How to Start Restaurant Business?
A restaurant is a commercial establishment that prepares and serves food and drinks to patrons. In the past few decades, the restaurant business has experienced exponential growth with a multitude of formats ranging from the conventional dine-in to home deliveries, drive through, and take-aways. With the corporate work culture catching up, people started opting for dine-outs or home-delivered food more often. Soon, going to a restaurant for a family outing or a romantic candle-light dinner on some special occasion was replaced by corporate luncheons and grab-and-go meals. And restaurant businesses kept pace with the changing customer behaviour resulting in a manifold growth of the food-service industry. And for newcomers in this trade, the more has always been merrier for food lovers.
The Indian restaurant industry is heavily fragmented with around 1.5 million establishments; the organised segment covers around 3000 only. The organised segment includes cafes, casual dining, fine dining, and Quick Service Restaurants (QSRs).
Analysing the demand
Shifting population and changing lifestyles are driving the demand in the restaurant business. Busy professionals don’t have the time or the desire for cooking. They want nutritious and tasty meals that are affordable and easily available.
Types of Restaurants
Restaurants are classified usually based on cuisine (Italian, Chinese, or French ), food ( vegetarian, vegan, or non-vegetarian ), or the style of offering ( a buffet restaurant or a sushi train ). According to service, they range from informal dining places having a low-priced menu to high-end fine dining places with an elaborate offering.
How to open a restaurant?
Opening a restaurant can feel like a difficult task. The following steps will help you to understand the nitty-gritty:
Many restaurants fail during the first year, mainly due to a lack of planning. The more streamlined you can make it, the better will be your chances of success. There are many variables in the foodservice business, and you must gain knowledge in all of them.
Writing a business plan is essential to reach out to investors and also provides you with a strategy. It usually has the following components:
- Executive summary.
- Company description.
- Business offerings.
- Financial projections.
- Market analysis
- Marketing and Public Relations
Focus on the 5 to 10 percent of the market, which can be your target customers. The main market categories of restaurant patrons are:
- Seniors: This market covers a large group of people aged 65 and above. They tend to visit family-style restaurants that have a comfortable atmosphere and reasonable prices.
- Empty nesters: This group consists of people who are younger than seniors and are in the age group of 50-65. This group is less concerned with price and visits upscale restaurants.
- Generation X: It is a label given to those who were born between 1965 and 1980. They favour quick-service restaurants and are concerned with value.
- Generation Y: This generation, also known as the “boomlet generation” includes those born between 1980 and 2000. They are a prime target of the restaurant industry.
Step-2: Choose a brand and concept
Your restaurant concept will include the food you serve, ambiance, and style of service. It is in-sync with your brand that represents your identity and mission. Based on your brand and concept, the dining room should have your distinctive style and express who you are. It creates a meaningful and memorable experience for people who would like to return.
Restaurateurs use concepts to let customers know in advance what to expect and also structure their services likewise. You can be a high-end restaurant serving Italian cuisine, and you would like to decorate your walls with flowers and plants. Or, you can create a brightly lit, fun, and casual atmosphere with modern artworks for a casual dining joint.
Some of the most popular restaurant concepts are seafood, steakhouse, casual dining, family-style, etc.
Step-3: Select the Menu
You have to first select some basic items that you will serve. Fixing the menu is important because it will decide the equipment that you will need and the staff to hire. Later on, you can learn which items are selling well and which are not, and update the menu accordingly.
Step-4: Get the seed money
Estimate the total costs to start the restaurant and operate it daily. You should then create a budget and determine the amount of money that you have and the funding that you will have to manage from outside. You can also apply for a business loan.
Step-5: Licenses Required
If you know, getting a license is very easy. The Food Safety and Standard Authority of India (FSSAI) license or the Food License is the most significant license required to open a restaurant. The body gives a certificate that the food that you serve is suitable and safe for human consumption. It is a unique 14-digit registration number. It is required to put it on all packaged foods. The certificate can be applied for a maximum period of 5 years, and you have to pay Rs 7500 annually.
You have to provide the following documents to apply for an FSSAI license:
- Declaration of food safety and management plan
- Address and ID proof
- Kitchen layout plan
- List of food categories
- Medical certificates of staff
- Valid email ID
- Water testing report from ISI approved facility
To apply for the FSSAI license you have to log in to their website.
If you want to serve hard drinks, then you have to procure the liquor license from the local Excise Commissioner. You will have to pay a one-time fee of Rs 5000 at the time of submission of documents, and an additional Rs 50,000 for each spirit brand like beer, brandy, or gin.
Step-6: The right location
Location can make or break your business if you are planning a dine-in format. You have to make sure that your restaurant is in an area that enjoys very heavy footfall. Make sure to include spacious parking. Preferably avoid location that had housed a previous, failed restaurant. If not more, it may require a bit more aggressive branding and marketing initiatives as the old patrons might associate you with your predecessor and give your place a miss.
Step-7: Marketing Strategy
Even though the Covid-19 fear is there, people still like to go outside to have a delicious meal. The most common search on their mobiles is “restaurant near me.” So as a good marketer, you have to take note of this trend.
A potent way to gather more traffic is to engage the Search Engines like Google AdWords and through Search Engine Optimisation(SEO). Another method is to be viral on social media like Facebook or Instagram. Boost the views of your pages by paying a fee so that your business reaches a wider audience.
Step-8: Hire Quality Staff
The talent of your employees, especially in the kitchen, can make or break your restaurant business. In general, a restaurant has the following staff:
- Professional cooks are called chefs.
- Waiting for staff to serve food.
- Busboys to remove used cutlery and dishes.
Also, a fine dining restaurant has the following personnel:
- A host or hostess
- A maître d hotel to welcome customers and seat them.
- A wine waiter to help clients choose wines.
Step-9: Takeaway Service
Nowadays, many customers feel that sitting inside a restaurant is unsafe, and delivery is a safer option. So, takeaway service has opened another gateway for restaurants to expand their business. In the last few months, there has been a 200% increase in takeaway order volumes. In this, you can partner with many online food delivery providers/options available.
You can also tie-up with a cab service like Uber and get the food delivered to your customer’s door.
To run a successful business, you have to innovate, especially when you are facing a crisis. Outdoor occupancy continues to be an option for restaurants that want customers to sit and eat outside while keeping indoor occupancy low. So, in these pandemic times, some are arranging for extra seating and also heaters to face the winter chill. You could extend the seating to the sidewalks if need be.
A restaurant business might be a very profitable one, provided you do it smartly and have an eye for detail. And, above all, don’t compromise on the quality of the food. It is one factor that can draw a satisfied patron again and again.
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