Back Introduction
Starting on a food service venture. The hustle and bustle of the kitchen. The creativity that comes with a menu and the different types of food offered.
Does that sound familiar? As a food entrepreneur, you should be able to identify these as the characteristics of one of the fastest growing markets in India, the food service sector. Population young and the old, including you, reading this blog, form a part of the percentage that drives the Indian food service chain.
Post the pandemic, the profit shift does not just lay within dine-in restaurants anymore. With a wide range of restaurant options ranging from cafes, to pubs, to food trucks and cloud kitchens there are options galore for any food entrepreneur to enter the arena of food service in India.
So, what’s the secret behind a secret restaurant business plan? Is it the location? The marketing? The one chef who’s monumental to the restaurant? Or just another ‘trendy’ restaurant?
Infact, there’s no one answer. It’s a little bit of everything, combined with making smart and right decisions, with input across all arenas related to your business venture.
In short, we’ve covered all that and more in this blog, as the ultimate guide to making your restaurant plan work.
A Guide to having a Restaurant Business Plan: 8 steps to Follow
Here are 8 steps you can follow to build a proper restaurant business plan. Dive in:
1. Concept of your restaurant
Starting at square one can be a hard task, given the number of things to do before opening up a restaurant in India. But before any other concept comes into place, deciding the type of restaurant you have in your vision and the type of audience you would want to cater is the first step.
What type of food would the restaurant be catering?
What’s the average price per customer for existing restaurants offering the same style?
Is my concept something that will help me in the long run?
Depending on the current trends, market analysis and your own idea, one can go for casual dining, fine dining, pubs, cafes, bakeries or even food trucks! As you may have observed, most restaurants have a theme. It’s either “that Mexican restaurant” or “that dosa corner” Concepts such as these or having a theme that celebrates local culture, or international cuisine or celebrates a cultural theme are some possibilities for your restaurant business plan.
What comes next? The interior and the ambience.
With all these in the foundation, deciding the type of interior design, furniture and the ambience is made easier. It is important to do some budget friendly shopping for interiors while setting up the restaurant.
With these in place, one final element to decide is the average price of the customer. This provides a fair idea of the average amount of money a customer would spend at the restaurant.
With all these categories in place, making an outline or a foundation can not only benefit your small restaurant business plan, but also serve as the blueprint while showcasing it to potential investors to gain funding for the restaurant or to gain opinions from a board of directors/ experienced members in the food service arena.
2. Costs associated
Running a restaurant can be hefty on the bank account, but with the right restaurant business plan, one can manage costs in an effective manner. Rather than have additional costs mount up without prior planning, here’s an outline of expected costs while running a restaurant:
a. Operational and set up costs
The restaurant business involves cost prior to set up and during the working of the restaurant. Mainly, there’s food and labour costs. More than the food cost, the labour cost makes up a significant portion of the restaurant expense. To maintain quality, the expertise of chefs and to handle the customer inflow, the costs of the restaurant must be managed accordingly.
b. Rent, utilities, property taxes, insurance, wages, supplies, labor benefits, healthcare form a major chunk of the cost. Some variable costs where amount can be negotiated includes equipment maintenance, shipping, repairs and so on.
c. Location
Be it dine-in or a cafe or a cloud kitchen, the location is a major determinant of the profit in your restaurant business plan. The rent should never exceed your profit and must be cost effective. The location must also not be too remote, as it can hinder any dine-in customers, online deliveries or takeaways offered by the restaurant.
d. Restaurant interior and equipment
While starting out, it is better to not jump for the shiny, new materials in the catalogue, but rather buy cost effective items. Decide the type of restaurant equipment according to the menu, production of items and buying accordingly can benefit a small restaurant business plan.
e. Marketing
In the era of brand identity and digital presence, ensure that part of your finances from the restaurant business plan are dedicated towards marketing. There are various digital channels such as organic, paid or social media that can help spread the word. Be creative, dish out offers and advertise the speciality and the distinguished factor of the restaurant to have some food enthusiasts rushing over.
3. Finances
Be it a startup in the world of software or in the restaurant world, budget is often a limiting factor for the ideas that entrepreneurs may have. Hence, your beginner business plan sample for your restaurant must have all the elements of your restaurant mapped out, to finalize on a capital and to showcase it to potential investors.
Some of the ways to raise money to bring your restaurant business plan to life include,
a. Bootstrapping- this is the process of self funding through saved money or by borrowing investments from close relatives or family. Bootstrapping can also be done with a partner, such that there is extra capital obtained
b. Loans- from brick and mortar bank loans, to merchant cash advances, funds or equity, crowdfunding or small business association loan, this is a document based process of approaching institutions for funding your restaurant
c. VC/Angel funding- as a startup, getting a board of directors to listen to your idea can be a bit of a hassle. However, it is advised to be straightforward on your business venture’s growth potential, restaurant plan, quality, staff management and ability to scale when approached by a possible investor. Investors can also approach your business after observing the performance over a period of time or over one or two outlets.
4. Menu
The food that you offer is the main driving point of your business. Within your restaurant business plan, make sure to have a menu as a priority, starting out with basic items and advancing on food items further. Having a set menu helps choose the right staff to hire, the right location to sell as well as the theme that will match the restaurant.
5. Licenses
Imagine you’ve planned the restaurant, have a stellar small restaurant business plan and at the end, you get caught in a legal battle or a legal trap.
To avoid this, getting a headstart on legal papers and licenses can greatly benefit your restaurant. Some of the most critical restaurant licenses include,
a. Food Safety and Standards Authority License (FSSAI)
This forms one of the most critical permits to open a restaurant and is obtained from the FSSAI department. The license ensures that particular food standards are met, and provides a unique 14 digit registration number to be printed on food packages.
Applying for the license requires documents such as government issued ID proof, kitchen layout, water testing reports, medical certificates of employees and list of food categories. Post filling up an online application on the FSSAI website, one can submit the printout to the regional/state authority within 15 days to ensure that the application is considered.
b. Shop and establishment act
From cafes to pubs, the shop and establishment act is a necessary license to be obtained within 30 days of the commencement of the restaurant. The amount of the license varies according to the city. The documents required for a shop and establishment act license include government issued ID proof and details of the employees. One can obtain a registration certificate within 7-10 working days of applying.
c. No objection Certificate from the Fire Department
A no objection certificate can be obtained by registering with the State Fire Department before the restaurant is built. The application does not have a fee and requires a mandatory inspection.
Click here to know in detail about every restaurant license in India.
6. Workforce
Hiring a proper chef and the right kitchen staff is the first step to starting out with your restaurant plan. But it doesn’t stop at that. Retaining the right talent is a challenge, but doing so can work wonders for your restaurant.
Any restaurant’s business is dependent on its staff and customer service, apart from the food. Having a minimal workforce such as kitchen staff, management staff, and restaurant staff, in the beginning, is suggested, with expansion in later stages. The main three staff members to hire in the beginning include,
a. Chefs- they form the most crucial part of your restaurant business plan. If your menu is the canvas, your chef is the artist who designs the dishes that have the customers coming back for more. Be it a pub or a food truck, your chefs must be passionate and dedicated towards the menu and serving your customers with the best in class dishes
b. Restaurant manager- in your restaurant business plan sample, a restaurant manager is of key priority such that everyday operations, stock management and overall management of activities is overseen by a member of the staff. In the era of customer centered approach, the ideal candidate as a restaurant manager would ensure that business runs smoothly and that customer experience and satisfaction is prioritised.
c. Service staff- Be it rush hours or those slow moving ones, your service staff interacts with your customers the most and have the most impact on dine-in customer experience. Courteous, dedicated staff who can work under pressure and manage the priorities of a dine-in restaurant form an ideal fit.
7. Choosing the right technology and getting listed with food aggregators
Having the right technology for your restaurant in this era is a must have to boost your restaurant’s order taking and profits associated. Manually taking over every aspect of the restaurant can just result in sloth like growth. Automating parts of the restaurant to in turn boost sales and draw in a bigger audience can be done with the help of the right technology. Restaurant order management systems with customized features or a set plan of features are recommended.
A crucial element to include in your restaurant business plan is to get listed with food delivery apps and aggregators. With online ordering picking up pace in the previous decade with projected surges in the years to come, restaurants can get listed with food aggregators such as Zomato and Swiggy to gain customers. For startups, it can help gain initial traction and serves as a form of advertisement.
Worried about handling orders from each food aggregator app?
But with technology such as Foaps, one can start accepting online orders hassle free. So, how does Foaps enable this in the restaurant’s plan?
a. Foaps helps restaurants manage multiple food delivery platforms from a single dashboard
b. Foaps automates the workflow of receiving online orders and delivery from Zomato, Swiggy, Dunzo, Foodpanda, Amazon, and many others
c. The unified central dashboard enables accepting orders, menu changes, updating pricing and delivery tracking across all platforms
d. Foaps includes a Kitchen Order System that notifies your chefs as soon as an online order is accepted
e. The software also offers smart intelligence prep time adjustment based on order history
f. Designed for startups or existing restaurants, Foaps is cost effective and offers round the clock customer support
Restaurant order management systems such as Foaps helps restaurants leave no delay in order preparation, and delivery. Hence, restaurants need not worry about patterning with a new food aggregator or handling existing online orders. With no extra commissions, Foaps ensures that restaurants only pay for the channel with no additional charges.
8. Vendor and suppliers
As a restaurant owner, one needs to go beyond the networking among other restaurant owners and emphasize on vendors and suppliers. These form the foundation of quality dishes in your restaurant. The important things to consider that ensure the smooth functioning of your restaurant include,
a. Having emergency stock
b. Daily delivery of fresh items
c. Ensuring quality and quantity check
d. Checking validity and licenses of the vendors and suppliers
e. Have long duration contracts
A rewarding business plan for a restaurant in 2022 and beyond
The idea of owning a restaurant is a creative venture, but it is also a daunting task that food entrepreneurs hold back from. Scarcity of information, resources, the right contacts, marketing or any other aspect can hinder a restaurant business plan’s road to success. However, the purpose of this article is to aid such food entrepreneurs and deter them from stopping at any point of the journey. With the right advice, tools and resources, opening a restaurant business in the country can be profitable in the long run. From sketching out a blueprint to successfully navigating each hurdle of running a restaurant, this restaurant business plan is aimed at any curious person, food entrepreneur or anyone with the zeal to run a restaurant in India.