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Run a Café Shop in India: Checklist to Start a Café Business

Run a Café Shop in India: Checklist to Start a Café Business
Shivani Jain
| Updated: Aug 04, 2020 | Category: News

Nowadays, due to the lucrative feature, every embryonic entrepreneur wants to Run a Cafe Shop in India. The term “Lucrative” denotes the high profit margins and the future growth and expansion in a business format. Further, most of the cafe tends to keep its menu cost-effective. As a result, this option becomes suitable for consumers who love to eat or binge out and explore new dishes

This learning blog will talk about the concept, growth rate, and a Checklist to Start a Café Business in India.

Overview of Café Business in India

The term “Café” denotes a Social or Casual Environment where people enjoy, relax, and binge on different food items. That means it is a type of restaurant that serves tea, coffee, snacks, baked items, and refreshments.

In India, as compared to the last decade, there has been a considerable increase in coffee consumption. The reason behind this is the significant increase in the Café or Coffee Shop culture.

As per a report published by TechSci Research, the coffee shop business is expected to grow at a Compound Annual Growth Rate (CAGR) more than 11% by 2021.

Moreover, as per a report published by the Techno Park Advisors, Café Business forms around 11% of the total Food Service Market in India.

Further, as per an article published by Economic Times on 29.06.2019, the Indian Café Market is expected to reach around Rs 4540 crores by 2023.

Reasons for the Growth of Café Business

How Café Business Growth

The reasons for the growth of Café Business are as follows:

  1. Rising Middle Class;
  2. Increasing Brand Awareness;
  3. Accessibility of International Experiences at Home;
  4. Luxury and Comfort;
  5. Status Symbol;
  6. Comfy Seating Space;
  7. Insta Worth Cool Décor and Ambiance;
  8. Growing Youth Culture;
  9. Various Continental Cuisines; and
  10. Cost Effective Food Options;

Checklist to Run a Café Shop in India

How to start Cafe shop

The factors included in the Checklist to Run a Café Shop in India are as follows:

  1. Draft an Effective Business Plan;
  2. Arrange an Eye-Catchy Location;
  3. Prepare a Mindful Budget;
  4. Conduct Market Research;
  5. Attractive and Cost-Effective Menu;
  6. Research Your Competitor;
  7. Mandatory Registrations and Licenses;
  8. Buy Robust and Sturdy Equipment;
  9. Appoint Qualified Staff;
  10. Design and Characterise Your Café;
  11. Market and Promote Your Café;
  12. Create an Attention-Grabbing Website;
  13. Managing a Sales System;
  14. Ensure Maintenance and Cleanliness;
  15. Customer Grievance and Recovery Mechanism;
  16. Start and Run a Café Shop in India

Draft an Effective Business Plan

A successful business is an outcome of an effective business plan or idea, which no doubt does not happen overnight. The term “Effective” business plan means Thoughtful Research, Planning, and Execution.

Further, a Business Plan includes Vision, Mission, Objective, and Profit Goals of the business.  As we all know, a lot of investment of money and time is required to Run a Café Shop in India. That means it is significant to spend considerable time understanding and drafting an Effective Business Plan.

Arrange an Eye-Catchy Location

An eye-catchy location does 50% of work to make a food outlet or café successful in India. That means, location plays a significant role in the growth or failure of a café.

Usually, a food joint that is located in a crowded or high footfall area will tend to earn more than the one situated in a less crowded area.

Further, a café that is opened on a ground level will earn more than the café located on the upper level. The reason behind this is high visibility and accessibility.

Prepare a Mindful Budget

To make a business or venture successful, one always needs to have clarity about the funding. The investment involved in opening a café could be around Rs 10lakhs to 15 lakhs.

Further, a bakery café will cost more than a normal café. One can also prefer finance loans, business loans, or funding from co-operative societies to start his/her own business.

Moreover, the budget for a café varies on the basis of several factors, such as

  1. Business Concept;
  2. Legal and Administrative Cost;
  3. Location or Geographic Cost;
  4. Equipment Cost;
  5. Labour Cost;
  6. Construction and Designing Cost;
  7. Furniture or Fixture Cost;
  8. Raw Material Cost;
  9. Branding Cost;
  10. Marketing Cost;
  11. Fixed Cost;
  12. And any other Additional Cost.

Conduct Market Research

Before commencing a business, it is significant to undergo an in-depth Market Research. The term “Market Research” denotes understanding pros and cons, finding out the competitors, ways to increase profit levels, consumer taste and demand, and associating with the best raw material supplier.

For this, one should invest his/her time in visiting different cafes and restaurants to try out different cuisines and understand the menu and pricing of items. 

Attractive and Cost-Effective Menu

Nowadays, the only three things that matter in the food industry are food taste, food variation, and food pricing. That means one should carefully decide the pricing of the menu for the café and strive for its taste and variety.

Usually, a menu that is cost-effective and is able to bear costs and earn profit as well will tend to attract the customer more.

Further, a menu must include what a customer wants and what all is trending these days. This may include baked items, beer, wine, international cuisines, etc.

Research Your Competitor

Location plays a significant role in tackling the competitors as a customer gets an option to try out some other café or food joint.

One should choose that location to run a café shop in India, which has less competition but more scope to attract customers.

Further, not only normal cafes or restaurants but other substitute plays an essential role in fulfilling the needs of a customer. The term “substitute” denotes McDonald’s[1] , Pizza Hut, Subway, and any other eatery or food joint.

Mandatory Registrations and Licenses to start a Cafe Business

Licenses required for cafe business

The Mandatory Registration and Licenses needed to run a Café Shop in India are as follows:

Business Registration

An individual who wants to run a cafe shop in India needs to obtain a Business Registration based on the type of cafe. For example, if a person wants to set up a cafe as a partnership firm, then he/she needs to obtain Partnership Firm Registration under the Indian Partnership Act, 1932.

FSSAI License

Since a Cafe comes under the ambit of FBO (Food Business Operator). That means it is mandatory for the owner to obtain FSSAI License before commencing its operations.

Eating House License

If a person wants to run a cafe shop in India, he/she needs to obtain a license from the Licensing Police Commissioner of the particular state. This license is known as Eating House License. The Licensing Police Commissioner has the authority to issue a license of eating houses in Hotels, Cinema Halls, and Swimming Pool.

Health or Trade License

Both the Health Department and Municipal Corporation of the respective state has the authority to issue the Trade License to run a cafe shop in India.

Fire Security Certificate

Every cafe owner must obtain a Fire Security Certificate or Fire NOC from the Fire Department of the state in which he/she wants to run a cafe shop. Authorities issue this certificate only after proper installation of fire extinguishers and other fire safety measures in the premise.

Shop and Establishment License

The main aim behind the introduction of the Shop and Establishment License was to protect and safeguard the rights of the workers employed in the cafe.

Trademark Registration

It is not mandatory for a cafe owner to obtain Trademark Registration, but is necessary for the protection of brand name and logo from duplication or imitation.

Music License

If the owner wants to play music or songs in the cafe, he/she needs to obtain a Music License from the Indian Performing Rights Society (IPRS).

Certificate of Environmental Clearance

The cafe owner can obtain a Certificate of Environmental Clearance (CEC) from the Ministry of Environment and Forest.

Pollution Certificate

To make sure that the cafe is not harming the environment in any way, the owner needs to acquire Pollution Certificate from the DPCC (Delhi Pollution Control Committee).

Insurance

Nowadays, Cafés are required to mandatorily apply for some insurance policies such as Product Liability, Fire Policy, and Public Liability.

GST Registration

A cafe needs to apply for GST Registration if the Annual Turnover of the Cafe exceeds the threshold limit of Rs 40 lakhs and Rs 20 lakhs for special states.

Buy Robust and Sturdy Equipment

Before starting the business operations, an owner needs to first buy robust and sturdy equipment for his/her café. It is always advised to avoid using old or poor-quality equipment because of the fear of weakening at any point of time.

Further, poor-quality equipment will not only increase losses in revenue but also dissatisfaction of customers. However, in the initial stage of the café, the owner can use second-hand preparatory areas and sinks. He/she can also use chairs and tables if they are in proper condition.

The list of equipment required to run a café shop in India are as follows:

  1. Espresso Machine;
  2. Coffee Grinder;
  3. Two Mixer;
  4. Refrigerator;
  5. Deep Freezer;
  6. Mop Sink and Install;
  7. Mugs/Glasses;
  8. Convection Oven (If required);
  9. Commercial Drip Coffee Maker;
  10. Computer, Printer, and POS system;
  11. Chairs and Tables;
  12. Outdoor furniture;
  13. Small wares;
  14. Music System;
  15. Microwave;
  16. Electronic Scales;
  17. Dishwasher (If required);
  18. Display Showcase;
  19. Internal Displays and Signage;
  20. Outside Signs and Displays;
  21. Coffee Beans Inventory;

Appoint Qualified Staff

Having a qualified staff is a clear indication of both an exceptional café shop and the best service. These people will directly contact the customer, which means proper customer service will result in loyal customers.

To staff required to successfully run a café shop in India are as follows:

  1. Baristas;
  2. Servers;
  3. Chef;
  4. Cleaning Staff;
  5. Manager; and
  6. Cashier;

Design and Characterise Your Café

Designing and Characterising a Café plays a crucial role in attracting customers in and alluring them to return. The interiors of a café will depend on the target customer. That means it should either be Modern, Retro, Sophisticated, Family-Friendly, Health-Focused, etc.

One should design and characterise his/her café after understanding the taste of the customer base. However, that does not mean the owner should aim to please everyone. A theme-based on the target audience is enough to market and run a café shop in India.

Once the theme or the interiors of a café are done, the next work is to arrange furniture, fixtures, storefront, display showcases matching the theme. Lastly, a great ambiance and efficient workforce are enough to make the experience worthwhile.

Market and Promote Your Café

The next step in the procedure to run a café shop in India is to market and promote your café. The best modes to promote and build business reputation are “Word of Mouth” and “Social Media”.

For “Word of Mouth,” the owner just needs to provide the ambiance, along with food taste and quality to the customers. As these loyal customers will attract more customers.

However, for “Social Media,” get in association with famous food bloggers, invite them to your café. They will review the café ambiance and food taste and will post comments on their social media handles.

Create an Attention-Grabbing Website

Another significant step in the procedure to run a café shop in India is to create an attention-grabbing website for the café. The website must contain proper details, together with personal and engaging content.

The owner can also use food images and café videos to attract and engage in more customers. Besides the website, the owner should also create Instagram and Facebook Page to post the latest updates, pictures, videos, and offers.

Further, whenever a customer visits the café, ask them to follow your Instagram and Facebook page to receive offers, discounts, and freebies.

Managing a Sales System

Nowadays, people are using more digital money than hard cash, which means the café owner must have a proper facility to accept payment from Visa or Mastercard Credit Card or Debit Card. In case a cafe owner does not offer a card payment facility, he/she will lose a lot of their loyal customers.

Further, a Mechanical Cash Register will assist the owner in tracking the cash and sales statistics.  Moreover, it always better to have a POS (Point of Sales) mechanism for analysing the profitability and sales of the café. This system can provide details of the sale of every item, which means an owner can remove the food items from the menu that are not doing good.

Ensure Maintenance and Cleanliness

The owners of the cafe must ensure cleanliness and maintenance of the cafe on a regular basis. The cleaning needs to be scheduled either on an hourly, weekly, or daily basis, depending on the type of equipment and area in question.

However, a cafe owner must make sure that the sitting area is regularly cleaned so that the customers visiting the cafe find the experience worthwhile.

Moreover, all the utensils and cutlery must be cleaned frequently to avoid issues related to hygiene and health.

Customer Grievance and Recovery Mechanism

To successfully run a cafe shop in India, every cafe must have a regular way to greet its customers. And for aiming this, it is crucial to train the staff properly

Further, the common mistakes that must not happen in a cafe are as follows:

  1. Mixing Up of Orders;
  2. Spilling of Food or Drinks;
  3. Serving Sub-standard Food Items;

However, if any of these situations take place but are appropriately handled, the customers will leave fully satisfied

Therefore, to aim for customer satisfaction, the staff members must be trained in this regard. Further, some of the measures that can be taken in this concern are as follows:

  1. Provide the customer an Extra Item for Free;
  2. Give High Priority to the Annoyed Customers;
  3. Give Refunds to the Dissatisfied Customers for the Orders;

Start and Run a Café Shop in India

The last and final step in the procedure to run a cafe shop in India is to start its business operations.

Conclusion

If you desire to run a cafe shop in India and have carefully read the blog, you have already initiated the journey to run a cafe shop in India.

Further, at Swarit Advisors, our professionals will assist you in obtaining FSSAI License, GST Registration, Trademark Registration, Eating House License, and all the licenses mentioned above.

Also, Read:How to Start a Virtual Kitchen Business in India

Shivani Jain

Shivani has completed her B com LLB (Hons) and has the experience of writing various research papers during her college time. Earlier she was working as an Associate in a Delhi based Law Firm, but her interest in writing made her pursue Legal Content Writing as a career. Her core area of interest is in writing about various legal enactments, tax, and finance.

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