Instead of sitting in an office and being an armchair analyst, we thought it would be great to talk to an actual businessman about running a restaurant ...
Instead of sitting in an office and being an armchair analyst, we thought it would be great to talk to an actual businessman about the hassles of running a restaurant in the city. And so, we contacted Mr. Vineet Shetty who owns three bustling restaurants in Mumbai. Let’s find out what he has to say!
How long have you been in the restaurant business? What is it like to run a restaurant?
Since last 8 years, I and my business partner Manav are in the restaurant industry. In 2010, we came up with our first restaurant Quench in Bandra. Currently, we have three outlets of Quench across Mumbai.
Our journey was full of difficulties. We worked hard to set up our business. A restaurant is a place where people come for leisure, to spend some leisurely time with their friends and families. So, it is really challenging for the restaurateurs to fulfil the needs of the customers. We must make sure that we provide quality food and services to our customers and a good ambiance which will make them visit the restaurant frequently.
What kind of food do you serve? What would you recommend to us?
We serve Continental and Chinese food. Our restaurant is also famous because of the variety of beer we offer. The tagline of our restaurant says “Quench, Where Beer Flows.” We keep happy hours and offers on beers which attracts people. Regarding food, you must try all our dishes, but Chicken Sandman and Paneer Paprika are highly recommended.
Let’s talk about with your experience in establishing a restaurant and doing business in Mumbai. How much time does it take to start a restaurant in Mumbai? How long did it take you?
It took us eight months to start the restaurant. We had to go through many windows to get permissions and licenses. That took us a lot of time. Six months is the average time necessary for all the restaurants and sometimes even more. It all depends on the time taken to acquire all the licenses and permissions.
What all licenses or permissions are needed to open a restaurant?
Around 7 to 8 licenses are needed, depending on whether you serve liquor or not. I remember when we started our first restaurant, we had to get a BMC license, police license (though it is no longer applicable), liquor license, eating house license which is the basic license to set up a restaurant, DJ license, shops and establishment license, and FSSAI license. There is an excessive license raj and bureaucracy under which you must run your restaurant.
Wow! Those are a lot of licenses. Did you face any difficulties in acquiring these licenses?
One major difficulty is that there is no single window to acquire these licenses. You must go through more than ten different windows. A lot of paperwork is involved, and a lot of time is taken to transfer your documents from one officer to another. You are then just left with the option to bribe the officers to get your work done as soon as possible.
Every day we had to run through the various departments to meet the officers. It took us four months just to get the basic license to set up a restaurant, and then liquor and police license which took another four months. We faced difficulties while acquiring these licenses and permissions. Under-hand payment is necessary and without it you cannot obtain a single license.
It seems like a lot of unnecessary work. Was there any specific license which is very difficult to obtain?
In fact, you should ask that which license is easy to obtain. All the licenses are difficult to obtain, from eating House license to liquor license. But there are two licenses which are most difficult to obtain – the BMC and liquor license. BMC license, because it takes at least five months to get it, and liquor license because, you must beg before the collector to examine your documents before getting it.
The time taken to obtain the liquor license depends on when the collector sits to examine your documents. The collector takes his own sweet time to get the work done, and only if you incentivise him with something, you may get your work done at all. I struggled for four months to obtain a liquor license for my restaurant.
Are these licenses permanent? Or you must renew some of them periodically?
You must renew all the licenses on yearly basis. The cost of renewing the licenses is extremely high. Currently, we pay ₹ 10,000 for Shops and Establishment license, ₹ 25,000 for Eating House license, ₹ 4,000 for FFSAI license, ₹ 6,00,000 for the liquor license and ₹ 2,00,000 for DJ license every year. The cost of renewing license has increased over time. It has doubled since we first opened our restaurant. This results in an increase in our cost which then reflects in the prices. The customers end up paying for those licenses.
That is a lot of money, has anything else changed over time in terms of running a restaurant in Mumbai?
Things have not changed much. Taxes have increased, the rate of property is going up and so are the rentals. On the other side, the cost of licenses is going up, which reduces the incentive for an entrepreneur to open a restaurant. Hence, even today it is not at all easy to run a restaurant in Mumbai because of all these bureaucratic issues.
Now that you have explained the cumbersome process, what are some of the changes you would like to see in the process of starting and running a restaurant in Mumbai?
If I plan to open my fourth restaurant, in say 2020, then I wish that there is one single window to get all the licenses to start and run the restaurant. The process of licensing should be digitised, because if there is a physical person examining your documents then chances of corruption are high. Tax rates should be less too.
