Opening a new restaurant is not an easy task especially when yours is not yet a recognised name. Nowadays restaurants especially Cafés have become quite popular. Cafés seem to feel like a sure shot return investment. Some even consider it as an easy ladder to riches.
Restaurant – Easy Money?
The lure of quick money has been there always and the recent spade of restaurants and café eruption in india only fuels the speculation that it’s an easy money making scheme
Not to dampen your enthusiasm, but, so many times have I come across people who are absolutely sure of their returns and just need a good designer to kick start their dream project. While explaining the costs involved, it seems most of these enthusiasts are actually quite unaware of what actually goes into opening a restaurant.
While the gleam to share costs by having multiple ‘friends’ as partners is surely bright, it does not reflect the true future of either the costs or the schematics of a more practical approach.
A few unusually missed pointers:-
1) More Partners, More Disputes
It’s essential to define what happens in case of a dispute and which partner gets the deciding vote in normal day to day operating decisions.
2) Holding Power –
Irrespective of how much money opening a café costs, what defines your scale of survival is how much money have you kept aside for the operating costs. Atleast first two years backup should be there.
3) Outer Area Schematics
A restaurant should have an inviting look. A good welcome message with visible interiors are much more preferable for unknown brands unless you have extra money to spare.
4) Walk in Customer Base –
The success of a restaurant largely relies on walk in customers. This basically translates into the location of the restaurant. A good café located near colleges or schools or educational institutes with a reasonably priced menu is a good start. A good commercial location where maximum number of walk in customers could be had is a nice cushion for earlier recovery of operating costs.
Do your own survey to find a suitable location. Be mindful of the fact that a good location demands more rent. disclose before signing on, that you would be opening an eatery – not every lesser is okay with eateries.
5) Make it Tangible –
Just opening an app with home delivery is not everyone’s cup of tea. There are still app maintenance, server and other maintenance and operative costs. Out of the recent apps that have cropped up – how many were actually successful?
6) Know Your Opposition, Know your Menu –
Once you have finalised the location, you must decide on your cuisine – wether it is chinese or italian or my favourite indian. Check out your competition, have food there, note their menu, note the service standards and the quality. Think wether you would like to go for a similar decor or have your own seperate decor and risk standing out.
Why has nobody else chosen a more stand out decor? Such questions are pertinent. You may choose to hire a reliable restaurant marketing company to help you decide your menu.
7) Know Your Customer –
It is not enough to know your menu because while it may appear you have everything sorted out, the menu is only as good as the purchasing power of your customer. Price your menu competitively to the surrounding area. Remember it does not matter how much you have spent on your setup – a customer is not obliged to cover your costs, it is after all a service industry – a resonably priced menu with mass resturns should be a good starting point.
8) Uniqueness –
What exactly is new that you are offering? Maybe no one else is offering pizza and you come out with your own double cheese pizza. Maybe you bring in a two floor open layout, an open yard with trendy graffiti and darker interiors, an open barbeque, a canopy layout on a terrace, offer live music, standup comedy, a dance stage, a hangover area, a small divider between each booth or a seperate booth concept, a dark wooden look interior with teak wood or a light marble/ tiled look. Luxury chairs or practical reusable ones – benches have come back as a concept even in luxury restaurants.
1) Your Restaurant will require a Point of Sale Terminal –
‘Rs 1-3 lacs’. There are many point of sale software vendors right now in the market and hiring any one will do. Almost all of them help you track your inventory and sales on a touchscreen while some even offer app integration that helps you track the same while away from office. You also have to bear annual maintenance and subscription charges in the range of ‘Rs 5,000-20,000’ for some of them.
2) Proper Ventilation –
If your café is spaced out in a larger area like 1100 square foot then atleast two-three half-ton air conditioners are recommended – ‘cost 2-3 lac Rupees’. This is a variable cost and can be managed by not going for ACs. The concept of central air conditioning may substantially increase your costs.
3) Interiors –
This again is a variable cost but considering a space of 1100 square foot you should expect a costing of about ‘Rs 12-15 lacs‘. nowadays the unsettled look is quite the trend – we dont paint the walls instead just work on cementing it beautifully.
4) Commercial Kitchen –
‘Rs 5-20 lacs’ minimum. These entail mostly stainless steel equipment. A restaurant requires a kitchen that is regular in use by multiple hands. It needs to store large amounts of inventory as well as a fast moving stove area. your regular home kitchen proves inefficient for such rigorous usage. commercial kitchen can require :-
- A Freezer – To help save your food from getting ruined a good sized commercial freezer is needed – ‘Rs, 10,000 above’.
- Bain Marie Counter – With hot and cold or just cold storage – similar to something like the Subway® food storage counter. Have you ever noticed where normal food court stalls present their food – ‘25,000 Rupees and above’ – depends upon the length and the type of storage.
- A Griller – A simple sandwich griller may come anywhere above ‘1,000 rupees’. Bigger ones as per requirement.
- Multi-Level Oven – ‘Rs 1-5 lacs’. A pizzeria may require this. Be sure to check that it allows for the maximum groovy pizza size that you plan to offer!
- Stall Counters – An ice cream freezer counter, salad counter, bar counter. ‘Rs 10,000 and above’.
- Ovens with Conveyor Belts – A bakery may require specific ovens for cupcakes – ‘20,000 Rupees’ for small and in lacs for ovens with conveyor belts.
- Tandoor For Grill, Barbeque and Roti Servings – ‘Rs 5,000 above’. You may decide to get a customized tandoor or make your own tandoor.
- Dough Beaters/ Kneaders/ Mixers – Pizzas and rotis can also use seperate dough beaters – ‘Rs 4,000 above’.
Note:- Always hire proper and experienced professionals to avoid injury and loss.
5) The Rent –
Most restaurants find it difficult to recover their rent in the first few years. The higher the rent, the better the location and footfalls. It is a see-saw between average location and less footfall v/s luxury location and more footfall. Inexperienced players should choose to limit this liability as much as possible.
6) The Water and Electricity Bill –
Your premises owner will not cover the additional costs of water and electricity. A normal rent agreement clearly defines that such overhead costs are to be borne by the party using the premises.
7) The Staff Salary –
The staff salary, including but not limited to the uniform cost of the server, captain, chef and manager. In case a dress code is implemented for the staff then that has to be borne by the restaurant owner. There are specialised dealers who make most commonly used dress codes for staff – ‘5,000 Rupees and above‘ per shirt
8) Cost of Counter –
Teak wood with clear grains walnut polished or simple deco paint using plywood – ‘cost Rs 6,000 -50,000 ‘. Making a counter mixed with mdf or iron may prove to be less expensive.
9) Cost of Layout/ Designs –
For example having an open kitchen visible to guests. While open kitchens have been popular but not all layouts are suitable for it. Often a bad layout dampens the mood of the place. Check with a proper designer so that you don’t lost customers on account of over enthusiasm.
10) Multiple Chefs –
Mostly people believe hiring one good chef is enough in the beginning – this is a grave misconception which often leads to unrepairable and disreputable situations. Restaurant business is a very fast moving business with a high attrition rate – for example if you are offerring 10,000 rupees and your competitor offers a little extra then the probability of losing staff on pay variation or for that matter on any other account becomes high.
As such if one day your chef does not arrive, then how will you serve? It’s recommended to have atleast three chefs including a head chef who decides your menu. A decent head chef can charge anywhere between ‘Rs 30,000 and above’ while junior chefs can be hired with pay variations – ‘Rs 10,000-30,0000’.
Best Be Prepared
A Simple Rule of Thumb against unexpected expenses is that atleast 2-3 years of operating expenses must be kept aside before leaping onto your dream Café. A 1100 square foot restaurant on an average rent of ‘Rs 1-1.5 lacs’ should set one back by atleast ‘Rs 3-3.5 lacs’ per month.
Even then, success is never a guarantee. It’s a measure of so many factors combined and remains elusive at it’s will. Always remember to have a backup plan and never put all your eggs in one basket.
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