Starting a New Restaurant? Here’s 10 Things You Should Know

Patricia Narayan, winner of 2015 ‘FICCI Woman Entrepreneur of the Year’ award started her career 30 years ago selling food from a mobile cart. In her own words she says, “I started my business with just two people. Now, there are 200 people working for me in my restaurants. My lifestyle has changed, too. From travelling in a cycle rickshaw, I moved to auto rickshaws and now I have my own car. From 50 paise a day, my revenue has gone up to Rs. 2 lakh a day.”

Gaurav Jain, the founder of Mast Kalandar, started a successful chain of restaurants nine years ago with seed money of Rs. 18 lakhs. Today, having seen success in India, he and his wife are on the brink of targeting an overseas market.

Do you have a dream of opening up a restaurant one day? There’s no better time in India than now to make that dream come true.

The restaurant business is booming in India like never before. The Times of India reported that the Indian food services industry is worth nearly Rs 75,000 crore and is growing at a compounded annual growth rate (CAGR) of 17%.

Eating Out Is Popular and Growing

Eating out is popular across all sectors of society. People are more open to trying different cuisines, including international varieties such as pizza and waffles. There are more international franchises on offer. In addition to starting your own restaurant with your own unique take on foods, you also have the choice of starting a franchise offered by a number of international brands, like Subway and McDonald’s.

Whichever route you want to take, launching a new business can be both exciting and daunting at the same time.

There are a million things you need to take into account before you begin. Starting a new restaurant is no different. It’s more than just passion and a degree. It’s not just about leasing a space and hiring employees. There are so many nitty-gritty details that come in between those two steps. Getting permits, liquor licences, health regulations, taxes, new bank accounts - the list can get exhausting!

Because of the sheer magnitude of the operation, it’s very easy to miss small details which might later get you into tons of trouble. So, here are 10 things you absolutely should consider before you start your own restaurant.

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1. It Will Take Longer Than You Think

starting-a-new-restaurant-heres-10-things-you-should-knowIt takes a lot of time and planning to open a restaurant. At least, a lot more than you think. The actual opening of the restaurant is the last step. You will first need to come up with a theme. Narrow down the main demographic you want to cater to. Then find a suitable space that will complement your theme and allow you the most access to your intended demographic. Then, give yourself at least 18 months to get construction, furniture and to set up in place. Permits also take a long time to come through, so leave a 3-month buffer to account for delays.

Now let’s look at some of these steps closely.

2. Be Sure of Your Concept

Every restaurant has a concept or theme and a specific cuisine that goes with the theme. Carefully consider the people you are catering to and pick your theme accordingly. Remember whatever cuisine you choose, you will need to find a chef who will be able to do justice to it.

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3. Location Is Key

Your restaurant has to be located somewhere that will give you the best possible access to the kind you people you want to cater to. For example, if you have a restaurant that makes fast food, consider a location where there are a lot of college students or youngsters who need quick snacks. If your restaurant sells high-end, pricy Italian food, you need to pick a location where the “rich folks” live.

Your restaurant also needs to be located close to the place where you get your supplies. For example, if you have a sea food restaurant, find a place closer to the fish market or even the coast if possible.

4. Yes, You Will Need a Business Plan

Restaurants may be about “cook and sell” but just like any other business, they also need business plans. You need to have clear long-term as well as short-term goals.

For example, when do you want to expand?

By when do you want to see return on investments coming in?

Do you want to branch out into other cities?

What about hiring staff and training plans?

These are just a few things that need to be part of your plan!

5. Get Your Licenses and Permits

Welcome to the world of licenses and permits. These things take months to process so please start as early as possible. You will need to register your restaurant under the Shops and Establishment Act.

Will you be serving alcohol?

Will it be a multi-storey restaurant with elevators?

Will you be playing music and videos?

Accordingly, you will need the respective permits and licenses.

6. Do You Have a Hefty Cash Reserve?

The running cost of a restaurant can be anything between 10 to 50 lakhs a month. Initially you probably won’t be able to make profits or even break even. You need to have enough of a cash reserve for the months when business is slow.

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7. Employees Are Your Main Assets

Always remember, you are the owner, not the manager. You have a manager who is specifically employed to “manage.” Keep checking yourself to make sure you are not stepping into any roles that are not your own. That’s the best way to drive yourself crazy. Try to avoid micro-managing. Instead, trust your employees and delegate duties to them to shed a bit of your own load.

Your employees are your main assets. Treat them with respect and give them a reason to come to work every day. Without them, your restaurant will be a sinking ship.

8. It Is Never Too Early to Begin Advertising and Promoting

Even before your restaurant is up and running, start advertising! Take advantage of social media, put up hoardings where your potential customers can see them! Invite people to an open house for the grand opening and offer food on the house.

When you advertise, be sure to mention what makes you unique as a restaurant so that people will desire to come and visit.

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9. Legalities

First and foremost, get a lawyer. Yes you will need a lawyer to handle the legalities. You will need to get different types of insurances and a whole lot of other legal mumbo-jumbo that’s best taken care of by a qualified lawyer. You will also need a chartered accountant to handle your taxes.

10. Patience

A restaurant cannot be opened over night. There will be times when you are so frustrated that you want to pull out your hair, but please hang in there! Patience and perseverance will really help you in your journey. Take time out to unwind and hit the pause button every day, even if it’s just for 15 minutes. Pace your plans well and you’ll avoid a lot of chaos! Remember that even the longest and most-fulfilling journeys consist of many small foot-steps that are worth it.

Granted, starting a restaurant is no easy feat. According to Gaurav Marya, president of Franchise India, although the restaurant business is dominated by unorganized players, it is the organized segment that has achieved the double-digit growth and is growing at a rate of 20 to 25 percent annually. It makes sense to get formal training in culinary arts before you start a restaurant in the organized sector. If you’re truly interested in making your dream come true, we encourage you to browse through the world-renowned culinary arts program AIMS Institutes offers in association with ALMA, Italy.