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How to start a restaurant business in India in 7 steps

  • Published on : 12/10/2017

A lifelong ambition nursed by many budding entrepreneurs is to start a restaurant business in India. Though they possess the zeal, few have knowledge about the process and the formalities involved in starting a restaurant.

To open a restaurant in New Delhi, one needs 26 licenses. By contrast, for opening a restaurant in China and Singapore you need to get only 4 licenses. (As per the Economic Survey). The aim of the article is to shed light into the various steps involved in starting a restaurant business in India. Listing below 7 steps to start a restaurant business in India.

Decide the concept of your restaurant

As there are various types of restaurant formats such as Quick service restaurants, Casual dining restaurants and Fine dining restaurants, you need to first decide on the concept of your restaurant.

The next step is to plan the theme and cuisine offered. Design the interiors in sync with your restaurant theme. Preparing a business plan is the third step, as you require it for future development.   

Raising the funds

Once you have calculated the capital required to start your venture, the next step is to raise the amount. If you are financially sound enough, you can use your own funds for this purpose. The second option is to take a bank loan.

For securing a bank loan, you need to submit a collateral. The last option is that of Venture Capital (VC) or Angel funding. However, in the case of new entrepreneurs, VCs evaluate the restaurant’s future growth potential and the scalability of your business idea before investing.

Choosing the location

Visibility and easy access are two important factors while looking for the location. A ground-floor restaurant on the main road will lead to more footfalls. Research thoroughly about your competitors in that area and the type of restaurants they operate. Before opening the restaurant, you also need to get a No Objection Certificate (NOC) from at least three of your neighbours. 

Evaluating the cost involved

There are various costs involved in running a restaurant that needs careful evaluation.

Some of them are:

i) Food costs – It involves the cost of raw materials involved in preparing dishes and the vendors who can supply them beforehand.

ii) Labour costs such as hiring servers, chefs, busboys, etc.

iii.) Overhead costs – The rent of the building is a major expense and it should never go beyond 10% of your total expenses. The other overhead expenses are that of kitchen equipment, decor and furniture expenses. 

Getting all the necessary licenses

There a number of licenses that you need to get from the government before starting your restaurant.

1. Trade license from the municipal corporation – The cost can come anywhere between Rs.10,000 to 1 lakh depending on the size of your restaurant. The validity of the license is for a financial year and it needs to be renewed in every March.

2.FSSAI – For opening a food business, you need to secure the license from Food Safety and Standards Authority of India. The license can cost anywhere between Rs. 5,000 to Rs.10,000 and there are several factors considered such as the size of your restaurant, turnover, installed capacity, location etc.

3. GST Registration – Restaurants need to register under GST and get a GSTIN number. If you are operating in different states, then you need to have a separate registration for each state.

4.Professional Tax License – For employing a salaried staff earning above Rs.10,000 you need to get a professional tax license. The amount needs to be paid every month.

5. Liquor License – It is pretty expensive and takes a lot of time.

6.Business Registration – The venture need to be registered as a partnership firm or a private limited company.

Hiring employees

Hiring well trained staffs such as waiters who have a deep understanding of the food items and experienced chefs who are really skilled are quite important. 

Investing in technology

Implementing a cloud based POS system such as inresto can help you manage multiple functions such as billing, inventory management, marketing and customer data management on the same platform.

Parting Words

The formalities involved in starting a restaurant in India are not an area of concern for you anymore. The above guide covers all the aspects that would come handy for the budding entrepreneurs.


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