How to Start a Restaurant Business?

Opening up a restaurant is a great business idea. Who doesn’t love good food? People want to go to restaurants whenever there are any special occasions or simply because there are days when they don’t always feel like cooking or crave food they cannot cook. The Foodservice Market size in India is estimated at 77.54 billion USD in 2024, and is expected to reach 125.06 billion USD by 2029, growing at a CAGR of 10.03% during the forecast period (2024-2029).

If you’re planning to start a restaurant business, you’ve landed on the right page. This article will educate you on all the important things you need to know to open up a restaurant successfully!

Know the steps!

Opening a restaurant in India involves the following steps:

• Market Research: It is important to do market research to understand the demand of the type of cuisine you’re planning to offer, target audience, and location preferences. 
• Business Plan: Prepare a business plan which outlines your concept, menu, target market, budget and marketing strategy.
• Location: Select a location with high food traffic and keep in mind important factors such as rent, accessibility, pricing strategy, and local laws.
• Menu Development: Design the menu in such a way that it aligns with your concept and preferences of the target audience. While deciding on what must be added to the menu, consider food costs, pricing strategy, and sourcing ingredients. 
• Interior Design & Layout: Create an inviting ambiance that reflects your brand identity. If you’re planning to open up a french restaurant, you can set up some shelves with french wines, serve food with french cutlery and put up famous french paintings on the walls with lights that’ll compliment them.  
• Recruiting Staff: Hire experienced and skilled chefs, kitchen staff, servers and managers. Train them on how you want the food to be prepared and presented and the way they should communicate with the customers and the hygiene standards that need to be maintained at the restaurant.
• Supplier Relationships: Establish partnerships with reliable suppliers who would supply you fresh veggies, fruits, cheese, meat, etc. A restaurant might be beautiful and fancy but it is the quality and the taste of the food which impresses customers the most. Imagine visiting a 5 star restaurant and getting food poisoning due to expired cheese in your pasta. You would feel scared to visit that restaurant again.
• Feedback: It is a very important step to take feedback from the early customers. Their feedback can help you to improve your services.
• Legal Requirements: This is the most important step. You can have all the funds and ideas in the world to open up a restaurant but if you don’t get the permission to open it, there’s no use to make plans. You have to get your business registered by the relevant government authorities and obtain all the necessary licenses.

Licenses Required for Restaurant Business

Licenses required for restaurant business: There are 12 mandatory licenses you need to obtain before starting a restaurant in India. They are:

FSSAI License

This license is provided by the Food Safety and Standards Authority of India. This license authorizes your restaurant to sell and serve food and beverages to the customers. A FSSAI certified restaurant attracts more people since the customers would expect you to follow the FSSAI standards for food. This license can be applied through the official portal of FSSAI. The inspection takes between one week to one month depending on the paperwork.

These are not one but three types of FSSAI licenses:

• FSSAI Registration – For food business less than ₹12 lakhs revenue/year.
• FSSAI State License – For food business more than ₹12 lakhs and less than 20 crore revenue/year.
• FSSAI Central License – For food business more than ₹20 crore revenue/year.

Documents required:

• Valid Email ID and Mobile Number
• FSSAI form duly filled and signed by the Restaurant Owner
• Kitchen Layout Plan
• Types of equipment to be used
• Identity and Address Proof issued by a Government Authority
• List of main stakeholders along with their identity proof
• Declaration of Food Safety Management plan
• Proof of possession of the location/premise
• No objection certificate from the local Municipal Corporations or local bodies
• Water Testing Report provided by ISI certified organization
• List of Food Category
• Partnership Deed/ Affidavit of Proprietorship (in case of business operated on other premises or case of partnership firm)
• Medical certificates of employees

Eating House License

Eating House License is mandatory for opening up a public restaurant where food and beverages are served for public consumption. You can register for Eating House License online by submitting an online application along with necessary documents. Thereafter, you need to meet the Additional Commissioner of Police of the State for verifying the application and examining the documents. If the application and documents get approved by him, the Eating House License will be issued within 30-60 days. 

Documents required:

• Site plan and photos of the eating house
• Identity Proof (PAN Card, Voter Card, etc.)
• Fire Safety Certification (if the seating capacity is more than 50 people)
• CCTV installation’s invoice
• Lease Agreement/Sale Deed or Rent Deed
• A No Objection Certificate from the property’s owner (if the licensee is not the owner)
• Proof of Residence (Passport, Bank Account, etc.)
• Incorporation Certificate of the company
• Consent letter as per the location of the Eating House.
• Police Clearance Certificate
• Self Attested Certificate for the Eating House License

Health Trade License

This license is issued by the municipal corporation. It permits businesses to engage in goods and services that directly affect the health of the general public. If you want to apply for this license, you need to fill up an application form for Health Trade License, which can be availed at the State’s Municipal Corporation portal. Fill up all the details mentioned in the form such as applicant status, address of premises, type of business activity and residential address. The license will be issued if all the details are correct and the documents  are verified.

Documents required:

• 3 copies of the site plan
• Structural Stability Certificate signed by the concerned Structural Engineer
• Water and Electricity bills
• Rent Agreement or NOC of the property owner
• Proof of Sewer Connection
• Proof of property tax
• Letter from local police
• Plan and Layout of the restaurant
• Indemnity bond for Rs.100
• Water Testing Reports
• Employees’ Medical Certificates

Liquor License

Selling liquor is one of the most profitable businesses in India. It stays in demand no matter what season it is. If you put a board with “Happy Hours” for liquor, many people will visit the restaurant just for that. To be able to serve liquor at your restaurant, you need to obtain a Liquor License which is issued by the State Excise Department. This department grants the license to those who want to sell or distribute alcoholic beverages in their premises.

It always has high demand irrespective of the season. You need the Liquor License to serve liquor at your restaurant. The Liquor License is permission granted by the State Excise Department to those who want to sell or distribute alcoholic beverages or drinks at a particular place. The application for this license needs to be submitted to the concerned state authorities. 

Documents required:

• Restaurant’s address proof
• MOA and AOA if the applicant is a company
• Original application and a copy with business details
• List of all directors of the company
• Latest IT returns’s copy
• Concern applicant photographs
• Affidavit of the applicant which states that they don’t have a criminal record
• NOC from the fire department and municipal corporation

GST Registration

GST registration is mandatory to start any business in India. If your restaurant chain goes beyond one or more states, then you need to have separate GST registration in each state.

To apply for GST registration, you have to visital the official portal of GST. Afterwards, fill Form GST REG – 01 and upload all the mandatory documents. Once the application and documents are approved, the department will issue the GST registration certificate.

Documents required:

• Applicant details
• Mobile number
• Email Id
• Pan card number
• Proof place of business
• Copy of valid rental agreement/lease agreement
• Valid bank account from India
• Provisional ID and password received from the state’s VAT department

Environmental Clearance License

This license is necessary to obtain to ensure that your restaurant will not cause any pollution to the environment. You can apply for the Environmental Clearance License from the Ministry of Environments and Forests official portal. To obtain this license, you need to submit a questionnaire for environmental appraisal. After that, your application will be reviewed by the Expert Appraisal Committee and issue you the license if you are eligible.

Documents required:

• Letter of intent from the Ministry of Industry
• NOCs from the State Pollution Control Board and the State Forest Department if the project talks about forestland

Fire Safety License

The restaurant must protect its customers and workers from fire-related incidents. To run a restaurant, it is important to obtain NOC from the fire department. The application of NOC can be downloaded online using the state government portal and must be submitted to the state fire department. The safety equipment necessary during fire incidents should be in place. Once a Chief Officer inspects the equipment, he will approve your license if you are eligible.

Documents required:

• Structure plan as per the data recommended by the bye-laws of the state.
• Checklist survey questionnaire with answers
• Building Model Certified agenda by Architect.
• Building Stability declaration.
• Copy of Aadhar Card.
• Photographs of the setup building clicked from outside.

Lift license

If you are planning to install a lift in your restaurant, it is necessary to possess a lift clearance License. The lift operations should meet the required safety standards. The lift license can be obtained from the Labour Commissioner Office’s electrical inspector. If there are no issues with the lift, the office will issue you a license.

Signage License

If you want to advertise your restaurant, you need a Signage License for it. This license permits you to promote your restaurant by using paintings, photos and graphics. This type of license can be obtained by the respective municipal corporation in your city.

Music license

It is normal for restaurants to play music, but did you know even this requires a license? Restaurants have to obtain a music license from the Phonographic Performance Limited website.

Shop and establishment License

This License has been made mandatory under the Shop and Establishment Act which regulates the working hours, payments of staff and work conditions. To obtain this license, you need to submit an application to the respective area’s inspector. Alternatively, you can submit your application through the labor commission website of the state.

Documents required:

• Details of Employer or Manager
• Memorandum and Articles of Association/Trust deed/Partnership Deed
• Lease Rent Agreement
• List of Directors
• Bank Account details
• First Income Tax Assessment order/PAN
• Date of commencement of business

Insurance

Insurance can be obtained from any legally registered entity. It is always a great idea to have insurance for your restaurant for the following things:

• Public Liability
• Product Liability
• Building & Asset
• Fire Policy

Conclusion

Opening up a restaurant requires a lot of licenses, but once all the required licenses are achieved, the sky's the limit. If you need help in obtaining any/all of these licenses, feel free to get in touch with the Registrationwala team. We are always happy to help our customers!

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, telecom, and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.