This is one of the ever-green businesses in India. However, starting a fast food business is not that easy.
Fast Food Business
About the business
It is a customer driven market. The entry to the market is very liberal and thus, there are a lot of different kinds of competitors in the market. The buying power of the customers is very high, thus the market is very profitable if you play your cards right. The switching power of the customers is very high, thus, the chances that a company can go out of business if not customer friendly is 100%. This industry is growing 40% annually and there are many global players and local players in the market trying to gather as much market share as possible.
Choosing your customers
There are a lot of niches in fast food industry. You need to choose the product that the people in your locality would be interested in buying. Next, find suitable resource which can produce these items from scratch. When it comes to fast food business, it is better to take up franchise of an already developed business. If you are planning to take up a franchise, then most of the start-up confusions would be reduced. On the other hand, if you want to start from scratch, you need to decide on the type of niche, the type of products, the main audience (college students, working people, children and so on) and the charging scale.
- Also Read: How to Start a Restaurant Business in India?
Starting up a franchise
Each type of company would have different rules that would make you eligible to take up their franchise. In this case, for instance, you get the franchise of a leading pizza shop. You need to take up their name, use their terms and conditions in terms of menu, interior designing, style of business and so on. You would earn a part of the profit that you make through the fast food center.
Requirements for starting from scratch
If it is a small road side venture, there is no requirement for registering your fast food company. But, if you are planning to take up a large business plan, you need to register with the Food Operator License from Food Safety and Standards Authority of India. It is a state level licensing and is valid for one year. You need to apply for the license for the establishment and also for service tax. The basic requirements are
- A space or a commercial area
- Utensils and other kitchenware items
- Human resource
- Tables, chairs
- Billing software (if needed)
- Interior designing
- Brochure or menu
Capital and return on investment
You would need a minimum of 350 square feet area for starting a medium scale fast food company. Let us consider that you would need a maximum of 8 people to cook, serve and maintain the business. The minimum investment that you would need for the above stated requirements would be around 25 to 30 lakhs for medium sized business and 10-12 lakhs for small scale business. If you are planning for a road side venture, you would be requiring less than one lakh as capital.
If you are planning to lease a place, you would need to deposit about 2 lakhs as security deposit and the lease would be usually renewed every five years in Indian market. With the consideration that your shop is exposed to 80% of the people who walk through it and about 20-30% of the people enter your shop to taste your food, you would be making 40% return on investment annually. A small startup company can aim at 15% return on investment per month. If you are planning to take up home delivery services, it would cost an additional 25,000 per month for the vehicle lease and fuel charges. If you are planning to take up bank loan and pay through EMI scheme, your return on investment would be higher and faster.
- What matters for increasing the exposure of your business is locality. Choose places where your target audience is very dense.
- Make sure that your business is attractive to children. It should be a place where children want their parents to take them to.
- Dense the human resource in production and service departments. Handle the administrative part by yourself to reduce the cost of start-up.
- You might not be able to see any considerable profit in the first few months. It would take a considerable amount of time to crack the market.
- Do not try to increase assets in the first year. Try to increase the customer base.
- Use daily offers and attractive discounts to attract the customers.
Starting up a fast food restaurant might not be easy or simple. But, the attractiveness of the market and the return on investment makes it a better choice to start a career.