Churning out good food is an art, as it integrates passion, emotion, integrity and love. When the whole recipe comes together to cater to the universal love called food, it is nothing short of magic, and everyone craves for this experience, time and again. The restaurant industry has tapped on this penchant for food and has always been renowned as one of the most reliable and profitable industries to invest on. The humongous population, upswing of the economy, rise of disposable incomes have catalysed the growth of Indian restaurant industry in recent years. If one is passionate about food and has an ability to smartly balance the satisfaction between the palate and wallet of its patrons, one is bound to be successful in this industry. In terms of magnitude, the Indian restaurant industry is the third largest among service sectors and caters to a variety of target audiences with categorised segments such as fast food, fine dining, casual dining, speciality restaurants to name a few.
The restaurant industry has become increasingly competitive and expansively diverse, owing to our assorted culture and introduction of foreign cuisines. These factors continue to propel the growth and are set to touch a staggering $78 Billion by 2018. Up to 70% of the restaurant industry is dominated by the unorganised sector, while the other 30% of organised sector is set to touch $28 Billion by 2018. The restaurant industry is an integral part of economic development as it creates millions of jobs directly and indirectly as well as contributing to around 2.3% of total GDP. While restaurants in all segments continue to grow, the mid segment with Average per Customer Check of Rs. 500 to Rs. 1500 has seen a tremendous growth over the last decade and is touted to grow aggressively in the future as well.
On an average, it would cost anywhere around 20 lakhs to set up a small restaurant and around 50 lakhs to set a medium restaurant and a set up consisting of more than 120 seats would easily put you back by anywhere between 75 lakh to 1 Crore, depending on the demographics. Statistically, it is revealed that a restaurant makes around 30% returns annually and if managed with proper systems and processes returns can go as high as 50%, which leans comparatively on the higher side compared to other industries. On an average, the gestation period for restaurants to break even ranges anywhere between 12 months to 5 years, depending on various factors. The lucrative statistical and proven data is now driving more food passionate entrepreneurs to start up their own restaurant, who are now being increasingly backed up angel investors. From investors perspective, everyone is keen to grab a pie of the restaurant business, as they perceive it as a risk proof portfolio, and the funding on the restaurant segment will continue to swell in the coming years.
Consider a city like Bengaluru, where a restaurant can generate great demand for a variety of cuisines, owing to its cosmopolitan nature. From local delicacies, national cuisines and international flavours, one can experience it all in Bengaluru, with each having their own loyal patrons. Speciality restaurants, food courts, quite bite shops, home delivery, home cooked foods have literally opened a new stream of avenues for entrepreneurs, who are now more than willing to exchange their cooking talents to make a quick buck.
On the flip side, the restaurant industry has its own set of disadvantages. Increasing, competition, food inflation, the introduction of new taxes, constant change of laws and fickle mindedness of people are some of the challenges for a restaurant industry. Shwetha, Managing Director of Nandhana Group of Hotels, which has 13 branches spread across Bengaluru explains, Apart from the said challenges, one has to keep in mind the universal rule of food, keeping the taste constant, day after day. Therefore, retention of patrons is an effort in itself. Also, one should have an intricate understanding of the business; sometimes good food might not be enough, operational skills is also equally important. Thats the reason why only 1 out of 100 restaurants survives for more than 5 years on an average.Add to that, the challenge of labour, as the industry is always short staffed and retention becomes increasingly difficult, as they tend to switch from one restaurant to other as there is no dearth of opportunities for them.
A restaurant start-up is more likely to survive in the current state of Restaurant Industry in India. After all, the business doesnt ask for skilled geniuses but instead demands a passion for cooking and a penchant for spreading the happiness through food. If you can translate your passion into a restaurant, rest assured, there is no scarcity of people to step into your restaurant for the food they deserve. BusinessEx.com is a networking platform that provides you with an opportunity to find an established restaurant business easily and fulfil your needs as an entrepreneur.