How to Start Restaurant Business in India (A Complete Guide)

India is a place with a combination of culture and heritage. You   will find traditional food with diverse tastes and flavors. The secret behind the success of the food business in India is the authentic taste. Indian people are more about food according to their culture and geography. 

So, the restaurant business is one of the most prominent business opportunities. But remember, to succeed in India's food business, you must follow the culture, tradition, and uniqueness. 

However, if you decide to start a restaurant business in India, it is a great decision. You can be a successful restaurant owner by blending traditional trendy recipes with diverse innovations. 

This article will briefly describe how to start restaurant business in India. You can walk with us and grab the process of opening a restaurant.

Which Type of Restaurant is Most Profitable in India

India has one of the largest restaurant business markets. The restaurant industry is growing very fast in India. As a result, thousands of entrepreneurs are involved in the food and culinary business. 

However, many become failures and need to be more successful in business. One of the major reasons for this failure is insufficient knowledge about the food industry and Indian restaurant concept ideas. 

Before jumping into the business, you need a clear understanding of the restaurant business market in India. Let's find out which restaurant makes the most money in India.

• Fast-food restaurant

First-food restaurants are also known as quick-service restaurants. This type of restaurant can be a moderate dining place to sit. Fast food restaurants are famous for their quick and easy services. 

In a fast-food restaurant, you will have simple and less expensive food that is quickly served and increases sales. These are the most popular restaurants in India and have high profit margins. 

• Buffet restaurant

Buffet restaurants are now trending. In a buffet restaurant, guests can eat a set of menus at a fixed price. Buffet restaurants are also called self-service restaurants, where customers serve their food. These types of restaurants have become very popular, especially in India. It is a highly profitable restaurant type. 

• Fine dining restaurant

Fine dining restaurants are another popular type of restaurant commonly found in India. In a fine dining restaurant, you will find a beautiful atmosphere. Fine dining or fast casual restaurants mainly focus on providing a great ambiance with private space. 

Moreover, a couple can enjoy the fine dining restaurant with the soft music, candlelight, and great food taste. All of these terms have made fine dining restaurants very popular. 

• Cafe and coffee shop

Cafes and coffee shops hold a very strong position in India. This type of restaurant has a very high profit margin because of its lower operating cost. Moreover, the coffee shop has a wide customer base. So, it is one of the great restaurant types that any business entrepreneur can start. 

• Food truck restaurant

The food truck restaurant is widely popular all over the world. It is mostly famous for its great taste and low prices. In India, you will find thousands of food trucks in the street, in front of hospitals, shopping malls, schools, universities, busy places, parks, and other places. Food truck restaurants earn a great amount of money because of their popularity.  

• Ghost kitchen/Cloud kitchen

In the era of modern technology, cloud kitchens have become very popular. These restaurants do not require dining space; they provide food delivery services. Cloud kitchens are popular as ghost kitchens. People are now more into the cloud kitchen restaurant. It is also a very profitable restaurant in India.

List of Things to Do Before Opening a Restaurant

The restaurant business is highly challenging. Two main terms are important in the food business: good food and good service. Both of the terms are equally essential in the food industry. 

Additionally, multiple things should follow before starting a restaurant. Here, we discuss what should be considered when starting a new restaurant business.

• Establish a restaurant concept with a selling strategy.
• Identify your targeted audience and understand the business market.
• Find out the pros and cons of your competitors.
• Ensure secure financial support.
• Find a good supplier for your restaurant's raw ingredients and other necessities.
• Implement the most advanced technology to be updated with the competition. 
• Establish health and food safety protocols.
• Set a goal and make sure you have a good profit margin.

These are important factors that every entrepreneur should consider before entering the restaurant business. Anyone following the terms can successfully open and run a restaurant.

How to Start Restaurant Business in India: Step by Step

Are you worried about how do i open my own restaurant or how to open a small restaurant business? Here is a brief explanation that can help you open a restaurant. India is a country where starting a new business opportunity is extremely high. 

The restaurant business especially has wide establishment opportunities in India. However, starting a new business takes a lot of work. It involves lots of steps and strategies. 

So, before jumping into the industry, you need proper knowledge and understanding. So, why wait? Walk with us and learn how to start restaurant business in India. 

1. Make a proper business plan

Every business needs a clear concept and a detailed business plan. So, the first step in starting a restaurant business is to decide on your restaurant concept and make a business plan. 

When starting a restaurant business plan must include the targeted audience, atmosphere, locations, menus, profits, investment, etc. Remember, the clearer your concept, the more successful you will be. 

Moreover, your restaurant business plan needs a detailed marketing strategy. Proper marketing can promote your restaurant effectively.

2. Choose a suitable location

Deciding a suitable location is a matter of concern for any restaurant. If you can choose an ideal location, it would be very beneficial for your restaurant. So, while selecting the location, you have to consider several things. 

First, you must do in-depth market research about your targeted locations. Moreover, you must choose a location that is a turning point in your city. As we know, restaurants fall under the hospitality business, so choosing a place easily visible to travelers is a good strategy. 

On the other hand, the location should also be visible to the local passenger and have a suitable parking area.

3. Estimate cost

Cost estimation is a very complex ongoing process. When estimating your business cost, you can take the initial steps to go further. Cost estimation helps to give a clear idea of the financial plan. 

In your cost estimation, you must include all the costs of starting a restaurant business in India. Cost estimation includes equipment, raw materials, rents, decoration, licenses, staff, etc. 

However, the size of the restaurant and its location also play a crucial role in cost estimation. The license and permission costs vary from location to location. So, while going through the cost estimation process, ensure everything is present. Using a restaurant startup costs calculator is an excellent way to calculate the estimated cost. 

4. Secure funding

It is only possible to start a business with funding. So, your restaurant business is within the rules. Before jumping into your business, you must ensure a secure fund for your restaurant. 

In terms of funding, you can use a different strategy. You can start with your investment where there is no pressure for interest. 

On the other hand, you can get financial help from various banks, NGOs and other institutions. Moreover, you can get financial backup from personal or business investors.

5. Get the necessary license and permission

Every country has some specific rules and regulations. To start a restaurant business in India, you must know what licenses are needed to start a restaurant in India. With those permissions and licenses, you can open and run your business. 

Remember, getting a license and permission takes time. In that case, you must apply for the paper as soon as possible. Otherwise,  you must wait a long time to open your restaurant. 

Here are some essential licenses and permissions that are needed. 

• GST registration
• Tax license
• Liquor license
• FSSAI
• Business registration 

6. Design your restaurant layout

Now, it is time to design your restaurant's interior and exterior. Remember, decoration plays a vital role in the restaurant business. So, while creating your restaurant layout, ensure the kitchen and dining space are correctly used. 

A well-designed and structured layout can make a big difference. However, your design should be according to your target audience's choice. It helps to attract more customers.

7. Create a unique menu

A well-defined and straightforward menu is vital to the restaurant business, so you should be careful when designing it. Moreover, a well-planned menu can also reduce food costs and food waste. Several terms should be carefully considered while designing the Menu.

• Your Menu should be clearly defined, which means there is no hidden cost.
• The Menu should also be designed according to the food preferences of your targeted locations.
• All the ingredients are mentioned.
• Choose those food items that can be prepared using common ingredients.
• Determine the food quantity and price.

8. Get all the equipment

Remember, a restaurant is not only about providing good quality food. It also connects with good services. So, good service should be a priority while planning for a restaurant business. 

In that case, good service comes from high-quality equipment. Now, you have to buy all the necessary equipment for your restaurant. A restaurant needs different types of equipment for other areas—for example, kitchen equipment, back house equipment, front house equipment, etc. 

Always try to buy the most updated equipment to provide service faster in less time. Moreover, a restaurant also needs software and hardware to run the restaurant smoothly. 

Here is a list of some essential equipment that a restaurant needs.

Kitchen Equipment

• Commercial oven
• Pizza oven
• Combination oven
• Gas ranges
• Electric ranges
• Ventilation
• Bowl processor
• Combination processor
• Buffalo choppers
• Floor mixer
• Countertop mixer
• Hand mixer
• Slicer
• Dishwasher
• Dinnerware accessories
• Compartment sinks
• Disposal sinks
• Microwave
• Ice maker
• Cutting board, etc. 

Storage Equipment

• Freeze
• Refrigerators
• Vegetable storing system
• Stainless steel wall shelf
• Grain storage bin
• Onion, potato bin storage, etc.

Safety Equipment

• First aid kits
• Fire extinguisher
• Aprons
• Security cameras
• Rubber floor mats
• Goggles and others. 

Software System

• Kitchen display system
• Point of sale system

However, depending on your restaurant type, you may also need other, different equipment. So, you must be very careful while purchasing the equipment.

9. Hire and train staff

Staff are an essential part of any business, especially in the restaurant. They provide food and other services to the guests. A staff faces different types of challenges throughout the services. 

It is one of the most challenging jobs. Now, it is time to hire the staff for your restaurants. But remember, hiring the staff can be a big challenge. A well-trained and experienced staff improves your overall restaurant performance. 

Moreover, you can also make some arrangements to train your staff. A restaurant needs many different staff types; let's find out the required staff.

• Service staff

Service staff interact with guests the most. Therefore, they should have good communication skills and a good sense of dress. Service should be well-trained so that they can handle customers smoothly which increases customer loyalty. Service staff include servers, bussers, housekeepers, etc.

• Kitchen staff

Kitchen staff are the back-of-the-house staff. They are related to cooking, food preparation, serving, and other support. Kitchen staff includes cooks, chefs, support staff, food preparation staff, and washers. 

• Management 

Management staff are involved in restaurant management. They should be very smart and intelligent. While on duty, they must solve and handle different situations. Management staff members include managers, cashiers, store managers, receptionists, etc. 

10. Do proper marketing and promotion

While your restaurant is ready to serve, it is time to market your restaurant. Remember, the more marketing strategy you will apply, the more customers you can reach. 

There are many different marketing ways to promote your restaurant. You can use social media as a vital marketing tool. For example, Facebook, LinkedIn, Twitter, Medium, Instagram, YouTube and other sites to spread your restaurant publicity. 

Additionally, you can create a website or use email marketing, which is also a very effective way to promote the brand. Instead of social media marketing, you can market your restaurant using banners, news channel advertisements, or other methods.

What is Average Cost of Opening a Good Restaurant in India

Think about how much it costs to open a restaurant in India or how much money is needed to start a restaurant. The overall cost of opening a restaurant varies in location. So, it is impossible to tell the exact amount. 

In India, a restaurant's opening cost can range between 5 lakhs and 2.5 crores. The amount can change over time, becoming higher or lower. Moreover, interior and exterior design also play an essential role in restaurant opening costs.

The price will be high if you open a restaurant in Mumbai, Bengaluru, Chennai, Delhi, or other renowned places. Alternatively, the cost will differ if you open a restaurant in a rural area.

Here are more details on calculating the cost of opening a restaurant in India. 

Let's start the calculation. 

• Location Basis Rental Cost

If you start a restaurant in a famous city, rental costs can range between ₹1 lakh to ₹5 lakh per month on average. On the other hand, the rental price of a restaurant in India, in mid-level city to lower mid-level towns, then the cost can range between ₹30,000 to ₹1.5 lakh per month(on average)

Urban City: ₹1 lakh to ₹5 lakh (average), per month 

Mid to Lower Mid City:  ₹30,000 to ₹1.5 lakh (average), per month

• License and Permission Cost

FSSAI License: ₹5,000–₹25,000 (average). It depends on the scale. 

Trade License: ₹2,000–₹50,000 (average)

Fire Safety Cost: ₹1,000–₹50,000 (average)

Liquor License: ₹5–₹15 lakh (average). It depends on location and is only needed if applicable.

• Staff Salary Cost

Staff salary costs can vary a lot. It depends on the size and popularity. But on average, a staff's salaries can range between ₹50,000 to ₹5 lakhs per month. 

Staff Salary Costs: ₹50,000 to ₹5 lakhs (average)

• Furniture and Other Equipment Cost

In restaurants, furniture and other equipment include interior and exterior decoration, kitchen equipment, front house equipment, and others. 

Furniture and other equipment: ₹5 lakh and ₹30 lakh(average)

The cost can also be higher or lower, depending on the types and services of the restaurants.

• Technological Setup Cost

A restaurant uses various technological setups, including a point of sale system, restaurant reservation system, and website development service.

Point of Sale System: ₹20,000–₹1 lakh (average)

Online Reservation Integration: ₹10,000–₹50,000 (average)

Website Development Service: ₹50,000–₹2 lakh (average)

• Marketing and Other Cost

Marketing costs include launch promotions and other types of marketing costs. 

Examples include email marketing, social media marketing, advertisement, and others.

Grand Launch and  Promotions: ₹50,000–₹3 lakh (average)

Social Media and Other Marketing: ₹10,000–₹50,000 (average) per month

Frequently Asked Question (FAQ)

What is the success rate of restaurants in India?

The restaurant business is one of the most challenging businesses. The competition is exceptionally high. Almost 60% of restaurants fail after one year of starting. But there is a twist. 

A restaurant business can be very profitable with proper planning and strategy. Moreover, according to different statistics, the average profit margin of a restaurant is 5% to 15%, although the percentage can be changed. 

How long does a restaurant business take to be profitable?

Determining how long it takes a restaurant business to become profitable is difficult. It depends on several factors, such as restaurant types and locations, service and promotion, food quality and marketing, etc. 

Some restaurants become famous very fast and turn into profitable businesses. On the other hand, some restaurants fail to survive the first few years. But, on average, a restaurant takes one to three years to become profitable.

The Verdict

Remember, running a business is more challenging than starting a new one. I hope you understand how to start restaurant business in India. So, start your business and become a successful restaurant owner. But remember, success does not come in a day. It takes time and is much more challenging to become successful. In that case, you must give your best and always be on the trends. It helps a lot to be a successful restaurant owner.