After an overwhelming response on "How to start a Restaurant business", we were flooded with lot of questions on social media, on various aspects of opening a restaurant such as what would be investment required, what format one should go for such as a Quick Service Restaurant (QSR) or a fine dining or a full-fledged Bar cum Restaurant. A lot of people also asked us on licensing and permissions to open their food outlet.
Following up on them, we decided to dedicate a series of articles to our readers which will give a detailed knowledge on different topics, such as choosing a particular restaurant format, licensing (region-wise), choosing a location, investment and funding, hiring and so on. We talk a lot about them and other issues separately in our RestroGyaan section (Follow it for some cool hacks on operating a restaurant business.)
In this article, we throw light on how to open a QSR or a Takeaway outlet in just Rs 5 lakhs. The first thing that one needs to do is to decide the concept of the restaurant. In this article, we will discuss a format which can be started in just Rs 5 lakhs with high returns. The Takeaway or QSR format seems to be the most practical format, as the returns are high.You can charge the price of a casual dining menu, but not incur cost the same as you save up on the area, furniture, air-conditioning, crockery etc. However, you still need 100-150 orders to make it viable in the long run.
Here we have shown the break-up of 5 lakh, which we will explain in the points below–
Steps to Open a Quick Service Restaurant under 5 Lakhs
The location is the one the most important factors which determine the success or failure of any restaurant. The takeaway should ideally be in a densely populated area, keeping the target audience in mind. Accessibility and visibility of the area are also important to attract customers. Ground floor shops, located at the front are preferred for QSRs and Takeaways.
The store shop should be at least 450 sq ft in size so as to build a good kitchen. The counter and the serving area should not exceed 100 Sq feet. Thus, for 450 Sq feet, the rent should not exceed Rs 40-45k. So, out of the 5 lakh investment, Rs 1,20,000 goes to the landlord, who gets two-month rent, a one month rent in advance.
You also need to make sure that the building has proper water supply and drainage facility. You must also obtain a No Objection Certificate (NOC) from the owner that he has no problem subletting his space for a food business, and also from the neighbors. The NOC is required in obtaining the TIN number/Vat registration, Local Municipal License, and Food license.
A QSR primarily requires five licenses, namely: Food License from FSSAI, TIN/VAT registration, Local Municipal Corporation Health License, Police Eating House license, and fire license. Out of all, Food license, VAT registration, and Local Municipal Corporation Health License are the most important ones to have for starting of the outlet. Fire license and the likes can be acquired once you commence restaurant operations, however, it is recommended to have all the licenses in place before opening the outlet to keep yourself away from the legalities and small hiccups which come due to unavailability of these licenses.
The three licenses have to be applied separately. For Food License, you can apply through its website www.fssai.gov.in. This can also be facilitated through various agencies which charge around Rs 5,000 for the complete paperwork and license fee. The VAT registration will be facilitated by any Charted Accountant. This will cost somewhere around Rs 10,000. Lastly, for Municipal Corporation health license, you have to contact the local health inspector, and they will guide you through the process of acquiring the license. The license fee is nominal, and will cost around Rs 3,000. Police Eating House and Fire license can be obtained once you have Municipal Corporation health license. This can be done in the first two-three months of the operations.
The secret to a successful restaurant is often a great team behind the counter and in the kitchen. The Chef is probably the most important person in your team, as they not only cook, and design the menu; they also lead and guide the rest of the kitchen staff. The attrition rate is extremely high in the restaurant industry, especially at the junior level. Learn how to hire better for your restaurant here.
In a takeaway kitchen, minimum of 5-6 employees is required in the kitchen. Out of them, two chefs are required who have a fair knowledge of every department of the kitchen. The salary of the chefs and helpers depends on upon their experience. The average salary of the chef at Commis level 1 is Rs 14000-Rs 15000 while the helpers and other staff salary range between Rs 6000- Rs 8000 based on their work. Apart from the kitchen employees, 2 delivery boys are required and one at the counter for taking the order.
In today's tech-time, there are a lot of third-party delivery services with whom you can tie-up for a work on per order basis. They charge somewhere around Rs 30 for the first five km and Rs 10 for every extra km. It is highly recommended to have at least one delivery boy full time and part time, even if you have partnered with a Third Party for deliveries, as a back-up. These third parties will help you save the cost of the bike for delivery.
Also Read: 7 Ways to Hire Better For Your Restaurant
4. Kitchen Equipment and Raw Material:
Kitchen equipment is a major expense for the restaurants. A small working table for 4 sqft can cost somewhere around Rs 6-7k. But, it is not always necessary to have everything new in the kitchen; most of the kitchen equipment can be bought old and used. This would roughly save around Rs 1 lakh. While working table, refrigerator, store racks and cupboards can be re-used, burners, Tandoor, and gas pipeline should be new to avoid the added cost of repairs and gas leakages that are bound to happen. Other than the aforementioned kitchen equipment, Mixer, fry-pans, knives, cutting boards and other utensils should be bought new.
About Rs 2,30,000 is invested in the setting up the kitchen. Lastly, raw materials such groceries, packaging, dairy, and poultry will cost you Rs 20,000 for the first five days of the operations, depending upon the sale you make in the first five days.
The tried and tested method of marketing, and also one of the cheapest, is the pamphlets. You also need to spend some money on menu designing and logo designing, which should not cost more than Rs 2000. For the first two months, 30k pamphlets are good enough to market your restaurant. These 30k pamphlets of good paper quality will cost you somewhere around Rs 25,000. However, you can change the quality and quantity of the pamphlets as per your budget.
Apart from pamphlets, invest some money on a good billboard to attract an audience. An average billboard costs around Rs 10,000.
6. POS and Billing Software:
This is the most important and integral part of a successful operation and management of any restaurant or food outlet. Choose a niche POS that is customized to suit the requirements of a QSR. Read a detailed guide on how to choose the perfect POS for your restaurant here.
The one we recommend is our very own POSist software, which is hardware independent and completely browser based. You can use any web-enabled device such as a computer, laptop, tablet or even your mobile to generate the bills. The cost for this should not exceed more than 25000.
7. Staff Uniform:
Staff uniforms are a critical aspect of a restaurant venture that is often ignored. It is important that all the staff members look good, hygienic and well dressed. You can choose from different types of dresses such as chef coats, smart shirts and t-shirts and apron. At the initial stage of operations, it's ideal to have a low-cost uniform which will save the additional cost. We recommend good t-shirts which will cost around Rs 150 per piece and if they ordered in bulk they will cost no more than Rs 120 per t-shirt. So, an amount of Rs 6000-7000 can be dedicated for staff uniform which gives a nice feel to your restaurant brand.
8. Counter and Branding the face of the outlet:
It would be best to procure the raw materials and design your own counter based on your need with a help of a carpenter. Go for a good standee and menu board at the front-end to give an overall feel of the brand. The counter and front-end will cost you somewhere around Rs 20-25k based on the design of the counter.
A Takeaway and Home Delivery outlet require one landline and at least two mobile phones. You can get a Cloud Telephony subscription that forwards the call to another designated number in case the first number is busy. You can also record the call for training purposes. This should not cost you more than 10k.
You further need to spend around Rs 8000 on electricity fitting and plumber work. Apart from that, you would require a good calculator, Fire-extinguisher, daily account books, attendance register etc.