India is known for its diverse and vibrant food culture, coffee & tea are some of the most popular welcoming drinks in every household throughout the nation. India’s cafe culture has been steadily on the rise, with coffee shops becoming more than just a place to grab a quick cup of joy, they are now hubs of creativity, relaxation, and connection. If you’ve ever dreamt of stepping into the world of coffee entrepreneurship in India, this blog will help you to get started. There are procedures you must navigate to obtain the necessary coffee shop licences and permits.
Business Model of Coffee Shop
There are three primary methods to initiate a coffee shop in India.
Invest in a Franchise
Choose the franchise coffee shop to start your business using a pre-established company model. This model comes with various critical business decisions already made. You can acquire an entire business, situated in a location chosen by the franchise provider, for a fee.
Purchase an Existing Business
Another way to acquire a ready-made enterprise is to take over an existing coffee shop that’s up for sale and could benefit from a makeover. Identifying a profitable business available for purchase can be a challenging task.
Start from the Scratch
Creating your coffee shop from the ground up demands the most significant effort, but it also offers greater flexibility and potential for maximising profits.
Coffee Shop/Cafe business plan
A solid business plan is the essential first step for any business. In this section, we’ll guide you through the key components of a coffee shop or cafe business plan, covering everything from the business model, market research, and location to marketing, licensing, and permits.
Market Research for Coffee Shop/Cafe
Market research is important for individuals planning to open a coffee shop or cafe. It involves gathering, analysing, and interpreting market information to make informed decisions and take your business toward success. Market research begins by identifying the target audience, considering factors such as their age, lifestyle, and preferences. This identification helps in coming up with a theme that aligns with the target audience’s preferences. Another crucial step is competitor analysis, which assists in customising your business strategy. Additionally, factors like menu and pricing warrant thorough analysis.
Marketing Strategy for Coffee Shop/Cafe
Coffee shops and cafe businesses can be highly competitive, and to succeed a marketing strategy is vital. To stand out, first, understand your target audience and create a strong brand identity.
- Establish an online presence
- Engage with customers
- Influencer marketing &
- Email campaigns help maintain connections.
- Building a community can play a major role in brand growth.
Cafe/Coffee Shop Location Strategy
Selecting the right location for your cafe or coffee shop is an important decision that can have a significant impact on the success of your business. Your location should be a place where you can build a community and connect with customers. The coffee shop location strategy includes your target audience, competition, traffic, parking, and the overall ambience as major factors.
Another important thing about the location is whether it’s your place or rented or a newly purchased place. This factor depends on the financial state. The documentation differs for each, let’s look at them
Buying a Shop
Many cafe owners decide to purchase a space when they believe it will benefit their business or for other reasons. To do this, a sale deed registration is prepared on stamp paper, and it’s registered at the registrar’s office. The buyer and seller, along with two witnesses, must sign the agreement.
Renting a Shop
If you choose to rent a property, create a rental agreement for future reference. The rental agreement is drafted on stamp paper, with different states having different stamp duty rates. It’s important that both the owner and tenant, along with witnesses, sign the rental agreement.
Using Residential Property for Commercial Purposes
If you plan to open a cafe in a neighbourhood, even within a part of your own home, you’ll still need approval from the town planning authority or corporation. However, not all residential areas can be used for commercial purposes; it depends on the local authority’s policies. Be sure to check and comply with these regulations before proceeding.
Coffee Shop Licences and Permits
Obtaining the cafe/coffee shop licences and permits can be a difficult task, but to ensure that you’re operating within the legal framework it’s necessary. Here’s the list of essential licences and permits you’ll need for your coffee shop:
Proper registration ensures that your coffee shop operates within the legal framework and allows you to avail various benefits and protections. Before registering your cafe, decide on the most suitable business structure.
- Sole Proprietorship: You are the sole owner and responsible for all aspects of the business.
- Partnership Firm: You can partner with others to share ownership and responsibilities.
- Limited Liability Partnership (LLP): Offers limited liability protection to partners.
- Private Limited Company: Provides separate legal entity status and limited liability protection.
The Food Safety and Standards Authority of India (FSSAI) licence is mandatory for all food businesses, including coffee shops/cafes. It certifies that your cafe complies with food safety and quality standards. Obtaining the FSSAI licence depends on the business turnover.
- Basic Registration – If your annual turnover is up to 12 lakhs.
- State FSSAI Licence – If your annual turnover exceeds 12 lakhs but doesn’t exceed the 20 crore limit.
- Central FSSAI Licence – If your annual turnover exceeds 20 crores.
Health Licence/Trade Licence
The Health Department and Municipal Corporation in each state have the power to grant a health and trade licence for operating a cafe in India, to ensure that your cafe maintains proper hygiene and sanitation standards.
Eating House Licence
To obtain an eating house licence, individuals should submit their applications to the state/city police headquarters and the Police Commissioner’s office. In certain cities, applicants have the option of applying for the registration certificate through an online platform.
Shop and Establishment Licence
The shop & establishment licence regulates the working conditions and employment terms in your cafe. It is typically issued by the state’s labour department or municipal corporation.
If you start your own coffee shop brand then you should trademark your coffee shop. Trademark registration is a must to avoid others taking your business name and logo.
To ensure the safety of your customers and staff, you’ll need a fire safety certificate from the local fire department. This involves an assessment of your cafe’s fire safety measures and equipment.
If you plan to display signage or outdoor advertising for your cafe, you may require a signage licence from the local municipal corporation to ensure compliance with local regulations.
If you hire 20 or more employees on a salaried basis, it’s compulsory to register with the ESI or Employees State Insurance Corporation scheme. All employees earning less than Rs. 21,000 per month are eligible for benefits through this program.
Registering for the Goods and Services Tax (GST) is crucial for tax compliance. The requirement may vary based on your cafe’s turnover.
Each state has its regulations and requirements, so it’s important to obtain the pollution certificate from your state’s respective authority.
If you intend to play music in your cafe, you’ll need a music licence from organisations like the Phonographic Performance Limited (PPL) or the Indian Performing Rights Society (IPRS) to avoid copyright issues.
Liquor Licence (Optional)
It is necessary only if you plan to serve alcoholic beverages, you’ll need a liquor licence, issued by the state’s excise department. Note that availability and eligibility vary by state.
We hope this blog answers “How to Start a Coffee Shop/Cafe in India?” Obtaining the necessary coffee shop licences and permits for your coffee shop/cafe is essential for a successful start. At Taxxinn, we’re here to assist you every step of the way. Our experts will help with business registration, trademark registration, FSSAI licencing and all other licences, making the process easier, and ensuring your cafe operates legally and safely.