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Learn the essential steps to launch your restaurant and secure the required financing.
Starting a restaurant business can be an exciting venture in India, a country with a rich and diverse culinary heritage. It offers an opportunity to tap into a booming food and hospitality sector. However, the path to success involves careful planning, a solid business model, and securing the right kind of financing.
A well-crafted restaurant business plan is essential to guide your efforts, attract investors, and secure loans. Your business plan should detail the concept of your restaurant, market analysis, financial projections, marketing strategies, and operational plan. By securing financing, you can cover startup costs such as rent, equipment, staff salaries, inventory, and marketing.
Know how to start a restaurant business in India and secure financing to bring your idea to life.
There are many important steps involved in the process of creating a robust restaurant business plan. Each is crucial to ensure smooth operations and long-term success. Here’s a step-by-step guide:
Step 1: Define Your Restaurant Concept
Decide the type of restaurant you want to open, such as casual dining, fine dining, fast food, or a café. This concept will guide your restaurant’s décor, menu, target market, and pricing strategy.
Step 2: Create a Business Plan
A solid business plan is essential to secure financing and ensure smooth operations. Your plan should include a detailed market analysis, financial projections, operational plans, and a description of your restaurant’s concept.
Step 3: Secure Financing
Depending on the size and location of your restaurant, you may need significant capital to cover initial expenses. Explore business loans and other funding options available through various lenders to kickstart your business.
Step 4: Choose a Location
Location is critical to your restaurant’s success. Look for a place with good foot traffic, visibility, and accessibility. Consider factors such as the local demographics, competition, and rent costs.
Step 5: Hire a Team
Hire experienced chefs, kitchen staff, and front-line employees to ensure smooth operations. It’s essential to choose people who align with your restaurant’s ethos and are capable of providing excellent customer service.
Step 6: Market Your Restaurant
Developing a marketing strategy to promote your restaurant is crucial. You can use social media platforms, food bloggers, and influencers to create buzz around your restaurant. Offer promotions or discounts during your launch phase to attract customers.
In India, there are several registrations and licenses you need to obtain before starting a restaurant. Have a look at why understanding these are vital to your restaurant’s business plan:
The Food Safety and Standards Authority of India (FSSAI) is mandatory for any food business. Ensure you get the necessary registration from the FSSAI so that your business is compliant with health and safety standards.
GST registration is mandatory if your restaurant’s annual turnover exceeds the specified limit.
This license is mandatory for all businesses, including restaurants, to operate legally in India.
If your restaurant plans to serve alcohol, obtaining a liquor license from the local excise department is necessary.
Depending on your location, you may need a health trade license from the local municipal corporation.
Starting a restaurant in India requires meticulous financial planning. Factors such as the city location, type of cuisine, target market, and the scale of the establishment can significantly impact investment requirements. The following analysis provides estimated costs for Tier‑1, Tier‑2, and Tier‑3 cities, showing how these elements influence overall capital needs.
Tier 1 Cities: Cities such as Mumbai, Delhi, and Bengaluru have high rent, labour, and operational costs, which significantly increase the initial investment required to start a restaurant.
Tier 2 & Tier 3 Cities: Cities like Jaipur, Kochi, Patna, and Indore offer more affordable property and operational costs. Such costs help make it easier for them to establish and operate a restaurant with lower capital requirements.
| City Tier | Small Restaurant (₹) | Medium Restaurant (₹) | Fine Dining or Premium Restaurant (₹) |
|---|---|---|---|
Tier 1 |
₹15–40 Lakhs |
₹40–80 Lakhs |
₹80 lakhs – ₹2 crores |
Tier 2 |
₹8–20 Lakhs |
₹20–50 Lakhs |
₹50 lakhs – ₹1 crore |
Tier 3 |
₹5–12 Lakhs |
₹12–30 Lakhs |
₹30 Lakhs – ₹60 Lakhs |
Disclaimer: These cost figures are indicative and meant for illustrative purposes only and do not guarantee actual expenditure patterns. Actual investment needs may vary significantly depending on location, brand, property terms, and market conditions. It is important to consider consulting experts for precise budgeting.
What you require is a solid financial restaurant business plan. A well-thought-out business model and appropriate financing options are key to success. Let’s explore the uses of business loans for a restaurant.
Take a look at the uses:
Equipment and Furniture
Loans can help cover the cost of kitchen equipment, furniture, and décor to create a functional and inviting atmosphere.
Inventory Purchase
Business loans can assist in purchasing essential inventory like ingredients, packaging, and other consumables that you’ll need to run your restaurant.
Rent and Lease Payments
A significant portion of your restaurant's expenses will go toward rent, especially in prime locations. Financing can help cover these expenses, especially during the early months when revenue is low.
Marketing and Promotion
To attract customers and build brand recognition, you'll need to invest in marketing strategies like social media ads, influencer partnerships, and promotional events. Loans can provide the financial cushion needed to implement these strategies.
A business loan allows you to access the capital you need to open and sustain your restaurant without waiting for long periods.
Most lenders offer flexible repayment options that suit your business's cash flow, which can ease the financial pressure.
The interest paid on business loans is often deductible as an expense, reducing your taxable income.
Refer below table:
Lenders |
Starting Interest Rates (p.a.) |
|---|---|
14% p.a. |
|
22% p.a. |
|
16.50% p.a. |
|
18% p.a. |
|
18% p.a. |
|
19.20% p.a. |
|
20% p.a. |
|
24% p.a. |
|
24% p.a. |
|
22% p.a. |
|
22% p.a. |
|
20.50% p.a. |
|
29.50% p.a. |
|
15.50% p.a. |
Disclaimer: The mentioned rates are subject to change at the lender’s discretion.
Indian citizenship
Age between 21 and 60 years
Minimum 1 year of business operation
Good credit score (700+)
You must either be a self-employed professional or a non-professional
Your business should be registered as a partnership, limited liability partnership, or private limited company
Minimum turnover of ₹1.5 Lakhs by business annually (according to ITR)
Identity Proof: PAN & Aadhaar card, Voter’s ID, Passport, Driving License
Address Proof: Aadhaar card, utility bills, lease agreement, passport
Income Proof: Bank statement for the last 6 months, income computation, Profit and Loss (P&L) statement, balance sheet for the last 2 years, Income Tax Returns (ITR), along with certified copies containing the relevant details
Business Proof: Partnership Deed copy, certified copy of the Memorandum, Sole Proprietorship Declaration, and Articles of Association
When seeking a business loan to establish a restaurant in India, lenders evaluate both personal and business financial credibility. A strong personal CIBIL score, generally 700 or above, reflects consistent repayment history and financial responsibility, which can reduce the likelihood of loan rejection and help secure more favorable interest rates.
If the restaurant is registered as a company or partnership, lenders also assess the Company Credit Report (CCR). Provided by credit bureaus such as TransUnion CIBIL, the CCR details the company’s outstanding liabilities, repayment patterns, and overall financial exposure. It also includes a CIBIL Rank ranging from 1 to 10, where Rank 1 signifies the highest creditworthiness.
Maintaining timely payments, minimising overdue accounts, and ensuring compliance with statutory obligations at both personal and business levels can significantly enhance loan approval prospects. This dual evaluation enables lenders to gauge the financial stability of a restaurant business and support structured funding for infrastructure, kitchen setup, staff salaries, and operational expenses.
The application for a business loan on Bajaj Markets is a simple, fast, and entirely digital process. Have a look at the steps below to apply:
Step 1: Hit the ‘CHECK ELIGIBILITY’ button on this page.
Step 2: Fill out the form with your personal and business details.
Step 3: Choose a lender from the list provided.
Step 4: Select your desired loan amount and repayment terms.
Step 5: Submit your application form for processing.
Starting a restaurant business in India requires careful planning, the right location, a solid team, and sufficient financing. Securing a business loan can provide you with the necessary capital to launch and grow your restaurant successfully. Whether you need funds for equipment, inventory, or marketing, Bajaj Markets gives you access to various loan options to suit your needs, making it easier to realise your restaurant business dream.
The Government of India has introduced several schemes to provide financial assistance and support to Micro, Small, and Medium Enterprises (MSMEs). The programs listed below can help restaurant owners access funding, develop infrastructure, enhance skills, and grow their business operations effectively.
| Scheme | Description |
|---|---|
Collateral-free loans to help small businesses, including restaurants, finance setup, equipment, and working capital. |
|
Provides guarantee-backed loans without collateral for small enterprises, enabling access to bank funding. |
|
Supports SC/ST and women entrepreneurs by providing loans to start new businesses, including restaurants. |
|
Offers subsidised loans to micro and small enterprises for establishing new businesses and generating employment. |
|
Skill Development & Entrepreneurship Programs (PMKVY / NSDC) |
Provides training, mentorship, and business skills to help restaurant owners and staff improve operations. |
Technology Upgradation Fund Scheme (TUFS) |
Supports small businesses in upgrading technology and equipment for improved efficiency and service quality. |
| Scheme Name | Description |
|---|---|
One District One Product (ODOP) – Uttar Pradesh |
Promotes district-specific products and businesses; helps restaurants gain recognition and local support. |
Maharashtra MSME Development Scheme |
Provides financial incentives, subsidies, and skill development for small and medium enterprises, including restaurants. |
Karnataka Creative Industries Support |
Offers funding, mentorship, and business advisory support for creative and hospitality enterprises like restaurants. |
Tamil Nadu MSME Promotion Policy |
Grants financial aid, infrastructure support, and training programs for small and medium businesses in the hospitality sector. |
Gujarat Startup & MSME Support Program |
Provides financial assistance, capacity-building, and marketing support for new and existing restaurants. |
Andhra Pradesh ADEETIE Scheme |
Encourages adoption of energy-efficient technologies to reduce operational costs for small and medium enterprises, including restaurants. |
Disclaimer: These Central and State Government schemes may or may not apply to funding a restaurant business. It is essential to review the eligibility criteria, terms, and conditions of each scheme before applying to ensure accurate and effective utilization of government support.
Starting a restaurant in India typically requires an investment ranging from ₹15 Lakhs to ₹1.5 crores, depending on factors such as the restaurant's format, location, and size. Quick Service Restaurants (QSRs) and cloud kitchens may cost between ₹5 Lakhs and ₹25 Lakhs, while fine dining establishments can exceed ₹1 crore.
Restaurants can be profitable, but margins vary widely based on location, cuisine, scale, and management efficiency. Small cafés may see modest profits, while well-managed medium or fine dining restaurants can achieve net margins of 10–15%. Effective cost control, menu pricing, and consistent customer flow are key to profitability.
Quick-service restaurants (QSRs) or small cafés are generally easier to start. They require smaller space, limited staff, simpler kitchen setup, and lower capital. These models focus on fast food, takeaway, or beverages, reducing operational complexity compared to full-service or fine-dining establishments.
To secure a loan for a restaurant, approach banks or NBFCs with a detailed business plan, projected revenue, and personal credit score. Registered entities can provide a Company Credit Report (CCR). Loans can fund kitchen setup, interiors, equipment, inventory, and working capital, often supported by MSME government schemes.
Yes, the restaurant business can be highly profitable if you offer quality food, maintain excellent service, and market your restaurant well with a solid business plan.
The cost of starting a restaurant varies depending on the location, concept, and scale of operations. On average, you may need ₹10-50 Lakhs to start a restaurant. However, the investment can be higher in metropolitan areas or more upscale concepts.
Yes, you can hire professional business consultants or agencies to create a detailed business plan that will help secure required financing.
Yes, most lenders will require a well-structured business plan to assess the viability and profitability of your restaurant business before approving the loan.
