How to set up a restaurant business in India:The Restaurant Business Plan in India 2021
Restaurant Business Plan

Did you know the restaurant business in India has grown from 3 lakh crores in FY15 to around 4.2lakh crores in FY20? The Indian food business is expected to grow at an impressive 14.2% by the year 2024. Factors like the growth of the middle class, urbanisation, adoption of western lifestyle, and more women entering the workforce have led to this growth. 

Indian is a very diverse country, and so is its food. We as a nation love food, and our food is famous for its flavour, colour and texture across the world. While we have a unique food culture, Indians eat less outside food than their global peers. But we are experiencing changes, with the restaurant industry seeing robust growth in the last decade. 

Opportunity in the restaurant business in India : –

India’s food industry is diverse, compromising roadside eateries, dhabas, cafes, chain and independent restaurants, bars, pubs, and lounges. Market share of the organised business, i.e. standalone and chain eateries, has increased from 30 to 38%, and the unorganised share has decreased from 67% to 60%. Even though the industry remains primarily unorganised, there is a trend towards formalisation as more players enter the industry due to growth opportunities.   

While the pandemic and the subsequent lockdown have disrupted the F&B industry, it has also opened new doors for innovative ideas. Cloud kitchens is the new kid on the block that has thrived during the pandemic period. Cloud kitchens are food businesses that don’t have a dine-in space or store presence. The entire business is based on food delivery. 

Some start-ups like Rebel Food which operate numerous cloud kitchens in India and abroad, have already attained an Unicon status and is now valued at USD 1.4 billion. Startup like these have inspired people to do their own Bar and restaurant business planning. Even after the lifting of lockdown and opening of other competition cloud kitchen are still seems to be in demand.   

The other phenomenon is the exponential growth in online food ordering. Even in the pre-pandemic era, online ordering and delivery service has seen a 300% faster rise in business since 2014 than dine-in business. Food delivery aggregators Swiggy and Zomato have given a platform to many unorganised players, thereby giving new options for clients to order from and increasing the demand. Due to restrictions on dine-in eateries, many restaurants have been forced to tie up with food aggregators, growing clients’ options. 

Analysing the Market for your food business plan :

One of the sad truths about starting a business is half of them don’t make it past their 5th anniversary. Conducting a market feasibility study hence is a prerequisite to overcoming avoidable pitfalls for a budding enterprise. Analysing the market forms a crucial pillar of your restaurant business plan in India.

These are some steps you should take to analyse the market: – 

Understanding the Trends: –

Restaurant consortiums like the National Restaurant Association of India and other industry publications issue periodic research on market trends. These studies show the business verticals that have performed well and one that hasn’t. Once you get a basic understanding of the overall market trends, you can work on your business plan and do a market feasibility study. There are professional consultancies that can help you with setting up a bar and restaurant business plan.

Understanding Demand: –

For any business to prosper, you need to understand the demand for the product or the service you intend to see. When analysing the demand, you need to check if there is any competitor in your location and, if yes, would there be enough demand for a new entrant to sustain and survive. Identify any demography that hasn’t been catered to, e.g. family or working professional. Designing a concept for this untapped market will give you a competitive edge against your rivals. Prepare a revenue potential report to get a tentative idea of possible revenue generation. 

Understanding local market: –

Local rules and regulations differ from state to state and city to city. It would help to analyse the cost of getting the licences and other government approvals to open a food business. One also needs to understand the local tax structure. Even though GST has rationalised the taxation, some components like liquor are yet out of this bracket. Some states levy more taxes than others on liquor, and this will affect the future profitability of the business. You need to count in this factors before you set up restaurant business in India. 

Menu engineering and the Concept selection for restaurant business plan: –

Concept and the Menu are the souls of the restaurant business. The restaurant concept is a broad term used to describe the components like cuisine and the theme of the food business. We can elaborate on the details as below: –

Menu:-

The middle, Top right, and Top left are the prime real estates of a Menu. The customer tends to look first in these spaces. When designing the menu, place the most popular and the highest revenue-generating items and the dishes in these three prime real estates. Creating a short description of cuisine or its ingredient helps the guest make an informed decision and avoid any further complaints or confusion.

Cuisine: –

The type of cuisine you choose for your restaurant depends on the demography of the restaurant’s location. It is not advisable to open a Korean or Thai restaurant in a middle-class area. The chances of such eateries succeeding are less due to low awareness and the high cost. 

Theme: –

Word of mouth plays a vital role in attracting business for a new restaurant. One should choose a fresh theme and market it uniquely to grab attention. A restaurant with a unique concept can collaborate with food bloggers and influencers to gain digital platforms. You can do research online and choose a theme that is innovative and practical. 

Business model:-

Restaurant business models lacked robustness; one had to make a considerable investment to start a new venture. However, the pandemic has caused the business owners to revisit the strategy and accept a lean business model. 

There are three business models which have evolved with time. The minimal expenditure model includes businesses like food trucks, cloud kitchens, etc. The second model is the mid-range model like cafes, bakeries, small restaurants, and the last is fine dining, which requires higher investment and, if successful, will also yield higher returns.

Target Clients:-

Once you have a business model, you need to define who your target customer is. Your restaurant theme and concept have to be worked out on the needs and aspirations of this target customer. As you decide on the restaurant location, you need to be mindful of the area’s demography and economic profile. The demographics and the location are crucial to understanding the food business’s sales potential in that area. 

All your marketing has to be focused on your target client. For, e.g. If you are opening a fast food business, your target will be primarily students and youngsters; however, if you are opening a dine-in restaurant, you have to target both youngsters and family groups.

Understanding competitors: – 

Once you prepare a target customer profile, work on your competitors. Analyse how your competitors function and what they do and don’t do, which have made their business model successful. 

Try to understand if there are any market segments your competitors are missing out on. Are there any gaps in the service your competitors are providing? If yes, try to cater to them by making some changes in your restaurant concept; this will give you a competitive edge.  

Along with market segments, you also need to know your competitors’ pricing; in comparison, your products need to be priced competitively. Reverse engineer your rivals’ marketing strategy on social media and implement a better plan to market your products more attractive.

Conclusion

Pandemic has caused great distress to the F&B industry, but things are returning to normal. India had faced a severe second wave of COVID, making most of the population immune to the disease. The government has managed to improve the vaccination rate. The possibility of the third wave is either ruled out or is predicted to be localised. We already see green shoots of recovery in the food industry. We hope the worst is over, and this is the best time to start a new food venture.  

 

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