Excerpts of Mr. Shiv Nirula’s no bar interview about his Restaurant Journey and Frequently Asked Questions on the Restaurant Business:

1. What is your take on the Restaurant industry?
   It is one of the most fascinating industry that has a lot of charm due to its glitzy nature. It’s definitely one of the fastest growing industries and the needs are ever growing. Having said that, it is a very risky line of business with approximately over 60% of the restaurants closing within a 3-year period. Most people when venturing without the assistance of professional consultants end up getting entangled in the back-end work like arranging licenses, organizing cost effective back-end supply and properly managing the food production and services.
   
2. So what do you recommend for someone who wants to enter into the Restaurant Business?
   The first thing to take care of while entering into the restaurant business is location! It is very important to get a location which has the right amount of footfall and a practical lease rental. Ideally though I suggest this business to people with their own property as they are able to mitigate the risk and generate a great return for themselves while exponentially increasing their property value.

Post that is the requirement of professional consultants who handle all parts of the business including consulting, F&B planning, Interior Designing, Kitchen Setup, Staff Hiring, Marketing & more. It is very essential to not fall into experimental traps with inexperienced consultants which abound the market. These include some restaurant owners who run just 2-3 restaurants & become consultants, kitchen vendors, chefs & other people with unidimensional knowledge. In such cases a team should be hired with all these personnel’s so that a proper comprehensive project is set up.

3. Which are the Top Cuisines recommended?
   The beauty about Restaurant industry is that everything works provided the food is tasty and well presented. In India the evergreen cuisines are North Indian (Mughlai, Punjabi, Awadhi), Oriental (Chinese, Thai & Japanese), Continental (Italian, Mixed, Mexican, Lebanese), Fast Food, Burgers, Kathi Rolls, Momos, Biryani’s Thalis), South Indian and then some specialty concepts like Korean, Tibetan, Vietnamese, Bihari, Kashmiri & such cuisines. It doesn’t matter what you choose provided there is enough population and the food is well-made and appropriately priced.
   
4. What is the typical cost of setting up a restaurant?
   This varies immensely depending on the Theme & locations. A normal designed restaurant like Dhaba or Bercos would typically cost Rs. 2,000 per square feet for interiors, another 10-15 lakhs for Kitchen catering to 100 covers. Add the leasing expense to this and some cash in hand. In case it is a franchise that amount would be a little more. The below chart might give a better picture.

                              i.Standalone Restaurants:   Rs. 2,000 – Rs. 2,500 p.s.f.

                            ii.Theme Restaurants like Jungle Jamboree, Walk In the Woods, Paprika Park, Spice Caves etc.:   Rs. 2,000 – Rs. 3,000 p.s.f.
So a typical 80-100 seat in 3,000 sq. ft. will cost Rs. 1 Crore approx.

                          iii.Lounge & Pub like The Flying Dutchman, Cinnamon Courtyard, Victorian Vantage etc.:   Rs. 2,500 – Rs. 3,500 p.s.f.
So a typical 80-100 seat in 3,000 sq. ft. with Bar will cost Rs. 1.2 Crore approx.

5. What is the recommendation for someone who wants to enter into this industry?
   Apart from the points I just mentioned I would also recommend a new entrant to consider developing a chain to utilize the economies of scale. A chain of 4 Restaurants like Jungle Jamboree or The Flying Dutchman that I founded in appropriate sizes can be created for just Rs. 4-5 crores onwards with approximately 4 outlets. Similarly, if one wants to enter into smaller space a chain of 4 cafes can be done in approx. Rs. 1-1.5 Crores onwards and so on.
   
6. What are the typical returns with these kinds of investments?
   The returns vary wildly depending on locations, offerings in terms of ambience, food, quality, market response etc. but the industry average as per me is around 25% gross returns. Do note that this excludes a depreciating value of the asset, the loss of interest on capital invested and most importantly the productive time of the Restaurant owner. Again, as I said earlier, I recommend this business more to property owners and developers to do themselves rather that on leased properties.
   
7. I am sure that there will be a lot more factors?
   Yeah there are and each project has to be judged on its own merit. I recommend the interested party to discuss the same with my team or other professional consultants before deciding to lease a space.