According to a report, the restaurant industry in India is growing at the rate of 7% of which the organized sector is growing more rapidly at 16% as compared to the unorganized sector. Out of the 1.5 million eating outlets, only a very small fraction of outlets are part of the organized sector. The organized segment is slated to reach Rs.22, 000 crore by 2017. Quick service restaurants will show maximum growth followed by casual dining, cafes and fine dining. Most Indians eat out only twice a month and if they eat out just a little more often, the market opportunity will increase tremendously.
Delhi and NCR alone have around 2,200 licensed outlets, Mumbai has 1,500 and Bangalore about 300-400 licenses. The restaurant business is all set to reach new heights with the rise in disposal incomes, nuclear families and increase in working population. Another trend that favours the restaurant business is the increase in private equity as the restaurant business is lucrative.
If you are planning to get into the restaurant business then you must be thoroughly conversant with the prerequisites to avoid legal complications. Check list the following licenses/NOC's that you need to get from different bodies in order to comply with the regulatory norms.
Food License: The primary requirement is to obtain a license under FSS (Licensing & Registration of Food Businesses) Regulations 2011. Every restaurant owner must register their business with FSSAI as that is the apex food regulatory body. Moreover, running a restaurant business without a license is considered a legal offense that can invite penalties. Check the eligibility criteria for Registration, State Licensing & Central Licensing.
Health Trade License: Another important license that a restaurant owner must have is the health-trade license. This is issued by the Municipal Corporation or the Health Department of the state where you wish to open a restaurant.
License for Eating House: Eating House License is necessary and is authorized by the city or state police headquarters and the police commissioner licensing. There is a provision for online application for this license.
Fire Security Certificate: All restaurants need to be secure against fire hence they need an NOC from the fire department of the city. On application, an inspection is carried out and on fulfilling all criteria the officials of the Fire Department will grant the NOC or let you know where there is a shortfall in fire safety on your restaurant.
Liquor/Bar License: Liquor license L-4 (L-17 as per new excise rule) is required if liquor is served in a restaurant. The liquor license can be obtained from the Excise Commissioner of the city or region of the state.
Approval/Re-Approval of Restaurants: Prior approval is required from the Department of Tourism of the Government of India in the concerned state if you wish to apply for the L-4 license.
Lift Clearance: Restaurants in multi-story building premises need to ensure that the lift operations comply with safety norms. For this, they need a clearance certificate from the electrical inspector in the office of the Labour Commissioner.
License for playing music/video: You cannot play recorded music or videos in your restaurant unless you have a license which is in compliance with the Copyright Act of 1957. This license is obtained from Phonographic Performance Limited or Indian Performing Right Society.
Environmental Clearance: An NOC from the Pollution Board of the city/state is required to ensure the restaurants activities do not violate pollution norms.
Insurances required: The restaurants need to have insurance for Public liability, Product liability, fire policy and policy for building and assets. Get these insurance policies from any recognized insurance company.
Signage license: Restaurants can obtain this license from the local civic bodies like Municipal Committee or City Corporation which is required for public display of signs.
Shop & Establishment Act: A restaurant has to be registered under this act as is applicable in the concerned state. This act safeguards employee rights and working conditions.
Approval from Weights & Measures Department: According to the Legal Metrology Act, 2009, you require approval for the weighing and measuring instruments you use in the restaurant from the Weights & Measures Department.
If you plan to venture into the restaurant business, besides a business plan and financial security you also need to make a comprehensive list of compulsory regulatory requirements. Once you have the licenses you can concentrate on running your business. However, make sure you don't forget to renew your licenses on the due date.