How to start a restro-bar in a tier-2/tier-3 city?

. 7 min read
How to start a restro-bar in a tier-2/tier-3 city?

Steps, investment, best location, permits & other details.

Being a proud owner of a restro-bar seems to be a glamorous job. Indeed, it is a fascinating and economically rewarding business with high returns. But, it is also one of the toughest businesses with high risks, and that is the reason why most of the food businesses shut down within their first year of operations. Therefore, it is imperative to have a clear understanding and proper plan when planning how to start a restaurant.

Here is a step by step guide to help you understand how to start a small restaurant in India:

Step 1. Decide on the restro-bar formats.

Step 2. Settle on the location of your restro-bar.

Step 3. Obtain licenses, registration, certificates, and permits.

Step 4. Maintain a record book.

Step 5. Evaluate all the costs involved in running a restro-bar business.

Step 6. Get investment for your food business.

Step 7. Arrange suppliers and vendors.

Step 8. Get manpower for the smooth operation of your restaurant business.

Step 9. Design an appealing menu.

Now that you know the essential steps to start a restaurant, let’s dive deeper to explore how to start a restaurant business plan.

1. Decide on the restro-bar formats:

Wondering how to start a restaurant business? Start it by deciding on the type. There are typically six types of restro-bar formats, namely:

1. Club Bar

2. Brewpub or Beer Bar

3. Specialty Bar

4. Sports Bar

5. Franchise bar

6. Neighborhood Bar

Depending on your interests, abilities, markets, and other important aspects, you need to first choose the right format for your food business. Once you come up with the right format, you can further mull over the other important aspects.

2. Settle on the location of your restro-bar:

Having decided on the format, now it is time to choose the best location for your food business. The following factors should influence your location choice:

1. Your budget

2. Higher visibility

3. Easy accessibility to customers

4. The target audience you will like to attract

5. Your restro-bar concept and design

Even if location plays a big role in running a successful restaurant, a thriving place doesn’t guarantee you sure success as long as your food quality and services are not great.

According to experts, choose a location that is near to high-end shopping streets, malls, markets, and office complexes as footfalls will be high here. It is most likely that the employees and shopping spree will turn around to the nearest restro-bar with their friends to eat, drink, and merry.

3. Obtain licenses, registration, certificates and permits:

The restro-bar requires more licenses and permits than any other kind of food business format. To open a restaurant, you will typically need the following 9 kinds of licenses:

1. GST Registration

2. Liquor License

3. Police Eating House License

4. Shop Establishment License

5. FSSAI License

6. Local Municipal Authority License

7. Fire Safety License

8. Music License

9. Environmental Clearance Certificate

The total cost of obtaining these licenses can be around INR 10 lakhs but don’t get overwhelmed by the price and number of permits required to start a restaurant and bar. Once you get all these licenses, running your restro-bar will be a lot easier and it will not shut down in its initial years of operations due to the lack of permits.

businessmen discussing building plan, property value estimation with infographic statistics

4. Maintain a record book:

As an organised restaurant and bar owner, you should maintain a clear record of all the liquor you receive from the suppliers with dates and quantities. Having an inventory account like OkCredit can be a great idea to maintain the record.

The officials can ask you to show the records at any point of time, and if you fail to do so, they may penalise you. Thus, you should be prepared and maintain a record book to show any kind of information anytime.

5. Evaluate all the costs:

Wondering how much does it cost to open a restaurant? Worry not! Just evaluate all the costs involved in running a restro-bar and arrange capital accordingly.

Here are some of the significant costs you should ponder over before starting a food business:

1. Food Costs - Food cost includes the price of all the raw materials used in making the dishes. Typically, your food cost is 30% of the menu price.

2. Labour Costs - Labor cost is the cost of the workforce you need to pay to start a restaurant and bar.

3. Overhead Costs - Overhead costs include the price of interiors, kitchen equipment, rent, license, POS, marketing, etc.

6. Get investment for your food business:

Due to the lack of funds, most of the aspiring restaurants and bars don’t see the lights. Thus, arranging funds is one of the most crucial things when starting a food business. Depending on your restro-bar format, you should first finalise how much investment is required. Once you know how much capital you need, you can move ahead with any of these three ways to fund your food business.

1. Self-funding - Invest the capital you have.

2. Bank loans - Take loans from the banks.

3. Angel funding - Ask wealthy individuals to invest their money into your business plan.

At the initial stage, a restro-bar business requires more investment, but it has high ROI and is one of the most lucrative business options.

7. Arrange suppliers and vendors:

For the smooth operation of your restro-bar, you must have a minimum of two-three vendors and suppliers in each category. It will help you compare the price and quality of the received products. It will also serve as a backup if one of your suppliers faces any issue with supplying the materials.

Below are some tips to keep in mind when arranging suppliers and vendors:

1. Maintain two days of stock in your inventory.

2. Ask your suppliers to supply the materials in the morning.

3. Check the quality and quantity of products every time you receive the materials.

4. Maintain a long-duration contract with the vendor.

5. Check your vendor’s Trade Identification Number (TIN) before you assign him your food business supply contract.

8. Get manpower for smooth operation:

Employing and retaining the right talent is one of the toughest jobs while starting a food business in India. Even if hiring through referrals seems exciting, as a first-time entrepreneur, you can employ your manpower via the traditional way of marketing. For instance, you can circulate ‘We Are hiring’ pamphlets, count on the newspaper ads, rely on OkStaff, advertise through social media posts or hire through agencies.

Ideally, you will need three types of staff:

1. Kitchen staff - It will include food preparation staff, cooks, support staff, etc.

2. Service staff - Service staff will include waiters, busboys, housekeeping staff, etc. Your service staff should be good at communication as they need to interact with customers.

3. Management staff - Your restro-bar manager, cashier, chef, etc., come under the management staff. Your management should be well-educated and experienced.

Apart from all the other staff, hiring the right chef is vitally crucial for your food business as your chef is the person who will check the right quality of food, design the menu, and lead the team to prepare and present the dish in the right way.

Business administrator in action of manpower or business organisation on a virtual dashboard

9. Design an appealing menu:

While arranging the basic necessities for your food business, you often miss the finer details. For example, you will contemplate your menu just as a piece of paper that lists the dishes and drinks you offer, but it is much more than a mere paper piece. A smartly designed menu with the logo of your brand goes a long way in upselling your offerings and creating an impact.

Hence, you should hire a professional to design a menu that can lure customers and create branding for your business.

Ready to start your restro-bar?

Starting a new restaurant and bar is surely difficult and requires a lot of investment, but if you do it right by following the above-listed steps, you will certainly gain ground and reap better results in the long run.

Also read:

1) How to Open a Restaurant? 10 easy steps to help you open a Restaurant of your own!
2) Top 10 Businessmen in the Industry & What You Can Learn From Them
3) Top-5 markets in India every businessperson should visit
4) Where to Get a Small Business License?
5) OkCredit: Simple, Paperless & Secure solution for businesses


Q. Can I run a restro-bar with no experience?

Ans. Yes! If you are experienced in running a food business, it is great. But worry not if you don’t have prior experience of working in the food industry. The most important qualities you need to run a successful restaurant are determination and dedication.

Q. How much does a restro-bar owner earn in a week?

Ans. While the amount a restro-bar owner can make varies significantly depending on the location, size, food quality, and other vital factors, on average, a bar owner can earn between INR 18,00,000 INR-22,00,000 a week.