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How to start a cafe in India? – Complete Guide

by ittisikhushi | Updated December 2019
how to start a cafe?

The competition for food business in India is fierce. Every other business aspirant in the country wants to jump in the food industry. Food businesses are mushrooming across cities like never before. But the harsh truth is, a very small percentage of these businesses manage to survive for even one year.

However, most of these businesses are in the form of small delivery only kitchens. The focus still is largely on Chinese and Indian food. And truth be told, they are just serving the demand. Burger joints, sandwich hubs, pizza outlets and cafes often find it difficult to attract customers despite low competition.

However, if you get the location game right for your café, there are great chances of growth. And the best part is managing the menu of a cafe is far easier than that of a proper restaurant.

We are going to discuss each and every aspect of the café business in this article –from setting one up to running it successfully.

How do I choose a good location for my café?

This always has to be the first step. Before you think of a name, before you buy a solitary spoon, you have to find the perfect location. India is large and diverse country and if you are living in a city like Delhi, the kind of customers, the choice of food changes every few kilometres. What works in Saket may not work in Laxmi Nagar.

Since we are talking about cafes, we need to first analyse the kind of customers who we are targeting. What you are selling in a café are burgers, sandwiches, beverages and a cozy place to chat and have a coffee.

You do not even need to stress your mind a lot to figure out your target customers. It’s the youth! However, there are two paths you can take your café too –either make it dim light, romantic kind of setup or make it everybody’s go to place like a café coffee day.

We strongly recommend the second option if your budget is limited. It’s more welcoming and the customer pool is large. The former option works only in big, lavish setups in posh localities.

Now, since we understand we need to target customers from the age group 35 and below, the location can be near offices or some college. A café may also work in a popular market but we strictly warn against investing in a local market, until and unless you want to rely heavily on deliveries. In such a scenario the local area should be densely populated and contain a large number of PGs and hostels.

Just remember, don’t compare your café with somebody’s Indian kitchen. The customers are vastly different. Supposedly a restaurant A is doing well in an area. It doesn’t guarantee your café would attract enough customers too.



What is a good name for my food outlet?

Do you understand how a search engine works? We are not diving into that at the moment but you need to understand it’s crucial for you that you select a name for your café which includes a popular search term.

What are some food outlets which expanded fairly quickly? Check out these names – Burger Singh, Burger King, Pizza Hut, Café Coffee Day, Chai Point, Wow Momos. Did you notice how each of these successful food businesses include their product in their names?

Imagine you are specializing in sandwiches and you select the name ‘Healthy and Fresh’ for your outlet. Somebody else chooses ‘Sandwich Station’. Who do you think would have an edge when somebody searches ‘Sandwiches near me’? Do you get it? Don’t make it hard for Google. One look at your café and the customers should immediately be able to picture the food you offer.

Licences and Formalities for setting up a cafe in India

Now there can’t be one fixed answer to this section. Formalities change from area to area, however there are some basics that you have to cover at any cost before you even cut that ribbon. Here’s a list.

-Food Licence

-Trade Licence

-Fire Safety Precautions

-GST Registration

Obtaining a food licence is easy. There are several agencies that can help you with the procedure, just Google for one in your area. Maintain a hygienic kitchen at all times.

Trade licence involves several small formalities. It’s slightly a more complex process. Several local corporations now offer online application for Trade Licence. Check out on the internet if yours does.

Fire Safety norms are one of the first things that should be on your list. The guideline for larger restaurants is slightly stricter. Small outlets can get away with just a fire extinguisher. However, for your own safety, follow fire safety guidelines at all times. Restaurants and cafes are always vulnerable to fire accidents.

Furnishing and Choosing Interiors

Now since we already prefer an open for all, welcoming café. Choose light colours. Do not add more than three to four colours in your interiors. Just Google for colour schemes. There are plenty of ideas available on the net.

how to choose the right interiors for restaurant?

Furnishing should be comfortable. Those steel-wood chairs won’t do. Select cushiony chairs, mini sofas and scatter them around. You might feel the urge to shove in as many chairs as you can but a neatly spaced café looks more attractive. Do not clutter!

You need a counter setup. While you may opt for steel, the old fashioned wood with some simple mica is not bad either. Include a refrigerated display counter in the array if you plan to serve cakes and pastries.

There are two affordable options for walls -textured paint or wallpaper. They both look great. However, wallpapers are prone to termite attacks and naughty children.

Don’t ignore the floor! Vinyl flooring is a great new option to go with. We personally recommend a wooden texture, looks super classy. You can simply paint the ceiling in black. Some white surface lights on it would look fantastic.

Lights are the life of any café. You got to find the perfect blend between warm and white lights to get the setting right.

 



How to finalize the menu of my food business?

Don’t try to sell something of everything. Select at best 4-5 categories and specialize in them. Think of McDonalds, they don’t try to make Pav Bhaji or Butter Chicken. They are successful just selling burgers.

Pricing the items is a tricky part. 80 % of your items should give you at least 50% margin. However, don’t get too pricy.

Try to create a balance between your raw material costs and quality. 10% of your items should be very affordable. They would draw customers to you. And once they start loving it, they might try the pricier items as well.

And yes, the last 10% of your items should be slightly in the exotic category. Even if you sell a single piece of that in the day, you would make more money than selling multiple items from the affordable range. The idea is, there should be something for everybody.

Do I need a chef for my cafe?

Honestly speaking, you don’t until and unless you decide to add Pizza to your menu. It takes some expertise to pump up that dough. All the other regular café items are just some sauces, some bread and some vegetables. Experiment with the correct blend. Take help of YouTube. And once you get everything sorted, hire freshers and teach them everything.

Most ingredients you need in a regular café menu come readymade these days. Several companies sell frozen patties, pizza cheese, packaged sauces, artificial flavours, breads etc. You just have to get your suppliers sorted. Indiamart.com can be of great help in this.

But of course if you want to skip all this, just hire a chef.

What kitchen equipment do I need to start café?

There are some basic machines that you need – griller, pizza oven, microwave, fridge, deep freezer, stove or induction, mixer, steamer. Apart from this get minimum cutlery. Use disposable, biodegradables for serving and packaging -The lesser utensils in the sink, the better. Since we are talking kitchen, you might want to leave that kitchen open, just like McDonalds. It helps develop customer confidence in your brand.

kitchen equipments needed in a cafe

Again, there are several kitchen equipment sellers which would happily deliver to your doorstep. Justdial.com can be a handy website for this. Several others have their own website. A lot of India made, restaurant specific equipment are also available in the market. And they are not too bad either.

You would need an entire range of little tools and utensils for your kitchen, buy them as you need them. Your chef would help you with that and if you are not planning to hire a chef, note down all that you see in those tutorials.

 

Maintaining a supply for raw materials

Not everything can be sold online. Some connection with local sellers would help you maintain a regular supply of FMCG products, vegetables etc. However, just check if the new startup kid in the block, Udaan is operational in your area. They provide fresh vegetables and groceries at wholesale rates!

Don’t ditch the local Mandi for anybody though. That place is the lifeline for all your emergency needs. You still can’t overly rely on technology in India.

You need to maintain stocks of your frozen raw materials like cheese in your deep freezer all the time. Keep a record of every single packet that is put in use. It would help you in many ways.

Promotions and Advertisements

Nothing works like the old pamphlets in food business. People just love to order from a menu in their hand. You can easily get 5000 pamphlets printed for as much money. Distribute them at crossroads. Slip them under doors. Put them inside newspapers. They work!

Instagram is the best place for food related ads. Just ensure you target your immediate circle, not wider than 3 KMs. Save phone numbers of all customers who visit your café. Send out offers to them later on.

India is a price-centric market. Whatever boards you put outside your café should defiantly mention the price of your cheapest product. Do not put out the whole menu. A graphical representation of your major items would catch eyes.

Get yourself registered on delivery platforms like Swiggy, Zomato. Invest heavily in them. Run offers regularly. Place banner ads once every month. Get noticed. Aim for good ratings. And you are set. People in India are heavily relying on these apps. And you need to hit the trend!

And while you do all the promotion, just remember it's indispensable to create a strong bond with the customers. Interact with them. Be nice to them. And make them feel comfortable. The jostle in the market is for a customer's heart more than anything else.

 

And that concludes our guidebook for starting a café in India. Go grab that dream of yours!