A Comprehensive Guide to Opening a Casual Dining Restaurant (CDR)

In our previous articles, we have been discussing various form and formats of restaurant ranging from a Quick Service restaurant under Rs 5 lakh to a high-end dream bakery. In this article, we would be discussing India’s most popular format among all types of restaurants and food outlets: Casual Dining Restaurant. The Casual Dining format contributes to more than 33 percent of the total market share of the organized food industry and is further pegged to increase by 33 percent by 2021. It represents the second largest share of the chain food service in India.

According to Indian Food Service Report, 2016 released by National Restaurant Association of India (NRAI) along with leading research firm Technopak, the size of the casual dining restaurant Chain Market is estimated at 6,720 crores in 2016. It is further expected that it will grow by Rs 17,245 crores at 21 percent CAGR (Compounded Annual Growth Rate) by 2021.

What is a Casual Dining Restaurant?

A restaurant serving moderately priced food in an ambiance oriented towards providing an affordable dining experience with table service where the average spend per person ranges from Rs 250-Rs 500″. So, unlike a Quick Service Restaurant, the casual dining restaurant not just focuses on the quality of food to be served or delivered by a lot more value-added services adds on to this particular format.

Casual Dining Restaurant can further be divided into different formats-

1. Affordable Casual Dining Restaurants
2. Premium Casual Dining Restaurants

How to Open a Casual Dining Restaurant?

In casual dining restaurant, you need a proper sitting area with a warm ambiance. In this article, we will take you through the step by step approach on how to open a casual dining restaurant in just under Rs 15 lakhs.

1. Choose the Right Location

It is one of the most important factors for a casual dining restaurant as the majority of business comes from the footfall, unlike delivery based quick service restaurant which drives most of the sales through online channels.

So, the ideal locations to open a CDR format are Malls, High Streets, Popular Markets and big office complexes with an ideal space of 1500 Sqft to 2,000 sqft. Out of which 500 sqft is dedicated to the kitchen area while min. 1000 sqft is required for the service area.

For a 1500 Sqft space in a popular market near densely populated residence area will cost you somewhere around Rs 60,000 per month and may increase depending upon the location. One of the key things to keep in mind is that in a casual dining restaurant, you need to have ample space for parking around the market or the restaurant.

Accessibility is the most important factor for a casual dining restaurant. So, the restaurant must either be located on the ground floor or on the first floor.

Apart from this one should also have proper directional boards within and around the market to help customers to reach the restaurants. Out of the total investment of Rs 15 lakhs, the acquiring a good space at a good location will cost you Rs 1,80,000 (two months security deposit and a one-month advance rent).

According to the NRAI report, the majority of casual dining restaurants are concentrated in two major metropolitan cities Delhi and Mumbai. In Delhi NCR, one can open casual dining restaurants in Connaught Place, Khan Market, Haus Khas Village, Shahpur Jat, G.k M Block Market, Noida Sector 18, 50 and 63, DLF Cyber Hub and Sector 29 market of Gurgaon. While, in Mumbai locations like Lowel Parel, Bandra Kurla Complex, and Powai can turn out to be a good option.

2. Acquire Appropriate Kitchen Equipment and Raw Materials

Kitchen Equipment takes up a major part of the costs while setting up a new restaurant. Thus, it is only reasonable to purchase the new equipment or old/used ones, based on their usage and requirements.

It is highly advised that the equipment related efficiency and cost should be bought new such as Gas Burners, Gas pipeline, refrigerators, microwave ovens and any other kind of electrical or electronic equipment, while one can look for used utensils, exhaust hoods, and other regular equipment.

The purchase of equipment would be based on the cuisine one wants to serve at his/her restaurant. Further, the purchase can be cost-effective if the Chef of the restaurant is involved in the purchase with the vision of starting with minimum equipment which can give maximum output. Based on a rough estimation the cost of the kitchen equipment and raw materials is Rs 5,00,000 which includes the serving cutlery as well.

3. Create a Stellar Service Area

According to many Foodprenuers, ambiance and service areas is the second most important factor after quality food which makes customers visit a restaurant again. As customers are constantly looking for new experiences, it is highly recommended in today’s competitive world to have a theme based ambiance and service area rather than just going for a simple ambiance and infrastructure.

The total expense to develop a decent service area would be around Rs 5,50,000 out which Rs 2,50,000 is spent on furniture and Rs 2,50,000 in ambiance and infrastructure such as air conditioner, lighting, flooring, and ceiling. To cut the cost one can also look for old decent furniture which can be refurbished as new with the help of a carpenter.

Apart from that, a good POS is a dire necessity which restaurant owners often forget. Think of your POS as not just a billing software, but as an investment that can help you manage your restaurant better, and also help cut down costs in several areas. Integrated inventory management, CRM, in-depth reporting and analytics are some of the must-have features in your POS. The basic POS software can cost you around Rs 30,000 per year, but it is advisable to go for the complete restaurant management feature, as it helps you in the long run. Remember to choose a POS that allows third-party integrations to save you the hassles of manual work.

4. Get the Licensing and Paperwork done

A casual dining restaurant (CDR) needs an FSSAI license, GSTIN Number, Police eating house license, Local Municipal Health License and Fire License for operations. Out of all the licenses required FSSAI, Service Tax Number and Local Municipal Health license are the important ones to procure before the operations.

Know about all the licenses that you need to have in place, that will ensure that you run your restaurant business without any legal hindrances, here.

While the police eating house and Fire licenses can be produced later when you are operational for two-three months. It is better higher consultancy who can procure licenses on your behalf as it is a time taking the process and also requires a lot of paperwork. The total cost to procure the entire license will be around Rs 30,000 to Rs 40,000

The three licenses need to be applied separately. For Food License, you can apply through its website www.fssai.gov.in. This can also be facilitated by various agencies which charge around Rs 7,000 for the complete paperwork and license fee. The GST Registration will be facilitated by any Charted Accountant. It can be done here: https://reg.gst.gov.in/registration/

Lastly, for Municipal Corporation health license, you have to contact the local health inspector, and they will guide you through the process of acquiring the license. The license fee is nominal and will cost around Rs 3,000. Police Eating House and Fire license can be obtained once you have Municipal Corporation health license. This can be done in the first two-three months of the operations.

5. Decide on a Staff Uniform

In a casual dining restaurant, the presentation is the key to success and hence the staff uniform is the most factor to keep in mind. Most of the restaurants do not pay enough attention to staff uniforms, a mistake for which they pay in the long run, in terms of lost customers and poor branding. It is utmost important that all the employees look good and well dressed. You can choose from different types of dresses such as chef coats and t-shirts with an apron. At the initial stage of operations, it’s ideal to have a low-cost uniform which will save the additional cost. We recommend good Chef coats (10 units), t-shirt and Cap (50 units) which will cost around Rs 20,000 and last for at least six months of the operations.

Find out how to create a human resource hiring structure for your restaurant here.

6. Invest in Marketing

It is always good to have a well-designed logo and menu. It is advised to hire a professional designer who can help you in getting the desired logo and menu at a cost not exceeding more than Rs 2,000. Apart from this a well-designed light board, the menu for tables and pamphlets for offline marketing are essential parts of Marketing. It is advised to invest in developing a good and attractive table menu. One can go from lavish hard cardboard menu to a laminated booklet.

Also, it is important to explain the each and every dish in one line so as to help customers order, hence pay attention to your restaurant menu descriptions. Remember to train your staff to upsell the menu. Also, online tie-ups are essential in today’s internet age to gain customer traction which will not cost more than a meeting with the alliance team of the food-tech portal.

We hope that you have garnered the wholesome knowledge that will help you to venture into this volatile industry with a casual dining restaurant. Keep in mind that running the restaurant operations diligently is important, but unless you start your restaurant with 100% precision, there will always be a potential threat clouding on your restaurant’s success. Hence memories the steps mentioned and execute them well, and see how it helps your business blossom!