I had been running a food joint sometimes ago, committed lot of blunders and learnt lot of lessons.
I have shared my story here. Lot of Entrepreneurs want to enter into food business but they too tend to replicate my doom story due to lack of experience.
Nothing makes me more satisfied than saving somebody from committing the same mistakes that I did.
So here are the few suggestions and tricks , I am listing down to bring the entry barrier low for new Entrepreneurs.
Most of the Entrepreneurs who want to setup a QSR, do this mistake of having a wrong attitude towards the concept. They brainstorm, think, act, do everything keeping big QSR’s brands like Domino’s, Mc Donalds, KFC, etc. The first step itself goes wrong. Comparing a new idea of setting up a QSR to Decades old established brand is injustice to your unborn QSR. Business environment is very different for such established brands and your unborn QSR.
If you wanna setup a QSR, do it in a new way, be innovative, be disruptive. When you follow a religion you are restricted by traditions, customs, norms, etc, but if you don’t follow then you are a free man. Similarly, if you can isolate your idea from established QSRs in your mind then you can really do wonders.
Cash Cow or Brand
From the day of inception of idea, Entrepreneurs spend lot of efforts on making their unborn QSR a well established Brand.
Brand value once earned is not going to be in your kitty like a Fixed Deposit, its like an EMI, you will have to keep paying for it in all terms money, service, customer satisfaction, etc. But while you are starting new there will be inconsistency in service initially because it takes time to adapt, things on paper and on ground are very different, cash flow will also be in short initially as it takes some time to adjust working capital cycle to optimum level. So do you think it’s wise concentrating on Brand building when you have other vital issues to focus.
First goal of a new Entrepreneur must be to make it a cash cow not a brand, do whatever it takes to bring in revenue, you do whatever it takes to keep costs low. Try to enter into positive cash flow as soon as possible. I don’t advice against marketing but trying to imitate the marketing style of Big QSRs is not justified. Marketing should be innovative and as far as possible free of cost.
I agree that some of you may argue that Branding is a continuous process and has to be done from day 1 or else it would be hard to change the perception of the people later on, but then instead of spending money which you dont have on branding, create a cash cow, and then you can always start a new venture with same concept and brand it and you will also have cash cow to support it.
Don’t run after VCs for investment, don’t run after banks for project loan or don’t go for any formal method of raising funds because all your efforts will be futile. Banks will ask for collateral and 3yrs of ITR which if you had then you wouldn’t hv been reading this post to find out how to setup low cost QSR. VCs out of question, consider yourself extremely lucky if you even get a chance to pitch in front of VC, because they want to see sales, customer, scope for exponential return only then they would invest.
Your only option is personal savings, friends and family. By now I have made it clear the need for low cost QSR. You need low cost QSR because you don’t hv money to invest, so better have a modest plan, initially only think of building a base, later on as things progress and you start making money you can start expanding and growing, its the law of nature men when take birth they take birth as a baby not 6.ft tall man, let the process of birth of your QSR be natural. I confidently claim here that a decent QSR can be setup in as low as 1-2 lacs.
No matter what is the size of the QSR in your mind, start with kiosk or if you have a decent budget then with a shop not more than 300 sq.ft. Don’t try to accommodate sitting arrangement for customers, take away is better. Dine-in format increases your fixed cost of space and limits your sales as there is a certain limit of how many customers you can accommodate. Even big QSRs are changing their format to take away as real estate cost is haunting them and also sales get restricted.
So in short try to start with a kiosk initially, with less or no sitting arrangement, if you see demand you can introduce home-delivery service.
This is real tough job, finding right person for right job. As a new Entrepreneur you tend to recruit highly experienced chef, or someone working for big QSR brand. But they charge you anything between 10k-20k or even more at times. Entrepreneurs hesitantly pay them to have a quality product and also in hope to get some help due to their experience. I suggest a better trick here. Hire a fresher with no experience, so he will be happy even with 4-5k initially, then hire an experienced chef to train your people and pay him in return, even if it means paying 20k its worth.
Another mistake new Entrepreneurs do is to hire too many people in anticipation of huge no. of customers. And then these employees sit idle and you pay them for wasting their time. Be like a Marwari and Sindhi, if they pay you they will extract each and every drop of yours, they make sure they are getting value for money.
Hire just one fresher whom you will be training for chef and hire another fresher for miscellaneous jobs i.e ask him to assist chef when needed, home-delivery, cleaning, etc. If more no. of customers are turning up then you can hire more people but make sure before hiring that your QSR is running at 100% capacity don’t unnecessarily increase idle capacity.
Entrepreneurs tend to add lot of variety in their menu but don’t forget lot of options confuse the customer. More the no. of items on your menu, more you will have to maintain inventory, more requirement of working capital, more wastage as inventory items are highly perishable in this case.
Start with two variety and few variations in it, for eg you can have 3-4 kinds of juices and veg & Non-Veg burgers. As people start trying out your products, and revenue starts coming in you can introduce more products gradually in the intervals of 3 months and this will help you to hook customers.
Lets have a glance on total cost now. Set aside Deposit and rent for the set-up as it will differ place to place but anyway cost you really low if you go for Kiosk.
Equipment should not cost you more than 10-20k if you start with just 2 items on the menu.
Employee if you go according to my trick it will initially cost you max. 20k to train and then max 6k for fresher chef and 4k for other fresher, it total ups to 30k
As you have Kiosk you wont need lot of furniture and interiors, but still lets take another 40k into account.
Take another 10k into account for raw material.
Lets take another 20k for marketing budget including menu, leaflets, gift items, etc.
So excluding Real estate cost you will require a maximum of 1.2lac to start with,
and operating cost will be just Rent + Electricity + 10k(salary).
Plz don’t debate on this exact figure of 1.2Lac, it is a probable figure. Depending upon your plan it may increase or decrease but I can bet if take some inspiration from the above points mentioned then you can drastically reduce your cost to start.
Its better to Start small than never to Start!