Are you passionate about opening your own cafe in India? If so, this blog post is for you. We'll guide you through the entire process, from developing a business plan to choosing the perfect location to marketing your new cafe.
Let’s dive in!
The Cafe Business Landscape In India
The coffee business landscape in India has undergone a significant transformation in recent years, reflecting changing consumer preferences and a growing café culture. This evolution has primarily been driven by India's youthful population, urbanisation, and a rising middle class with disposable income.
The target audience for coffee businesses and cafes in India has expanded beyond traditional coffee enthusiasts. While they remain a significant portion of the customer base, cafes have also become popular among students, professionals, couples, and families seeking a comfortable and trendy hangout spot.
Additionally, the increasing adoption of remote work has turned cafes into remote offices for freelancers and entrepreneurs.
The coffee business in India can be highly profitable, but success depends on several factors. Efficient operations, quality service, and a pleasant ambiance are essential to retaining customers and generating repeat business.
Moreover, embracing sustainability and offering unique experiences such as coffee workshops or live music can set a cafe apart from the competition and boost profitability. We will dive deeper into this aspect in the further sections of this blog.
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Is Cafe Business Profitable in India?
The cafe business in India has a lot of scope which makes it profitable. Some of the factors include-
- Increasing urbanisation and disposable incomes
- Rising popularity of coffee and other cafe beverages
- Growing demand for social spaces and experiences
As a result of this growth, there is a lot of opportunity for new cafe owners in India. However, it's important to note that the competition is also fierce. To succeed, you'll need to develop a unique concept and offer excellent customer service.
MBA Chaiwala and Chai Sutta Bar are the 2 cafes in India that have earned a lot of fame in a short period of time due to their USP (Unique Selling Proposition).
Chai Sutta Bar and MBA Chaiwala are two of the most successful chai brands in India. They have both achieved great success in a relatively short period of time, and they have both inspired many other entrepreneurs to start their own chai businesses.
Chai Sutta Bar was founded in 2016 by Anubhav Dubey and his childhood friend. They started out with a small stall in Ahmedabad, Gujarat, and they quickly became popular for their high-quality chai and affordable prices. Today, Chai Sutta Bar has over 450 outlets in 195 cities across India and Nepal.
MBA Chaiwala was founded in 2017 by Prafull Billore. Billore started out by selling chai on the roadside in Ahmedabad. He quickly became popular for his unique marketing style and his commitment to customer service. Today, MBA Chaiwala has over 200 outlets in more than 50 cities across India.
The success of Chai Sutta Bar and MBA Chaiwala can be attributed to a number of factors, including:
High-quality products: Both Chai Sutta Bar and MBA Chaiwala are known for their high-quality chai. They use fresh ingredients and they have a team of experienced chai makers.
Affordable prices: Chai Sutta Bar and MBA Chaiwala offer their chai at affordable prices, which makes them accessible to a wide range of customers.
Convenient locations: Both Chai Sutta Bar and MBA Chaiwala have outlets in convenient locations, such as near office buildings, universities, and shopping malls.
Strong marketing: Both Chai Sutta Bar and MBA Chaiwala have strong marketing strategies. They use social media, influencer marketing, and other channels to reach their target audience.
The Legal Aspect of Starting a Cafe In India
If you are enthusiastic about starting a cafe in India, first of all you should be taking some important legal and fundamental steps. In this section, we will go through all the required legal licences, and registration processes to start a cafe in India.
2.1 Registering your cafe business
a) Registration of Your Cafe Business
The first and fundamental step in starting a coffee business or cafe in India is obtaining the appropriate business registration. This involves selecting a suitable legal structure, which could be a private business, limited liability partnership, partnership firm, or a single proprietary entity. Each structure has its own set of legal requirements, tax implications, and levels of liability for the business owners.
b) Registration of trademarks
Though not mandatory, registering a café's trademark is advisable to protect its brand. Trademark registration provides exclusive rights to the brand for ten years, preventing others from using a similar mark. This safeguards the café's unique identity, enhances brand recognition, and ensures legal recourse against infringement or misuse.
c) Filing of GST
For cafes and restaurants, registering for GST is mandatory if their annual turnover exceeds Rs. 20 lakhs (Rs. 10 lakhs for special category states). Here are the key details regarding GST registration for cafes:
Threshold Limit: If a cafe's annual turnover (aggregate turnover) crosses the specified threshold limit of Rs. 20 lakhs (or Rs. 10 lakhs for special category states), it must apply for GST registration.
Mandatory Registration: GST registration is compulsory for cafes meeting the turnover criteria. Even if a cafe's turnover is below the threshold, it can still voluntarily register for GST.
Application Process: To register for GST, cafes need to visit the official GST portal and complete the online registration process. They will need to provide their business details, PAN (Permanent Account Number), and other relevant information during registration.
GSTIN: After successful registration, the cafe will receive a unique GST Identification Number (GSTIN). This number is used for all GST-related transactions and filings.
GST Filing: Once registered, the cafe must regularly file GST returns, typically on a monthly or quarterly basis, depending on their turnover. This involves reporting their sales and purchases and remitting the applicable GST to the government.
Penalties: Failure to register for GST when required or non-compliance with GST regulations can result in penalties and legal consequences.
2.2 What Licences are Needed to Start a Cafe in India?
In India, running a cafe or restaurant requires compliance with several licences and regulations to ensure the safety and quality of food and the smooth operation of the business:
FSSAI Licence: The Food Safety and Standards Authority of India (FSSAI) licence is a mandatory requirement for all food business operators, including restaurants and cafes. To obtain this licence, businesses must adhere to various regulations, including posting necessary notifications, ensuring the health of food workers, following proper food handling techniques, and complying with specific guidelines for certain food products. This licence is crucial for ensuring food safety and consumer confidence.
Given below are the basic requirements to get the FSSAI License
- Proof of ownership or rental agreement for the cafe location
- Site layout with measurements
- Two photos of the cafe location, showing that it is being used as a cafe
- Copy of the business licence and fee receipt
- Government-issued ID, such as a driver's licence, Aadhaar card, or passport
- Affidavit on stamp paper
- Fire department no-objection certificate (NOC) for cafes with seating for more than 50 people
- Project plan and NOC from the fire department for cafes with amenities such as a dance floor, bar, disco, or live performances
- Contract for the installation of CCTV cameras that can store video for at least 30 days
Health/Trade License: This licence is obtained from the local civil authority in the area where the cafe or restaurant is located. It certifies that the business complies with local health and safety regulations. The specifics may vary by locality, so it's essential to check with the local authorities to meet their requirements.
Eating Place Licence: To operate a restaurant or cafe, an Eating Place Licence must be obtained from the city's licensing police commissioner. This licence is typically processed through the commissioner's website. It ensures that the establishment complies with city-specific regulations and standards, and it may cover various businesses, including restaurants and movie theatres.
Signage Licence: To display signage, such as logos, images, posters, and signs for your cafe, you must acquire a signage licence from your local civic authority. This licence allows you to effectively market your cafe's brand and aesthetics. It ensures that you have legal permission to use visual elements for promotional purposes.
Permit to Use Music or Video: If your cafe plays music or shows videos, it's necessary to obtain a permit in accordance with the Copyright Act of 1957. You can apply for this permit through the Indian Performing Right Society or Phonographic Performance Limited's websites. This permit ensures that you have the legal rights to use copyrighted music or videos in your establishment, avoiding any copyright infringement issues and legal consequences.
Compliance with these licences and regulations is crucial for the legal and smooth operation of a cafe or restaurant in India. Failure to do so can result in fines, closures, or legal consequences, so it's essential for business owners to stay informed and ensure all necessary permits are in place.
Budgeting and Financial Considerations To Start a Cafe in India
The cost of starting a cafe in India can vary depending on a number of factors, such as the size and location of your cafe, your concept, and the equipment you need. However, you can expect to spend at least Rs. 15-20 lakhs to start a small cafe in India.
Here is a breakdown of some of the startup costs you can expect:
Rent: The rent for your cafe will vary depending on the location and size of your space. In general, you can expect to pay Rs. 50-100 per square foot per month for rent in a major city in India.
Equipment: The equipment you need for your cafe will depend on your concept. However, some basic equipment you may need includes coffee machines, grinders, refrigerators, freezers, and ovens. You can expect to spend Rs. 5-10 lakhs on equipment for a small cafe.
Furniture: The furniture you need for your cafe will also depend on your concept. However, some basic furniture you may need includes tables, chairs, and sofas. You can expect to spend Rs. 2-3 lakhs on furniture for a small cafe.
Inventory: The inventory you need for your cafe will depend on your menu. However, some basic inventory items you may need include coffee beans, milk, tea, sugar, and food ingredients to make dishes such as sandwiches, pastries, and salads. You can expect to spend Rs. 1-2 lakhs on inventory for a small cafe.
Staff salaries: The size of the staff you need for your cafe will depend on the size of your cafe and your business hours. However, you can expect to pay Rs. 15,000-20,000 per month for a full-time employee in India.
Marketing and advertising: The marketing and advertising costs for your cafe will vary depending on your budget and your marketing strategy. However, you can expect to spend Rs. 1-2 lakhs on marketing and advertising for a small cafe.
If you are serious about starting a cafe in India, it is important to create a detailed financial budget. This will help you to estimate your startup costs and ongoing expenses. It will also help you to track your spending and make sure you are on track to meet your financial goals. PropReturns makes it easy for you. We help you find commercial spaces tailored to your business needs that fits your budget and location preferences.
Target Market and Marketing Strategies To Start a Cafe In India
Selecting the ideal location for a cafe is a critical decision that directly impacts its success. In this context, we'll explore how to identify and attract the right customer base by choosing the right location for your cafe, along with opportunities to promote your cafe's services effectively.
Target Audience: Cafes typically target a diverse audience, including students, professionals, couples, and families seeking a comfortable and trendy hangout spot. Opportunities exist in serving remote workers and tourists, offering a broad appeal for coffee enthusiasts and those looking for a pleasant ambiance.
Marketing Strategies: Effective marketing involves social media promotion, loyalty programs, and collaborations with local influencers or businesses. Hosting events like open mic nights or art exhibitions can draw in various customer segments. Location-based marketing, such as geo targeted ads, can also be useful.
Location Insights: Choosing a location in or near college campuses, business districts, or tourist areas can help attract the right customer base. Analysing foot traffic, competition, and demographics of the area is crucial.
Promotion Opportunities: Utilising online commercial real estate platforms and consulting commercial real estate experts can help identify suitable retail spaces for the cafe, ensuring visibility and accessibility. Additionally, partnerships with nearby businesses for cross-promotion can boost the cafe's visibility.
Creating a Perfect Cafe Space
The ideal cafe space should be large enough to accommodate your target number of customers, but also small enough to feel cozy and inviting. A good rule of thumb is to allow for 10-12 square feet per customer.
When considering the layout of your cafe, it is important to think about the flow of traffic. You want to create a space where customers can easily move around and order their food and drinks. You also want to make sure that there is enough space for customers to sit and enjoy their meals.
Here are some specific tips for choosing an ideal cafe space:
- Make sure the space is well-lit and has plenty of natural light.
- Choose a space with a high ceiling and open floor plan. This will create a sense of spaciousness and make your cafe feel more inviting.
- Consider the location of the kitchen and the ordering area. You want to make sure that customers can easily order their food and drinks and that the kitchen is not too close to the dining area.
- Create a variety of seating options, such as tables, chairs, booths, and sofas. This will appeal to a wider range of customers.
- Add personal touches to your cafe, such as art, plants, and comfortable furniture. This will create a unique and inviting atmosphere.
Choosing a Cafe Location Effectively
The location of your cafe is crucial to its success. You want to choose a spot that is both visible and accessible to your target market. Here are some factors to consider when choosing a cafe location:
Foot traffic: Choose a spot with high foot traffic, such as near a busy street, office building, or shopping mall.
Visibility: Choose a spot that is easy to see from the street or sidewalk.
Accessibility: Choose a spot that is easy to get to by car, public transportation, and on foot.
Competition: Avoid choosing a spot that is too close to other cafes or restaurants.
Zoning regulations: Make sure that the space you choose is zoned for commercial use.
PropReturns is a leading commercial real estate portal in India. It offers a wide range of commercial properties for rent and sale, including cafes. Here are some of the benefits of consulting PropReturns for finding suitable cafe locations:
Wide selection of properties: PropReturns has a large database of commercial properties, including cafes. This means that you will have a wide range of options to choose from.
Detailed information: PropReturns provides detailed information about each property, such as location, size, price, and amenities. This will help you to make an informed decision about which property is right for your cafe.
Expert assistance: PropReturns has a team of experienced real estate agents who can help you to find the perfect cafe location. They can also provide you with advice on negotiating rent and other terms of your lease.
Starting a cafe in India can be a rewarding experience. However, it is important to be prepared and to have a solid plan in place. This blog has provided you with a comprehensive overview of the cafe business in India and how to start your own cafe.
Here are some key takeaways:
- The cafe business is growing rapidly in India, and there is a lot of opportunity for new cafe owners.
- To succeed, you will need to develop a unique concept and offer excellent customer service.
- The cost of starting a cafe will vary depending on a number of factors, such as the size and location of your cafe, your concept, and the equipment you need.
- It is important to choose a good location for your cafe. The ideal location will be visible, accessible to your target market, and have high foot traffic.
- You should consult with a commercial real estate agent to find suitable cafe locations.
Resources:
https://corpbiz.io/learning/set-up-a-cafe-business-in-india/
https://legaldocs.co.in/blog/mandatory-licenses-for-opening-a-coffee-shop-in-india
https://enterslice.com/learning/license-required-to-open-a-cafe/
