How much does it cost to start your own restaurant ?

The Indian consumer is evolving and is eager for new experiences in dining. Niche restaurants are popping up to cater to this demand. What used to be a real estate office till last week now proudly announces the opening of a fusion café; the empty plot down the street is soon to be a microbrewery, and the new building coming up around the corner promises to be a haven of exotic cuisines. 

It’s truly a great time to be a foodie in India. But the good news isn’t limited to food connoisseurs alone. If you’re planning to start your own business, stepping into the food industry seems like a delicious proposition. However, before you take the plunge, there are a few things to consider, the main one being: how much does it cost to set up a restaurant?

There’s no easy answer. The numbers will vary; one can’t really put a figure to it since there are numerous factors to consider. The location, the size of the restaurant, the concept, the materials required, the kind of labour you need – all these will vary significantly depending on whether you are planning to open a coffee shop or a full-service family restaurant. 
Read on to get an idea of the costs involved in setting up a restaurant. Once you have this information, you can set the ball rolling.

1. Capital 
Whether the venture is going to be self-funded or a partnership, you could consider applying for a bank loan. A Business Loan from HDFC Bank is a great way to start your journey as a restaurateur. You might be expected to put up collateral or find a guarantor. Another way to secure the initial investment is to look for investors. But this could be difficult, especially if it’s your first foray into business.

2. Buy or rent? 
Scout for a location first. Once you know where you wish to open your restaurant, decide whether you wish to purchase or rent the premises. Either way, it’s a significant expense. The monthly EMI/rent alone is a fixed monthly overhead and can be a considerable drain on your finances. So that business loan could come in handy. 

3. Staff 
Next on the list is manpower. You need to hire – and retain – talented employees who can help run your restaurant. You can hire through referrals or put advertisements in newspapers and online. You will need money to pay monthly salaries, yearly bonuses, etc.

4. Equipment 
Your restaurant needs good quality kitchen equipment. It might seem heavy on the pocket initially, but it will pay for itself in the long run. New equipment can also get you tax benefits. Get a Business Loan from HDFC Bank to purchase all your essential equipment.

5. Decor and furniture 
Unless your theme is going to be grunge, you’ll need to invest in a well-designed, beautifully decorated restaurant to attract customers. Hire an expert interior decorator, and make sure you invest in good quality furniture and furnishings.

6. Licences 
Check all the local licences, permits, and NOCs you will require to run a restaurant in your area. The cost of obtaining these licences would vary depending on the type of restaurant. A liquor licence, for instance, can be expensive. Apply well in advance as some of them may take time.

7. Food costs 
You need fresh groceries daily to prepare your meals. Typically, in a restaurant, the daily food cost is around 30-40% of the menu price. Knowing what you plan to serve will help you decide how to control costs. Always have two or three vendors, so you can compare prices and have a backup in case one fails to deliver.

8. Advertising and marketing 
Now that you are ready to start your restaurant, you need to let people know. One way to do it is through word-of-mouth – ask friends and family to help. Another is to use online and offline media to reach your audience. Do not spend more than 1-2% of your revenue on advertising and marketing.

Conclusion 
Running a successful restaurant isn’t easy. You will have multiple expenses in the beginning, but if you create a budget and stick to it, you will be able to keep expenses to a minimum. And if you can deliver good food consistently, the customers will keep coming!

Applying for an HDFC Bank Business Loan is now simple! Click here to get started.

* Terms & conditions apply. Loan disbursal at sole discretion of HDFC Bank Ltd.