How Much Does it Cost to Open a Restaurant?
It is one of the biggest service sectors in India, which is why the restaurant business holds it as one of the best options for Indian entrepreneurs. Retail food encompasses the restaurant business. India has various types of restaurants as per the preparation method, menu style and pricing. For this reason, there are a variety of words in restaurants such as a cafe, fine dining, casual dining, ethnic, fast casual, fast food, quick service, barbeque, family style, tabletop cooking and others.
Restaurant Industry In India
The Indian restaurant industry sector is a very fast growing market in the world. The national restaurant market is estimated to be reaching Rs.5.99 lakh crore by 2022-23 at a CAGR of 9%, as per National Restaurant Association of India (NRAI) report. The restaurant owners coped with the challenges and hardship that come with the Covid pandemic and decided to open up a restaurant would mean a new opportunity to young restaurant owners.
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Starting Restaurant Business Process
The following process is involved in starting a restaurant business in India:
Decide the Restaurant Concept
First thing to do to start a restaurant is to define the concept. A restaurant concept is determined by the investment capacity and local demographics’ eating habits. A restaurant owner can choose any of the following types of restaurant concept depending on the vision and funding:
- Fine dining restaurants
- Casual dining restaurants
- Bakeries
- Cafes
- Food carts
Once the business owner agrees on the restaurant concept, he and she must make the following decisions: the restaurant theme, interior design, cuisine and the menu. There need to be synchs among the restaurant’s interior design, service style, menu and theme.
But, when the business owner decides to start a dark kitchen, they don’t have to decide the theme and interiors. The dark kitchens are online restaurants with no establishment. An individual comes to dinner in dark kitchens set up, to prepare meals in a kitchen and sell them online. This is also a good option of opening a dark kitchen, set up costs are low and people like to order food online.
Create a Business Plan
Having decided on the concept, business owners should draft restaurants business plans. The restaurant owner will have a plan as to the restaurant business future development and will also offer it to any possible investor.
It’s also the business owner’s job to decide whether or not to begin a franchise business and launch his/her own restaurant. Starting a franchise business is nothing compared to starting a restaurant.
Evaluate Restaurant Costs
Starting a restaurant means a business owner should have a firm understanding of the operational and set up costs involved. Irrespective of the type of business, a business owner will have to bear the following costs:
This is food cost where the cost of raw material to serve a dish is called as food cost. If the food cost is right at or below 30% of the menu price, most certainly you’re doing as well as you’re ever going.
They require equipment, including labor cost – Labour cost is a critical restaurant cost that increases the expenditures while opening a restaurant.
These are overhead costs – Overhead costs are expenses which are unrelated to food or labor. They include:
Location
The restaurant premises’ location plays a major role in their rent. But it should never exceed 10 percent of the total revenues.
Interiors
This means the restaurant owner can make decisions regarding the interiors budgeted and the concept.
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Purchase of quality kitchen equipment
Kitchen equipment has to be purchased by the restaurant owners at the beginning, but in the long term they always compensate for this cost.
Lawyers
Involving lawyers in sifting through the confusion of a new business’s insurance coverage is good advice. License fee paid depends on establishment type.
The POS (Point Of Sale) system
modern technology used in restaurant operations and payments.
Restaurant owners should ideally use 1-2% of their restaurant revenues for marketing restaurants.
Start getting Investments and Funds for your Restaurant.
The first and most important thing to consider before you set up a restaurant business is the amount of capital you will need or when you will get the capital you will need. The capital for starting a restaurant must be decided by a restaurant owner.
A decent sized restaurant will ideally have a set up cost from Rs 15 lakh to Rs 1.6 crore, primarily based on the kind of menu, place and many others.
Investments and Funds for the Restaurant
It’s one of the most important things about starting any type of restaurant business – finding the funds and the amount of investment you need to open a restaurant. In a restaurant, the restaurant owner has to decide which capital is needed to start a restaurant. A decent-sized restaurant with all the necessary set up cost may stand at Rs. 15 lakh to Rs. 1.6 crore. It is dependent on the menu, location and other factors.
A restaurant owner can obtain funds to start a restaurant through the following ways:
Self funding
If a business owner has accumulated enough money to actually open a restaurant, he/she can actually do so without taking loans. Opening a restaurant in partnership with others also lowers investment risk and is very much a good option.
Start a restaurant
A person can start a restaurant with a bank or financial institution loan. Obtaining a loan from the bank however is a hassle as you need someone to underwrite the loan and provide a security or a guarantee for the loan.
Conclusion
With these important points at hand, you shall definitely make a way to the realization of the desires of starting a new restaurant. But of course, starting a new restaurant and succeeding at it is a busy task. However, if you learn the basics and how to run the business then the process becomes easy. Additionally, it makes your restaurant look more professional. In addition to being an innovative process, customers can rate your foods. Your restaurant will get a high rating, and you will become more popular if they like your food.
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