How to Set Up a Restaurant in India?
Tue, 16 May 2023
Over the past ten years, the restaurant sector in India has significantly expanded and now plays a significant role in the service industry. This growth is largely attributable to the rising disposable income of the Indian middle class, which has resulted in a greater inclination to explore new dining experiences and dine out more frequently.
Understanding the Indian Market
- The food service market in India is projected to attain a value of USD 79.65 billion by 2028, with a compounded annual growth rate (CAGR) of 11.19 percent from USD 41.1 billion in 2022.
- Approximately 7.3 million individuals are employed in the restaurant industry in India.
- Recently, the restaurant industry in India has experienced significant growth, particularly due to the emergence of online food delivery mobile applications. This growth has resulted in improved performance for Quick Service Restaurants, Cafes, and Cloud Kitchens compared to their previous performance.
- In India's food delivery industry, Swiggy and Zomato are the dominant players, while standalone restaurants are the main contenders in the market. To increase their order volumes and reach a wider customer base, both small and large restaurants have begun collaborating with these food delivery apps, particularly in Tier-1 and Tier-2 cities.
How to Start a Restaurant in India?
- Decide on the Concept of your Restaurant
- Get Investment to Fund your Restaurant Business
- Evaluate Restaurant Costs Involved
- Decide the Location of your Restaurant
- Get all the Licenses required to Launch your Restaurant
- Get the workforce for your restaurant business
- Design a stellar menu
- Arrange Vendors and Suppliers for your Restaurant
What are the Estimated Costs of setting up a Restaurant in India?
- The costs involved to start a restaurant business in India can vary depending on several factors such as the type of restaurant, location, menu, and operating model.
- The total Capital Costs to set up a medium sized restaurant in Delhi NCR is approximately INR 5 Crores (USD 0.8 Million). This covers the cost of purchasing the land and building, kitchen equipment, furniture, licenses and regulations among other components.
- A typical medium sized restaurant in Delhi NCR would have monthly costs ranging from INR 40,00,000 to 50,00,000 (USD 49,000 – 60,000). This cost includes monthly salaries and wages, rent of the building and maintenance costs among other components.
*For illustrative purpose only
What are the different types of Franchise Agreements?
Several international restaurant chains including Burger King, Chilli’s, Subway and Domino’s entered the Indian market through Franchise Agreements. The four major types of restaurant franchise agreements in India are:
- Master Franchisee
- Company Owned + Franchise
- 100% Company Owned
- Joint Venture
Which Licenses are required?
Some of the Licenses required to set up a restaurant in India include:
- Company & GST Registration
- FSSAI License
- Trade License
- Fire Department NOC
- Eating House License
- Environmental Clearance
- Signage License
- Music License
- Lift Clearance
- Liquor License
Why is FSSAI License needed?
FSSAI license is a mandatory compliance requirement that ensures the safety of food products supplied or manufactured by various establishments in India.
Which type of FSSAI Registration is required?
Depending upon the annual turnover of the business, one of the following three types of FSSAI Licenses in required:
- Basic License
- State License
- Central License
Which documents are needed to obtain the FSSAI License?
- Identity Proof of the owner
- Proof of premises like rental agreement, etc.
- List of products planned
- Form – B (completed and signed)
- Trade Name
Why is it important to get listed with a Food Aggregator?
- Signing up with food aggregators like Swiggy and Zomato can prove to be a beneficial strategy for kickstarting your restaurant business and gaining initial traction.
- Running sponsored campaigns on these platforms can further enhance the visibility of your restaurant outlet and help increase its reach.
- Some top food aggregators in India currently are – Zomato (for listing and online order), Swiggy, Uber Eats and Dunzo.
What are the ways of Marketing a new restaurant?
- Print Media
- Social Media
- Influencer Marketing
What are some of the Policies and Subsidies offered by the Government of India?
- Pradhan Mantri Mudra Yojana
- Food Processing Fund
- Credit Guarantee Fund Scheme for Micro and Small Enterprises
- Micro and Small Enterprises Cluster Development Programme
- Start-up India Scheme
- GST Relief
- Some states like Maharashtra, Goa and Delhi additionally provide liberal policies that make it easier for new restaurants to be set up in these states.
How can we help?
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Feasibility Study: Assistance in evaluating the project of setting up the restaurant in India.
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Technical Collaboration: Assistance with collaboration with an entity for technical know-how and providing advisory on installation and procurement of raw materials and equipment.
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Fundraising: Assistance in the raising of funds and/or financing for the project.
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Legal Services: Assistance in legal formalities including corporate and regulatory compliances, approvals, and all other legal formalities.
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Sales Network: Assistance in creating a good sales network in domestic and foreign markets based on consumption of an application.
