How to start a restaurant in India? Licenses required to open a restaurant in India

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how to start a restaurant in india

The restaurant industry is extremely competitive and risky in countries like India where people of different culture consume verity of foods (veg. & non-veg.) with different tastes on daily bases. Though, despite tough competition from already registered and successfully running restaurants across the country, thousands of entrepreneurs dare to open a restaurant every year. Almost every cook, chef or any individual who have fond of cooking may have a dream of opening a restaurant. I often see such people finding a procedure for how to start a restaurant in India, especially how they can acquire required permits and licenses for it. Today I tried to enlist here all necessary steps one should follow to open a restaurant starting from initial business research and writing a restaurant business plan Let’s start from the scratch.

how to start a restaurant in india restaurant business plan

  Do some research

Research and homework is mandatory before start of every business. In case of restaurant, research should be primarily focused on following things.

  • The first and very obvious research is to determine taste of surrounding locality. How other restaurants in same locality performing? What types of food they are offering? What extra services other than food they offer? Are customers satisfied with all those services? How often they work out on improving their food services? In short try to focus on every small thing that can help your restaurant to stand among competitors.
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  • Choosing the primary cuisines. This is a very crucial point that every restaurant should choose carefully. You can offer multiple cuisines as well but your restaurant at least have some primary cuisine based on which you can take your restaurant ahead in future and can be claimed as an authentic cuisine you offer. For example, if you choose Sizzlers as your primary cuisine, you can also include various sizzler verities available worldwide, innovative types of serving sizzlers, introduce new types of sizzlers by adding local tastes as well as local ingredients. (You can research hot trends in dining in other parts of the country and bring the freshest concept to your restaurant — something your local target market has not experienced before.) Etc. As time passes, your restaurant becomes a brand offering verity of authentic sizzlers.

Recent Food Services Report 2013 by National Restaurant Association of India (NRAI) says, market size of India’s restaurant sector is Rs.247,680 crore ($48 billion). This sector is 24 times bigger than the film industry and $9 billion ahead of the telecom sector.

  Write a restaurant business plan

To prepare a business plan is an extremely important step for any business. I posted an article related to how to right a business plan few months back. You can have a look on it at how to write business plan.

Related article: 5 most popular food startups in India

how to start a restaurant in india restaurant business plan

Most new restaurants opened by inexperienced owners struggle or fail to survive. However, those based on solid understandings of the market needs, and management of inventory and staff have a much higher chance of success, especially when combined with prior experience in the restaurant industry. This is where opening a restaurant business plan actually required.

Particular for restaurants, the business plan not only serves as a financial tool, but it also serves as an analytical tool that helps you to set your restaurant business apart from the market competition and risks.

An ideal restaurant business must include following points.

  1. Analyze local region and determine taste of locality
  2. Select concept of restaurant
  3. Decide style and theme based on selected concept
  4. Space management plans (How much space would be allotted for dining area and etc.)
  5. Workout on menu
  6. Decide marketing plans as well as strategies
  7. Staff management plans
  8. Ingredients management plans
  9. Wasted food management plans
  10. Decide scope of service and menu improvement
  11. Expense and revenue forecast
  12. Source of capitals (budget)

  Restaurant business plan template

As per business plan understanding and importance described above now it’s time for having a look on an actual business plan that works and may help you to prepare your own. It’s like a rule-book for your restaurant where everything is written. Here I am sharing a slideshre link of actual restaurant business plan template for your reference.

You can see it here: http://www.slideshare.net/hiarnavsoni/business-planrestaurant?related=1

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  What licenses required to open a restaurant in India?

Before launch your restaurant is required to acquire certain legal registration, permits and licenses. In other words it is important for restaurateurs to procure some important licenses before commencing a new restaurant. Here I have tried to enlist different types of licenses issued by various bodies (and mandatory as well) as per legal guidelines.

how to start a restaurant in india restaurant business plan

  1. Service Tax Registration- The 2013 Budget expanded the service tax applicability to all restaurants that are air-conditioned. Therefore, all air-conditioned restaurants having annual sales more than Rs.10 lakhs are required to obtain service tax registration. Currently service tax is chargeable at 4.94% in air-conditioned restaurants.
  2. VAT Registration
  3. Trademark Registration
  4. Food Safety License- Issued by FSSAI (Food Safety and Standards Authority of India – http://foodlicensing.fssai.gov.in/UserLogin/Login.aspx#sthash.NdRFeVJV.dpuf)
  5. Health / Trade License- Issued by Municipal Corporation / State Health Department
  6. Eating House License- Acquired from Licensing Police Commissioner of the city
  7. Certificate of Environmental Clearance(CEC)- Issued by the concerned authority in the state
  8. Nominations under PFA Act 1954 Section 17 (2) and Rule 12 B of the Rules 1955- Director Prevention of Food Adulteration of the State
  9. Signage License- Municipal Committee/Corporation of the city
  10. Alcohol Permit- Issued by local Excise Commissioner (if liquor service is offered)
  11. Playing of Music in restaurants – Can be obtained from Phonographic Performance Limited (PPL)/Indian Performing Right Society (http://www.pplindia.org/licctg.aspx#sthash.NdRFeVJV.dpuf). This license becomes mandatory when you are planning to play recorded or live music of two or more members of PPL.
  12. Insurance(for public liability and product liability) required – Can be taken from any insurance company
  13. NOC from Chief Fire Officer of State Fire Department
  14. Shop and Establishment Act- register your restaurant under the Shops and Establishment Act.
  15. Lift Clearance License- Inspector from Electricity Department and Labour Commissioner of the city

how to start a restaurant in india restaurant business plan

You may also like to read: How to Brand Your Startup? How to brand your business name?

I strongly recommend to consult a CA of your city who can help you to obtain all required licenses and permit which are mandatory in the procedure to open a restaurant in India. The CA can take care of all above things for you and you can take a sound sleep.

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  Steps to be followed by every restaurant to retain momentum

Some recent study says that the restaurant industry in India is even bigger than Indian film industry and bit ahead of telecom sector of the country. This industry is presenting a lot of opportunities to entrepreneurs who are willing to set up their own restaurant. The best book that every entrepreneur, who to commence his own restaurant should refer is Restaurant Business Plan: How to Open a Restaurant Startup and Be Profitable Within the First Yearad

 To retain momentum in the profitable business your restaurants should follow certain rules. Like,

  • Menu improvements and optimization on regular basis
  • Try to improve lunch and dining experience of customers frequently.
  • New product / service (like welcome drink, facilitate waiting customers) innovation
  • Advertising assessment & tracking (Do not ignore local or regional market)
  • Food and service quality optimization based on customer reviews
  • Customer loyalty & retention (like maintaining live contact with customers)
  • Designing customized marketing research approaches to address business issues and adapting to changes in the market environment (constant improvements to overcome market competition)
  • Regular appraisal of staffs (That is extremely important. Remember, your staff’s contribution is critical for success of your restaurant.)

  Last but certainly not the least

how to start a restaurant in india restaurant business plan

There is no doubt the restaurant industry is growing and will continue to grow in the years to come. In case in future, if the owner plans to establish a chain of restaurant or create a franchising model, a Private Limited Company is recommended. You can download the complete article here.

Please share your valuable thoughts or feedback if you find all these information useful. Thanks.

how to start a restaurant in india restaurant business plan

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I am a passionate blogger as well as an IT analyst. I run my own software consultancy firm. Apart from it I am a regular contributor at quora.com and Yahoo Answers. My prime objective for creation of this website is to guide novice entrepreneurs as well as startups worldwide.
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Particular for restaurants, the business plan not only serves as a financial tool, but it also serves as an analytical tool that helps you to set your restaurant business apart from the market competition and risks.

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