How do you start a successful fast food business? You’ve always wondered, and you’ve always planned to open one with your friend, or a cousin, or a colleague.
It is one of the hottest business trends right now in Pakistan (especially in Lahore and Islamabad).
You must have seen new eateries opening every week. Burger joints, steak houses, cafes, dessert places – you have a place at every corner.
Because it seems a simple business model, many budding entrepreneurs and young graduates are eager to jump in the restaurant industry (and start making money.)
While it is never a simple process to start any business from scratch, let’s learn how to start a fast food business and run it successfully.
1. Planning and Research
Do an extensive research before taking any steps. In order to get a deeper understanding of this business, spend a few weeks (or even months) in studying your selling items, target customers, latest trends and competitors.
Decide what you are going to sell, and why should people come to you. Is your theme unique? Is your product unique? Or are you serving it in a different manner?
There is always room for something new in town, look around and try to come up with a unique idea.
Remember, your chances of success go higher if you are different from others. Be different, but market relevant.
Pro Tip: Spend a full day at your favorite restaurant/food point and simply observe, to get a better understanding of restaurant operations and peak hours.
Keeping in mind your food and target market, very wisely choose a location.
This will be the second most important thing after your food, so try to find an apt location.
It doesn’t have to be on a very prime road, but should not be very far from it too. People should be able to spot you easily.
Do not shoot up your overheads by choosing a very busy and posh location with high rent. Aim big but start small.
Put your maximum effort to find a good location.
While you are hunting for location and working on menu and costs, keep thinking of a good name for your restaurant.
Fancy names are in trend, but try to keep it short and catchy.
Make sure you are not copying others’ names.
4. Required Capital
You must have heard many a times that you can start a fast food business in 6 – 7 Lac Rupees.
Wrong! Don’t believe this.
You can manage to start a small food point in this amount, but a proper fast food restaurant needs more.
Apart from the setup cost, you will need some capital to keep your operations going for the first few months at least.
Let’s break down the total cost of starting a restaurant.
Suppose you have acquired a 600 sq. feet place on monthly 30,000 Rs. rent.
- Advance Rent = 30,000×3 = 90,000 Rs.
- Interior Design = 200,000 Rs.
- Furniture = 100,000 Rs.
- Kitchen Equipment + Crockery = 300,000 Rs.
- Recipe, Testing = 100,000 Rs.
- POS (including hardware) = 60,000 Rs.
- Electrical Backup (UPS/Generator) = 50,000 Rs.
- Initial Stock, Packaging, Printing = 200,000 Rs.
- Rent/Salaries for first 4 months at least = 250,000 Rs.
- Miscellaneous = 150,000 Rs.
All in all, you will need around 15 Lacs to start a moderate sized fast food restaurant. This can go up to 20 Lacs if your place needs basic furnishing (tiles, ceiling, etc.).
Pro Tip: Make sure you hire an interior designer for your place, things will become easy.
5. Cost Analysis or Feasibility
Now this is the part that’s going to make sure, that you do not just go out and splurge all your money.
Have a clear cut picture of your profits and monthly expenses, in order to succeed. If you are not doing monthly analysis, you might be losing money (and keep losing it for the coming months).
Now I don’t say that you will be making profits from day one, but you should be well aware of all the financial ins and outs.
This can all be done by costing.
Calculate all your costs against projected sale and see what it is costing you monthly.
Let’s see how it is done:
|Total Monthly Expense||192500|
|Total Daily Expense||6500|
Now calculate your profit from 1 item.
Suppose we are a fast food brand selling burgers.
Check market prices of all ingredients, and find out how much one burger would cost you approximately.
Let’s say our menu price for a burger is 350 Rs., it means our profit per burger is 145 Rs.
Now see, our fixed daily expense was 6500 Rs. and to cover that, our daily average sale should be: 6500/145 = 44.2 or we can say 45.
This is the number of burgers that we should be selling to hit our break-even point.
That means our daily average sale should be 15,500 Rs.
If you think your desired location can give you this much sale, you are good to go.
Pro Tip: While costing, always keep your cost of things on a higher side. This is because many new expenses will start emerging once your operations begin.
Your food is of paramount importance. Its good taste is equivalent to the success of your restaurant.
If your ambiance is nice, service is excellent, but your food sucks. No one will revisit you.
It is true that a customer pays for the overall experience, but the primary reason for people visiting you is food. So make sure it is good as hell.
Since you have not done it before, hence you cannot know the exact amount of staff you need.
As we are starting small, 2-3 people in the kitchen and 2 order takers or waiters are enough. With time, you’ll get to know if you need to hire more.
When you have a team of 5-7 people, managing them could be a challenge.
How to manage them all, and make sure they perform well?
Well, it is pretty simple. Treat them right; feed them good, and pay them on time.
You will never have to worry about their loyalty or how much effort they put in.
Also keep in mind; when you own a restaurant, you have to be willing to do every job. Be it cooking, order taking, serving, cleaning – you must be ready to give your all in!
Pro Tip: In order to have complete control over the business, try to develop your own recipes. If you lure a Chef from some other place, then get ready to be blackmailed.
Nobody will know you in the start. That is why you will have to invest a little on advertising.
Firstly, you will have to establish a strong social media presence. Build your restaurant profiles on Facebook and Instagram.
Post great pictures of your food online. Make sure your friends and family hit the share button, and get you some views.
Also, register your place on Google Maps as well. This will make you easily accessible, and visible online.
Pro Tip: Customers are your walking Bill Boards, make sure to make them happy!
9. Finally: Secret for Success
Do not just try and do good business. Do it with passion and with noble intentions.
Your scrumptious food and gorgeous ambiance might not guarantee you success. But when you complement it with nobility and virtue, you definitely get rewarded.
Besides your own staff, also treat your customers with respect, and give them a great experience every time they visit you. Recurring customers bring new customers, and hence bring consistency in your business as well.
Once again, keep in mind that customers are your walking billboards.
This simply means, that if they are leaving your place happy, there will be more people coming in on their recommendation.
Do you think now you know how to start a restaurant or fast food business? Let me know in the comments.