restaurant-startup

Restaurant Startup – The Last Guide You’ll Ever Need

Restaurant Startup

The food service business is always trending and is one of the thriving industries. If you have decided to try your hand in the restaurant startup, it’s the best decision except if you aren’t prepared enough. Even in this pandemic situation, the restaurant business only requires necessary changes in the traditional model for surviving.  How will your business survive in this dire situation? 

Adapting to the restaurant marketing trends in 2021 will help in growing your restaurant during this pandemic. Due to the emergence of technology, a restaurateur needs to go hand in hand with technology, new marketing ideas, attractive location, etc. along with excellent quality food and exceptional service for a successful restaurant business.

Let’s dig into the topic and figure out how to start a restaurant by analyzing each step in the process.

Restaurant Startup Guide

Like every other business, a restaurant business needs a well-explained guide on how to start, run and grow a successful business before starting. An inspiring restaurateur must do deep research with a keen eye for details before launching their startup to avoid failure. We’ll learn what are the necessities for operating a successful restaurant in this guide.

What You Need to Know Before Starting

You might have made up your mind about launching a restaurant startup, but do you think you will be able to run it successfully?

 Can you overcome the hurdles in your path to be a successful restaurateur? Being passionate about serving food is surely an advantage, however, is it enough? No matter how passionate and prepared you to feel to begin a restaurant, it is going to be a tough row to hoe. 

Before opening a restaurant ask yourself if you are:

  • Willing to work for more than 45 hours a week?
  • Eager to serve people and please them?
  • Would enjoy giving your everything to the startup?.
  • Can work without payment for a few months whenever required?
  • Interested in short-term or long-term running?

It is important to absorb the fact that not everyone is cut out for the restaurant business. Be prepared for all the challenges you have to face in the road to a successful restaurant startup so that you can stand up on your feet again if you fall somewhere down the path. 

Restaurant Startup Ideas

Now that we know the restaurant business is not an easy nut to crack, we can take a peek at some restaurant startup ideas. There are many types of restaurants and deciding on the type of restaurant you want to venture into is a significant step. To have a bright picture, give a glance at the below types:

Casual Dining

Casual Dining restaurant offers delicious, presentable, and freshly cooked food with table service. The ambiance of casual dining is modern and comfortable, giving a family-friendly experience.

  • Typically serve 3-course meals and have an extensive menu at a moderate price.
  • The desired location for these restaurants is high traffic markets, malls, and shopping streets with parking spaces.
  • Depending on the cuisine intended to serve the investments required will be around 10-15 Lakhs.

Fine Dining

Do you wish to provide your customers with the best dining experience? Then opening a fine-dine as your restaurant startup is a perfect choice. You need a high level of knowledge of gourmet food and service levels to be the best among other fine dines. Customers are expected to make a reservation for dining and may have to come in a certain dress code if necessary. 

  • Fine dines have lavish interiors, a snug ambiance, soothing music and are lit warmly for elite customers. 
  • Fine dines are well-staffed with staff hired for job roles that are very specific and well defined. 
  • The investment needed to start fine-dine ranges from 1-5 crores in India.

Quick Service

 A typical Quick Service Restaurant is fast-paced as they serve fast food which can be prepared quickly. The orders are completed within 10-15 minutes of ordering time. The design and ambiance are simple and offer a small space designated for those customers who wish to stay back and eat. QSR is the most popular among aspiring restaurateurs. 

  • Take-away, delivery and dine-in, both function simultaneously. 
  • Highly populated residential areas, malls, and large office complexes are preferred locations. 
  • The investment required in India will range from 10-20 lakhs. 

Ghost Kitchen

Ghost kitchens are also known as cloud, dark, or virtual kitchens are commercial cooking spaces with no dine-in option. Or in other words, these are kitchens that operate online with no physical presence. It’s called the future of takeaway as it is hassle-free, cost-efficient, has no unnecessary expenses, and has no parking problems as well.

  • Cloud kitchen runs only on online ordering and delivery
  • If you have low investments consider a ghost kitchen as it requires only 5-10 Lakhs to establish one in India.

Cafe and Bistro

A Cafe typically has a casual set-up and usually plays around with outdoor spaces. It provides a comfortable sitting area and creates a relaxed mood for its customers. The cafe usually serves beverages, and finger foods such as pastries, pizza, and sandwiches. However, a Bistro can offer entire meals other than the regular items that a cafe serves.

  • Cafes are designed for a very quirky and modern interior that is usually very captivating. 
  • The alluring interior concepts and themes attract the young generation mostly.
  • A cafe would need an investment of around 15-20 lakhs. 

Bakery

Are you interested in earning high margins from a food business? Have good cake and cookie recipes enough to attract people? Then a bakery could be your ideal restaurant startup. Opening a bakery can be very challenging and exciting at the same time. You can sell baked items like cakes, cookies, bread, and some other food and drink items. 

  • It provides delivery, self-service, and may have a sitting area.
  • The excellent location for a bakery is local markets near residential areas and shopping streets.
  • It may cost about 20 lakhs to open a bakery

Bar and Pub

 Bar and Pub are designed with comfortable sitting areas, pleasant ambiance, and lively music. This startup can offer you high sales but at the same time requires a lot of investments and overheads.

  • A bar’s menu includes a range of alcoholic and non-alcoholic drinks. 
  • A lot of money is required for preparing the bar and getting hold of the drinks. 
  • Typically a bar would need investments ranging between Rs. 60 to 70 lakh. 

Patisserie and Ice Cream Parlour

If you want to sell pastries, sweets, snacks, beverages, etc. then a patisserie is the right choice for you. India being a country of festivals, sweets shops will be a very profitable type of restaurant. While, you can serve the different types of ice-creams, shakes, and ice-cream cakes in an ice cream parlour. Ice cream parlour may offer a sitting area.

  • For a patisserie, you will need a shop to sell sweets and a base kitchen where the sweets can be prepared.
  • Coming up with innovative concepts for processing and unique concepts makes your ice cream parlour stay in trend.
  • It may cost about 10-15 lakhs for a starting patisserie or ice cream parlour.

Food Truck

food truck

The Food Truck or Restaurant on Wheels is the most viable among all the restaurant types because it requires less investment and has fewer overheads. There’s nothing better than taking your kitchen around, cooking inside a truck, and opening one side of that to serve customers food. Food trucks can sell fast and cheap food or serve specialty cuisines such as Indian, Italian, etc. 

  • Opening a food truck is still a unique concept in India and if done rightly can prove to be a highly profitable business.
  • A food truck would cost you around 8-12 with zero rental and other related costs. 
  • It is necessary to get all the licenses for a food truck that a regular restaurant would need. 

What is the first step to open a restaurant?

The first step to open a restaurant is to decide on the concept of your restaurant business. Depending on the type of restaurant you decided, you can plan a theme and type of cuisine for it to follow.  The interiors and overall ambiance must be in sync with your restaurant’s theme. Once you have figured about your budget and business plan, you can design the menu accordingly.

How To Start A Restaurant?

how to start a restaurant

Starting a restaurant requires some careful planning and here it is broken down into steps. If you’re keen on knowing about how to open a restaurant, these steps will give you a precise idea.

  1. Define the concept and brand of your restaurant
  2. Get investment to fund your restaurant business
  3. Evaluate restaurant costs involved
  4. Create a compelling business plan
  5. Decide the location of your restaurant
  6. Get all the necessary licenses required for the restaurant startup
  7. Get the workforce for your restaurant business
  8. Design a stellar menu
  9. Arrange vendors and suppliers for your restaurant
  10. Create a marketing plan
  11. Install the right technology at your restaurant

Read on to find out the process of opening a restaurant described deeply below.

What Should You Know About Restaurant Startup Costs?

Earlier opening a restaurant was just owning a space and serving food to customers. Now, it’s much more than that and there are a lot of other things to consider while setting up a restaurant. There are several expenses you need to take care of before you start with your restaurant. Let’s take a peek at the necessary investments you will have to make. 

Rental Costs

The factors that the rental cost of a restaurant typically depend upon are the size, location, and material that’s used in building that establishment. You can either rent a space or buy it for a startup. Buying could cost you a lot more than renting space. If you’re planning to open a small cafe or QSR, it is best to rent. In India, the cost of land and rent of space differs as you move to different cities. The average cost of buying land for your restaurant startup ranges from 50 lakhs to 1 crore whereas it would only cost you approximately 30,000 – 1,00,000 INR a month when renting a space. 

When selecting the location of your future restaurant startup, keep in your mind not to choose areas with high rents. High-traffic areas would have higher rent than more residential spaces. Selecting a medium-traffic location with not too high rent is the optimal choice.

Interior and Furnishing Costs

Approximately 30-40% of the total budget is reserved for furniture and fixtures, despite which, half of it goes into interior design and architecture. This cost is also based on the kind of restaurant. For instance, a food truck will need little to no furniture whereas QSRs can make do with a limited number of chairs and tables. A fine-dining establishment would have lavish interiors with cost of basic furniture ranging anything between 3-5 lakhs.

Licenses cost

For running any restaurant establishment, you must have all the legal documents and licenses that are essential. Let’s see some of the licenses you would need to run a restaurant. 

FSSAI License

The FSSAI central license costs Rs. 7500 and the state license ranges between Rs. 2,000 to Rs. 5,000. The registration cost for FSSAI license is Rs. 100.

Health or Trade License

This license costs between Rs. 500 to Rs. 50,000.

Eating House License

You can obtain this license for Rs. 300 with a validity of three years.

Shop and Establishment License

The cost of this license ranges from Rs. 200 to Rs. 4,000 annually depends on the total number of employees and the location of your restaurant.

Hiring and Training Costs 

Out of  20% to 30%  total budget,  is reserved for the hiring and training of restaurant staff. On the basis of the kind of establishment, you can decide exactly how many people are required to run your restaurant. 

Operational Costs 

Operational costs consist of the cost of commercial kitchen equipment and other electrical appliances. These costs may change according to the machine requirements, approximately Rs. 5-8  lakhs.

Labour costs

Labour costs include expenses made while hiring professionals for designing menu and interiors, fresh products and ingredients for your kitchen and maintenance are a few of the other areas that require financing when starting a restaurant. 

Restaurant Marketing 

There’s a certain amount of money that should be reserved for marketing. These include offline and online marketing. Depending upon the platform and campaigns, the cost varies. It could cost up to a lakh. 

Restaurant Technology 

Restaurant technology includes a robust and compliant Point Of Sale system, Kitchen Display System, tablets or other systems and the software that is compatible with all these systems. 

Restaurant Startup Budget

As you have a fair idea of the costs involved, you can calculate the approximate capital you would need for starting up. You can acquire budgets for your startup by:

Self-funding 

If you have a sufficient amount of money to open a restaurant startup, you can be your funder. The best part about being a self-funder is you wouldn’t be accountable to anyone since it’s your money that’s involved.

Informal loan

You can ask for funds from the people you know like from friends, family, or close acquaintances. Getting funding from peers may help in turning them into your future business partners.

Formal loan

You can raise a good amount for your restaurant startup by taking loans from banks.

Look for investors

Finding the appropriate investors can benefit both parties. Investors look for a profitable business to invest in. You can approach them to invest entirely or partially in your restaurant startup, after having a certain percentage of your stakes. 

Restaurant Startup Business Plan

restaurant startup budget plan

What is a restaurant business plan?

A restaurant business plan is written to describe your restaurant’s goals and the steps you will take to make those goals a reality. It is vital for the success of your venture as it assists in obtaining funding from an investor or bank.

A business plan provides clear guidance on how to convert general strategies into actionable plans for reaching your goals. It can help solidify everything from the startup functional strategy before starting out to upto few years.

What should a perfect restaurant startup business plan contain?

A compelling and perfect restaurant startup business plan should cover details on brand, concept, mission, sample menu, service, management team, design, theme, target market, location, business structure, financials, marketing, publicity, and professional consultants.

Why Select Best Restaurant Startup Names?

Some people don’t give much priority to choosing the appropriate name for their startup resulting in not being able to connect with customers. Your restaurant startup name should stick with customers, resonate with the concept of your brand, and must give you a distinct identity that helps you to beat the competition in the restaurant industry. 

Basic Restaurant Startup Checklist

restaurant startup checklist

Now that you have a clear picture of the different options for your restaurant startup, let’s move ahead and look at the essentials of opening a restaurant. To help you get started, go through the basic checklist.

  1. Choosing the perfect location
  2. Emerging your business as a brand
  3. Hone your menu
  4. Focusing on the concept, interior, and theme
  5. Getting all essential licenses and certificates
  6. Hiring and training staff
  7. Acquiring commercial kitchen equipment
  8. Maintain cordial relations with vendors
  9. Utilize restaurant technology
  10. Plan events for a year ahead
  11. Optimal use of social media
  12. Paid Marketing and Promoting by food blogging

This simple checklist will empower your journey as a successful restaurateur.

Is owning a restaurant profitable?

Is owning a restaurant profitable

Generally, restaurants are profitable, but they may have low profit margins. Profitability depends on many factors including the size, type of restaurant, labour and food costs. For example, a bar is more profitable than casual and fine dines. It may require an average of two years for a new restaurant to turn a profit.

What do restaurant owners struggle with?

Apart from being the high-risk sector, restaurant owners had to struggle with sudden changes and restrictions due to the pandemic. While learning to cope up with Covid-19, restaurateurs in India had gone through the following challenges.

  • Acquiring, retaining, and training staff for quality service
  • Designing the right and alluring menu
  • Alleviating increasing food costs
  • Coming up with a unique selling point
  • Controlling rising operational costs
  • Maintaining performance consistency
  • Lack of adequate capital
  • Reaching out to new customers

Evaluating the root cause of these issues accurately will help in finding the solution so that it mitigates the struggles of the restaurant owners.

How do you know if a restaurant is failing?

According to studies, more than 50% of restaurants fail in the first year. A lifeless,dull, and silent dining room is an obvious red flag or warning signal, but multiple subtler clues can signal that a restaurant is on unsteady ground. Take a look at these signals to know if your restaurant startup is failing.

  • Difficulty in paying bills and making the ends meet.
  • Menu choices are outdated or never changing.
  • The number of regular menu items is shrinking.
  • The restaurant begins to close earlier than the minimum service time.
  • Decrease in the number of staff.
  • Less involvement of the owner.
  • Regular customers come in less frequently.
  • Disastrous feedback on social media.

What to do if your restaurant is failing?

If you find your restaurant has undergone three or more of the above signals, don’t panic!! You can still save your failing restaurant by knowing these tips.

  • Revamp your menu with the necessary changes.
  • Auditing your restaurant and identifying the weak elements.
  • Adjusting the opening hours.
  • Organize special events.
  • Choose the right staff and provide ample training.
  • Lower operational and food costs without compromising on food quality.
  • Go through customer feedback if required, rectify the mistakes.
  • Focus on marketing.
  • Be consistent on social media.
  • Ask for guidance when needed.

Call To Your Thoughts

Following your dream of a restaurant startup is truly amazing. Despite it being your passion, starting a restaurant from scratch and running it successfully is an enormous task. This guide will help you open a restaurant with no experience and manage it successfully!

FAQs

Now, let’s see some commonly asked questions.

What type of restaurant is most profitable?

The most profitable restaurants are bars, cloud kitchens and food trucks. Low overheads, no rent(for cloud kitchen and food truck) and less food cost makes them most profitable compared to other restaurant types. Bars offer higher profit margin as the processing cost for alcoholic beverages is less than that of food.

Is the restaurant business hard?

No business is easy to manage, similarly, the restaurant business is not different from others. The restaurant business is hard to operate but not impossible. High competition, high operational costs, extremely difficult operations, long tiring hours, high employee turnover, and no self-care time make a restaurant startup a challenge. With proper knowledge, adequate resources, a fool-proof plan, and willingness to jump the hurdles; the restaurant business can be managed efficiently.

How often restaurant concepts should be revitalized?

 Even if you have enough customers and convert new customers to returning regulars consistently, you must always seek innovation to remain the top choice in the field.
The best way to remain relevant and adapt to trends is to update your menu. You should revamp your menu in at most four months so it is relevant to the seasons. The menu should be updated depending upon the availability of raw materials, to attract the customers by making seasonal dishes, to appeal to the target market, and to keep up with trends.

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