all the restaurateurs is the involvement of costs in operating a restaurant business in India. It’s crucial to assess and prepare a report for the restaurant costs involved, along with the proper planning concerning the same. There are numerous types of costs incurred in performing the operations of a restaurant business.
  • The basic cost concerning the restaurant business is the food cost. Food cost consists of all the costs involved in procuring the raw materials for the purpose of dish preparation. Usually, the food cost is not too high, but it tends to increase due to ingredients loss and wastage.
  • In order to manage restaurant costs, it’s vital to pursue menu engineering. By adopting this method, restaurateurs can minimize food costs and maximize profit at the same moment. As per the seasonal dishes, it’s a wise idea to update the menu accordingly. Thus, before bringing things into action, you need to make an in-depth analysis of trends going on and develop a plan based on it.

Overhead Costs Involved in Restaurant Business

Besides food and labour costs, there are other costs known as overhead costs.

The world of overhead costs holds too many aspects like Interiors, Rent, License, Kitchen Equipment, and Marketing.

  • By closely monitoring the theme of the restaurant along with its associated concept, you can manage your expenses for the interiors. How can we forget to mention the budget set for the running of a restaurant business?
  • Amid all the expenses incurred in the restaurant, rent incorporates a good portion of your costs involved in the restaurant. The location of your restaurant is a prime factor that determines the rent. As per the relevant sources, the rent should be below 10% of your entire revenue.
  • There are several types of permits and licenses needed for driving a restaurant business in India. Permissions required for the restaurants are the compulsory ones, and thus, we can say that these expenses are the essential ones. Running businesses without these licenses may put you in problematic situations. In this write-up amid one of the heads, you will be familiarizing with the permits and licenses required for running a restaurant business in India.
  • You must keep a list ready that should include essential kitchen equipment mandatory before starting a restaurant business in India. Only getting restaurant equipment is not enough; you must possess the best ones. Buying the equipment high in terms of quality can save your costs in the long run. The leading kitchen equipment is of various types- Counters, Freezers, Slicers, Sinks, Mixers, Refrigerators, Ovens, safety equipment, and more.
  • If you are an intelligent aspiring restaurateur, then you won’t mind devoting around 1 to 2 % of your revenues on marketing activities, including the highly emerging one, i.e., digital marketing. Offline and online marketing activities, utilized together, can boost the restaurant business.

Read our article: Who needs FSSAI Registration? Is FSSAI Registration Mandatory?

Giving the nod to the Best Location for your Restaurant

All the passionate restaurant business owners need to choose the location that perfectly fits the bill as per the requirements of their restaurant business. There is an interconnection between the success of your restaurant and your business location. Understand the customer base of a particular location and set your restaurant business accordingly. In addition to this, analyze the strategies of your competitors in the nearby area would also help your restaurant business to flourish in India. The location should be easily accessible as it would play a massive role in bringing successful outcomes for your restaurant business in India.

Licenses Mandatory for Starting a Restaurant Business in India

Acquiring government licenses and various permits for starting a restaurant business in India is significant. Based on your venture size, the costs of these licenses differ from each other. Since obtaining these licenses and permits may be a time taking process, apply for it as soon as possible.

The licenses mandatory for commencing/starting a restaurant business in India are-

Licenses for Restaurant Business

Business Registration

All the restaurant business aspirants need to register their restaurant business in India as a private limited company or as a partnership firm.  Furthermore, you can take responsibility for auditing your finances, filing annual returns, etc.

GST Registration

Restaurant owners need to register under goods and service tax and must obtain their GSTIN Number as well. It’s mandatory for the restaurant business owners to accommodate their business to the goods and service tax regime. As GST registration is state-specific, you need to have a separate registration for restaurant outlets in different states.

Health/Trade License from the Municipal Corporation

A restaurateur can apply for Trade License either online or at CSB. You can get the forms at the website of State’s Municipal Corporation or Zonal CSB. Municipal Corporations are capable enough to put locks on the restaurants. The Trade/Health License ensures that your restaurants would be under the surveillance of the Health Department. The cost varies as per the state rules and other specific requirements. 

Liquor License

In case your restaurant is involved in selling liquor, then obtaining a liquor license becomes a mandatory thing. Local Excise Commissioner is responsible for granting this license. If you are selling liquor without procuring Liquor License, a considerable penalty will get imposed on you, and your premises would shut down as well. This permit is a time taking one. Thus, apply for it at the earliest.

FSSAI License

The FSSAI License (Also regarded as Food License) is a necessary license for the smooth functioning of a restaurant business in India. FSSAI is the governing body that grants this License. It’s beyond the concept of License as it acts as an FSSAI approval and ensures the customers that food available in a particular restaurant adhere to the guidelines in the Food Safety Standards of India.

FSSAI Registration

Any food business with a turnover to the mark of Rs. 12 lakhs/year, or less than that-needs to get FSSAI Registration.

FSSAI State License

Any food business, including restaurant or any eatery points having a turnover exceeding the Rs. 12 lakh figure needs to acquire the FSSAI State License.

FSSAI Central License

Any food business with turnover crossing the significant number of Rs. 20 crores must get Central FSSAI License.

There are numerous other permits and licenses like Pollution Control License, Shop and Establishment License, Eating House License, Music License, and more permits.

Bring Best Manpower and Design a Smart Menu

  • Bringing the most capable hands on board and retaining them, in the long run, is mandatory for the successful running of a restaurant business in India. The hiring can take place either via newspaper advertisement or through agencies or even through social media spheres.
  • You need to optimize the menu and make most of the items mentioned in the menu available to the consumers. A well-designed menu can reduce your entire cost and create a notable impact on your customers’ mindset. It’s essential to maintain a balance between quality and variety of food.

Conclusion

Starting a restaurant business in India is an outstanding idea by looking at the increasing cravings of people for dining out and visiting restaurants to change the taste. However, setting a restaurant from the ground level requires tremendous efforts. At Corpbiz, we are readily available at your disposal to help you obtain the FSSAI License, GST Registration, and other permits and make your dream of running a restaurant business in India a reality.

Read our article:What is National Food Security Card, and How to download it?

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Margesh Rai

Being a poetry lover, and an avid reader, Margesh is fanatical about legal content writing. After completing graduation in B.Com(H), he decided to follow his passion. Writing impeccable in-depth content about legal and finance-related topics is his biggest forte.

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