How to open a profitable restaurant ?
Restaurant business is one of highly competitive business. In time when food habits are changing very fast, people are looking for good places to eat healthy food.
To start a restaurant is very easy if you have 1. interest in cooking 2. interested in customer servicing 3. Interested in lifestyle business 4. Interested in investing time and money 5. Good sense of interiors
A good restaurant in tier II city can be started with investment of less than INR 5 lacs and expected ROI is around 40%. Profit margin vary from 10% to 50%.
Four types of restaurant are very common 1. Daily food restaurant 2. Lifestyle food restaurant 3. Fast food joints 4. Cloud kitchen
As per the pricing category,restaurants can be divided into three segments 1. Lifestyle restaurants 2. Basic restaurants 3. Economic class restaurants
Closure rate of new restaurants is very high. For success , be ready for 1. Long gestation period 2. Brand building 3. Quality 4. Competition 5.Experience
I have conducted research to make restaurant successful, Here I am sharing strategy to start a profitable restaurant
Market decide the pricing and offerings. Before starting restaurant do the market research and find out about
a. food habits of target customers
b.paying capacity of target customers
c. what type of dining experience target customer wants
After market research, now you need to prepare a preliminary business plan (with keeping six month cash reserve )to start your restaurant covering place,offerings,staffing,pricing etc.
How you will offer the food and earn the money?
4 Step strategy
Based on your research open a budget restaurant with minimum 6 tables, one kitchen, two cooks, two waiters
Advertise in local media,leaflets, Whatsup groups,Facebook, local listings etc.
Run social media campaign.contest and offers for example best dish.best cook etc.
Find out b2b customers for consistent revenue like office supplies,factory canteen etc.
Check food wastage. This can be done through estimating the daily sales.
In restaurant most important is 1. Quality of food 2. Pricing of food 3. Hygienic conditions 4. Quality of service
In first three month build your loyal customer community and signature dishes
In second three months build premium customer base
Non negotiable for long term success
1.As per local laws -get licenses
2. Hire trained staff
3.Serve Healthy and hygienic food
4.Pricing as per locality & competitors
5.Long term lease of shop/place
To open good restaurant in tier II or Tier III city in India, you needed INR 1 lacs to 5 lacs depend upon your segment. Investment can be divided into two segment 1. Capital expenditure -70 % 2. Working capital 30 %
Fund raising for Restaurants:
A good restaurant can be started with investment of around INR 2 lacs. Below are the very common funding resources for opening a restaurant.
- Own fund
- Bank Loan
- NBFC Loan
- Friends & relatives
- Crowd Funding
- MUDRA Loan
- Micro Finance
If you have prior experience in food business or professional degree in hotel management then fund raising become easy.
Restaurant business is very risky if you are depend upon single cook,single sales channel etc. To avoid risk build multiple client base,multiple cooks and highly motivated team.
Strategic tie up with online food delivery platforms like Zomato, Swiggy etc. will increase the profitability.
Growth strategy for restaurant
Once you start the restaurant and after two to three months period you do following
Add high value items on menu
Brand as specialized in one or two dishes like Gujarati,Italian etc.
Start tiffin services, home delivery for regular customers
Wait for three months to see the impact,most probably your cash flow will improve. To increase your cash flow more you can go for growth accelerators
A. Improve the interiors
B. Add fast food items in menu
C. Take help of food bloggers, influencers, celebrity cooks etc.
Above strategies will improve the cash flow significantly withing two to three months.
To become successful restaurant owner following qualities will help you 1. Honesty 2. Truthfulness 3.Interest in food Only need no greed 4. Helping others 5. Environment friendliness
For more details to start restaurant or increasing profitability , you can write to firstname.lastname@example.org
Last but not least – “Start small and become big.” Read Business growth book