How to Start a Restaurant Business with Minimum Money & Zero Experience?

How to Start a Restaurant Business with Minimum Money & Zero Experience?

Despite the tough hours and substantial risks involved, owning a restaurant business is the rewarding experience of one’s life. Or we can say that ‘passion to grow’ is the number one reason why people choose a restaurant business, even they’re out of money. Likewise, if someone has nurtured a lifelong ambition of opening a restaurant, and isn’t aware of the problems ahead, then this article is a must-read. 

What things to keep in mind when preparing a restaurant checklist?

  • What is the concept of the restaurant?
  • What are the total costs involved?
  • How to fund the idea?
  • Where to open?
  • How to choose a stellar menu? 
  • Are licenses required to start up the business?
  • How to hire the best workforce?
  • The number of vendors and suppliers to work with? 
  • What technology to install at the business place? 

Now, once we have gained knowledge regarding the important steps to start a restaurant business, let’s dive deeper.

1. Concept of Restaurant

Think about the idea! A person needs to keep every small and big thing in mind before deciding on the business concept. One being the amount of capital required. Next, compute the Average Price per Customer (APC) that could give a fair idea about how much money (on average) a customer would spend in a single visit. 

Once the concept is clear, think about the cuisine and theme of the restaurant. Also, the interior must be in sync with the theme. Moreover, it is essential to prepare a business plan for any new business as it would help a business person in planning the future development of his restaurant. Also, a business plan helps potential investors to decide if it’s okay to invest or not. 

2. Compute Costs Involved

Below are the significant costs a business owner must learn about when starting a restaurant business with low investment:

Food Costs-  

  • cost of all the raw materials
  • should be around 40 percent of the menu price. 

Overhead Costs– not related to food or labor.

  • Rent- not more than 10 percent of monthly total revenue.
  • Kitchen equipment- invest in the right quality items (cost varies accordingly)
  • Interiors– the cost depends on the budget. 
  • License- Based on business type, the license fee varies. 
  • POS-  The price depends on its functionalities and features
  • Marketing- spend 1-2% of total revenue on marketing expenses. Do both offline and online (digital) marketing– can do wonders. 

3. Get investment 

A small businessman can look for the following ways to raise money for his dream concept. 

  • Self-funding – savings could be a lifesaver. Or it’s a good idea to open a restaurant in partnership. 
  • Loan- a person must checkout the eligibility requirements. However, securing a bank loan include hassles, therefore, look otherwise. 
  • VC/Angel funding- find potential investors. However, it’s a difficult job, especially if this is a first-time venture.

4. Decide the location 

The location can determine the success of a restaurant. While choosing the business place, it is imperative to identify the biggest competitor in that locality–evaluate their progress and business model. Learning about the competitor would help a person to understand the customer base (their pocket size and preferences) that hovers in that area.

Furthermore, consider other factors too.

  • Visibility and accessibility- Upper floor locations aren’t suitable. The restaurant should be visible as well as accessible to the general public. 
  • NOC- Before opening a restaurant, a business person might also need a No Objection Certificate (NOC) from neighbors.

5. Design a Stellar Menu

Now its time to design a menu. Make it smart enough to create a significant impact on customers and food costs. It should comprise of items loved by the majority and those that get ready quickly. Moreover, incorporate dishes in the menu that use similar ingredients, as it would reduce the margin of food wastage and the overall food cost. 

6. Get all the licenses 

It is essential to acquire licenses from the government before starting a restaurant business. Apply for the permits early, to avoid any issue later as they may take a considerable amount of time to get approved. 

The cost of obtaining the following licenses varies as per the size of one’s venture.

  • Trade license from the municipal corporation
  • FSSAI
  • GST Registration
  • Professional Tax license
  • Liquor License
  • Business Registration 

Other licenses required: pollution control license, fire safety certificate, etc. 

7. Hire the best workforce 

The success of a restaurant business depends on hiring the right talent. Find out the referrals as it would be much better. In addition, there are a lot of active groups on Linkedin and Facebook, from where a business owner can source talent.

Generally, a restaurant requires three types of staff:

  • Kitchen staff- cooks, support staff, food preparation staff etc.
  • Service staff- waiters, busboys, housekeeping staff, etc.
  • Management staff- the restaurant’s manager, store manager, chef, cashier, etc. and they need to be experienced and educated.

8. Arrange vendors 

A strong relationship with vendors and suppliers is essential for the growth of a restaurant. Work with at least two-three vendors who are the best, in each category. Start with comparing prices and quality of products offered by them. This would serve as a backup if the problem comes up with any one of them. Furthermore, keep stock in bulk (for at least 3 to 4 days) in case of emergency situations. 

9.  Install the right technology

Restaurant technology is the most underestimated part of managing a restaurant. However, it is the most important one. A business owner must know about new age modern robust POS that offers a number of integrated features to a great extent.  

Final thought

The idea of owning a restaurant business with small investment is excellent. However, starting everything from scratch is a little daunting. With this article, we hope you are able to understand “how to start a restaurant business with little money” and with no experience!

Thank you for reading!

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