How to Start a Restaurant Business & Secure Financing for It?

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:

FSSAI License

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

GST registration is mandatory if your restaurant’s annual turnover exceeds the specified limit.

Shop and Establishment Act Registration

This license is mandatory for all businesses, including restaurants, to operate legally in India.

Liquor License

If your restaurant plans to serve alcohol, obtaining a liquor license from the local excise department is necessary.

Health Trade License

Depending on your location, you may need a health trade license from the local municipal corporation.

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.

Uses of a Loan for Restaurant Business

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.

Refer below table:

Disclaimer: The mentioned rates are subject to change at the lender’s discretion.

• Eligibility Criteria
  

  • Indian citizenship
    

  • Age between 21 and 60 years
    

  • Minimum 1 year of business operation
    

  • Good credit score (650+)
    

  • Minimum turnover of ₹1.5 Lakhs by business annually (according to ITR)
    

• Documents Required
  

  • Identity proof (Aadhaar and PAN)
    

  • Proof of business ownership (Declaration of Sole Proprietorship, GST registration, Certified copy of memorandum, Partnership deed)
    

  • Bank statements for the past 6 months
    

  • Financial statements (Balance sheet, profit & loss)

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.

Several government initiatives are available to support small businesses in the food and hospitality sector. These schemes offer financial aid, easier access to credit, and opportunities for growth and expansion:

Prime Minister’s Employment Generation Programme (PMEGP)

The PMEGP Scheme helps aspiring entrepreneurs establish new businesses by offering financial subsidies. Restaurant owners, especially in rural or semi-urban areas, can benefit from this support to cover initial setup costs and create employment in their communities.

MUDRA Loan Scheme

Designed to assist small enterprises, funding of up to ₹10 Lakhs can be accessed based on the stage of the business. Whether you're starting a small eatery, expanding a food truck, or launching a cloud kitchen, the scheme offers three loan categories:

• Shishu – for startups (up to ₹50,000)
  

• Kishore – for growing businesses (₹50,000 to ₹5 Lakhs)
  

• Tarun – for established businesses needing larger capital (₹5 Lakhs to ₹10 Lakhs)
  

These loans are collateral-free and come with flexible repayment options.

Stand-Up India Scheme

This scheme is aimed at empowering women and entrepreneurs from SC/ST communities. You can get funding between ₹10 Lakhs and ₹1 Crore to help launch new ventures, including restaurants and cafés, encouraging inclusivity in business.

CGTMSE (Credit Guarantee Fund Trust for Micro and Small Enterprises)

For restaurant owners lacking collateral, this scheme enables easier access to loans by offering a credit guarantee to banks and financial institutions. It significantly reduces the barrier to entry for new businesses in the food sector.