Pakistan

How to Start a Fast Food Restaurant in Pakistan

Fast food is a food which is prepared and served quickly at outlets called fast-food restaurants. It is a multi-billion dollar industry which continues to grow rapidly in many countries. A fast food restaurant is a restaurant characterized both by food which is supplied quickly after ordering, and by minimal service. Many fast-food restaurants are part of restaurant chains or franchise operations, and standardized foodstuffs are shipped to each restaurant from central locations. There are also simpler fast-food outlets, such as stand or kiosks, which may or may not provide shelter or chairs for customers. Because the capital requirement to start a fast food restaurant is relatively small, particularly in areas with medium income population, small fast-food restaurants are growing throughout Pakistan.

The Fast Food Restaurant Market is a growing business in Pakistan relying heavily on the changing lifestyle patterns, population growth of the target age group and also related to increase in employment of women. With today’s hectic lifestyles, time-saving products are increasingly in demand like the fast food restaurant.

Demand for convenience has driven expenditures where people want quick and convenient meals; they do not want to spend a lot of time preparing meals, traveling to pick up meals, or waiting for meals in restaurants. As a result, consumers rely on fast food. Knowing this, fast food providers are coming up with new ways to market their products that save time for consumers.

Consumers want to combine meal-time with time engaged in other activities, such as shopping, work, or travel, therefore allocating less time for food, hence the growing need for fast food.

Fast Food Industry of Pakistan

The fast-food industry is popular in Pakistan. The presence of multinational fast food chains like McDonalds, KFC, Pizza Express, Pizza Hut, Subway etc. have somewhat catered to the high income segment. Multinational corporations such as these typically modify their menus to cater local Pakistani tastes and most overseas outlets are owned by native franchisees to ensure that cultural, ethnic, and community values are taken care of. Additionally, multinational fast-food restaurants are not the only source of fast food in most cities of Pakistan. Many local restaurants have developed around the main cities of Pakistan (for example: Kolachi, Kababjees, Mirage, Bundu Khan, Usmania in Karachi) to compete with international restaurants and provide menu items that appeal to the unique regional tastes. However much of the middle-income segment prefers visiting local outlets that offer low cost fast food, hence more frequent visits.

To start the fast food business following options can be considered according to current market trend (sorted with respect to investment size):

  • Take away only kiosks are least expensive option available in which only counter and kitchen area are required to fulfill the take away orders. Example: Food Break at Bahadurabad in Karachi.
  • Outdoor or without shelter open seating arrangement comes after take away only setup. It also include plastic chairs and tables to cater the orders. Example: Tipu Burger, Flamingo, Roll Inn and Chicks & Chips at Boat Basin in Karachi.
  • Mix setup is the setup which includes partial outdoor and partial indoor setup. The quality of indoor furniture is better than the outdoor one. Example: Jan Broast, Nihari Inn, New Handi Inn, Café Peshawari at Boat Basin in Karachi.

In Indoor setup there are two options:

  • Without air-condition restaurants are cheaper in capital cost which includes quality of furniture and interior décor, this cost also reflects in the menu. Example: Mr. Burger at Boat Basin. Golden Apple at Bahadurabad. Hyder’s, Royal at Sindhi Muslim Co-operative Housing Society (S.M.C.H.S.) in Karachi.
  • Air-condition restaurants include good to high quality furniture and décor depending on the tier of the restaurant and investment size. Example: Sizzlez, Burger Lab, The Sauce, Food’s Inn at S.M.C.H.S. in Karachi.

The rapid rate at which the fast food industry continues to add outlets is as much a reflection of consumer demand for convenience as it is a reflection of demand for fast food itself. Expanding the number of outlets increases accessibility, thus making it more convenient for consumers to purchase fast food. Especially in recent years, much of the expansion has been in the form of “satellite” outlets. These tend to be smaller in size, with little or no seating capacity, and are often in nontraditional locations, such as office buildings, department stores, airports, and gasoline stations. Location should be chosen specifically to maximize convenience and accessibility of consumer.

Consumer Appeal for Fast Food Restaurants/Franchises in Pakistan

Fast-food outlets have become popular with consumers for several reasons. One is that through economies of scale in purchasing and producing food, these companies can deliver food to consumers at a very low cost.

Multinational Fast food chains like McDonald’s rapidly gained a reputation for their cleanliness, fast service and a child-friendly atmosphere where families on the road could grab a quick meal, or seek a break from the routine of home cooking. Prior to the rise of the fast food chain restaurants, people generally had a choice between greasy-spoon diners (kiosk) where the quality of the food was often questionable and lacked quality service.

Fast food restaurants have rapidly become the eatery “everyone can agree on”, with many featuring child-size menu combos, play areas and whimsical branding campaigns, designed to appeal to younger customers. Parents can have a few minutes of peace while children played or amused themselves with the toys included in the premises.

Many consumers see multinational fast food restaurants as symbols of the wealth, progress and well-ordered openness of Western society and therefore become trendy attractions in many cities around Pakistan, particularly among younger people with more varied tastes.

Focusing on Consumer Convenience

Fast Food outlets tend to focus on the “work while you eat” philosophy similar to the International chains at Airports and Railway stations wherein seating space is also available for passengers in transition or the outlets in large shopping malls in Karachi, Lahore, Islamabad and in other cities promoting the concept of “Shop While You Eat.”

Increasing Market for Fast Food in Pakistan

Pakistan, currently ranked as 6th in terms of total population, is characterized by a growth rate of 1.92% (Pakistan Economic Survey 2014-15) and is set to take 5th position in world in 2050 in terms of total population with already 191.71 Million people registered in 2014-151. With this, the per capita income has increased to US$ 1368 while the productive age group (15 to 59) years is said to take the major chunk of population (67% of total population) by 2020.

The growth rate in food-service business is also augmented by the rapid increase in the employment rate for males / female population aging between 20 to 29 years hence the greater income contribution to the overall income is expected to be higher.

Future of Fast Food Industry in Pakistan

The Pakistani economy is becoming increasingly service-oriented, and over the past several decades, the food service industries that offer the highest levels of convenience have been rewarded with strong sales growth. In the face of rising population, incomes and increasingly hectic work schedules, a nearly insatiable demand for convenience will continue to drive fast food sales. Fast Food Outlets will strive to find ways to make their products even more accessible.

Even if incomes stagnate or attitudes change, consumers are unlikely to return to meal preparation at home on a large scale. This suggests that even if consumers choose to spend more time at home, for family or other reasons, much of the meal preparation will still occur elsewhere.

Many more table service restaurants, which traditionally focus on full-service in house dining, will likely try to capture part of this market by offering take-out, and possibly experimenting with home delivery.

The value of consumer time, as well as the demand for consistent, high-quality food products, will continue to shape the fast food industry. Fast food, once considered a novelty, has become an increasingly significant part of the young generation’s diet. The role of convenience in this dietary shift cannot be over-emphasized, and the future growth of the rest of the food service industry will be driven in large part by its ability to find new ways to save consumers time.

Tips for Success of Fast food Business in Pakistan

From burger stands to barbeque steakhouses more and more restaurants are popping up in cities every day. Since restaurants are such a common business venture, people must enjoy running them. However, all of those advantages come at a price – building a restaurant from scratch is not an easy task. It is a hard and expensive process, and the reality is that many restaurants fail in their first year of business due to improper planning. But rest assured, there are ways to reduce the risk of becoming another statistic. Following are some of the handy tips that can help run a successful fast food establishment.

The three main critical success factors that affect the decision to invest in the proposed business setup are:

Conceive the “Winning” Concept

A well-defined concept stands a much better chance of long term success than some vague notion. To start, it is wise to first set specific goals and decide on the ways you will measure your restaurants success.

Longetivity

This can be described as the art of being able to maintain success over time while adjusting to meet the changing demands and buying habits of the customer. To open a restaurant successfully and become profitable is one thing, but to maintain that success over a long period of time is “winning.”

Consistency

To not simply open a restaurant, but to truly develop a winning concept requires implementing systems and procedures to ensure consistency of your operation.

Market Appeal

All restaurants want to be busy but winning concepts seem to have a broad appeal and well developed “points of difference” that enable them to dominate their market niche. To be the first place the customer thinks of going when choosing to dine out is the goal of the winning concept.

Expandability

Consistency of quality and service, and operating systems and management procedures established in the first unit can result in more expandable opportunities where all systems are already developed and waiting to be implemented.

Menu Pricing

One of the most important factors in the strategic planning of a restaurant is in the development of the menu. It involves designing an appealing selection of menu items that are competitively priced in the marketplace. Menu pricing is a very tricky task because you need to price items so that you can operate profitably and, just as important, offer your targeted guests a good price/value relationship.

Selecting Prime Location

The specific location within your target area is also critical. If you are situated in an infrequently traveled area nowhere near complimentary businesses or at the back of a mall, you limit your earning potential. Even if you are the only outlet in town you must gauge the likelihood of outsiders visiting your restaurant. If the restaurant is right off of a major freeway heavily traveled by truckers and road trippers you may be highly successful despite a remote location.

Market Research

This is probably the most critical factor for running a successful fast food restaurant. You need to visit fast food outlets, franchises and other chains to see how your ‘concept’ would fit into the neighborhood you are planning to target. Talk to customers to know their preferences, some detailed meetings with restaurant managers / owners over dinner would do the trick in obtaining best practices and critical information that otherwise could have been overlooked. Keep in mind that because a concept works in one area does not mean it will be wellreceived by customers in your location. Tastes are subject to location preference and more often target market. In high scale urban areas (like PECHS, DHA, Clifton, Boat Basin, Bahadurabad, S.M.C.H.S, Gulshan-e-Iqbal, Gulistan-e-Johar etc.) you are more likely to be successful with a niche concept. Another thing to consider is competition. If your market is saturated with similar restaurants and the population may not be large enough to support more restaurants, you may want to rethink your concept.

How to Start a Restaurant

Work in a Restaurant

One of the best ways to reduce the risk of owning a failed restaurant is to have some restaurant experience before you start. Many successful restaurateurs have said that the best way to prepare for owning a restaurant is by working in one, hopefully in an eatery similar to one you’d like to open. You’ll learn more than just how to serve food with a smile; you can learn restaurant marketing, menu development, payroll, and other significant components of the restaurant world. Working in the restaurant industry and learning the basics is an important first step to becoming an owner.

Know Your Target Market

Who do you see eating at your restaurant? Are you targeting the family crowd, teenagers or seniors? Knowing your target market before you start planning will not only help you solidify your menu; it will help determine your location, decor and the overall atmosphere of your restaurant. A family-style restaurant, which caters to parents and their kids, may not appeal to seniors. On the other hand, an upscale, quiet restaurant offering a two-hour dining experience wouldn’t be appealing to teenagers or families with small children.

Select a Service Style & Food Concept

What type of restaurant do you see yourself owning? Typically, your service style will either be fast-food, which offers food types that range from burgers, fries, soups and sandwiches; mid-scale, which has full course meals at value prices; or upscale, offering full service meals with high-class ambiance and, in turn, higher prices.

After narrowing your establishment to one of these three options, you can narrow your style of food choices. Is there a particular type of cuisine that you see yourself serving? Do you prefer pizza or soup? Sandwiches or Chinese? Choosing your food concept goes hand-in-hand with your choice in service style.

Develop a Business Plan

Like any other type of company, a restaurant will need a concise business plan. This plan should include but is not limited to: the overall concept and goal of the restaurant; specific financial information and projections; a description of the target market; the menu and pricing; equipment and employee details; advertising and marketing plan; and a potential exit strategy.

Create ‘the Menu” and not “a menu”

The menu can make or break a restaurant, and should be in accordance with the overall concept of the restaurant. Revisit the business plan to make sure the menu is attractive to the target market, is affordable within specified budget, and complements the restaurant’s design concept. For example, if the restaurant is family-friendly, you will need a kids menu. If it is supposed to be an upscale establishment, a lot of thought will have to go into the dessert list.

Choose a Location & Layout

It is important to find a location that has a continuous stream of traffic, convenient parking, and is in proximity to other businesses (especially if you’re catering to the lunch crowd). It is necessary to revisit the business plan to make sure you are close to your target market. If you are opening a fast food restaurant, it may not be the best idea to open it in the vicinity of upscale homes but preferably near flats. In addition, make sure that the monthly rent is in-line with the business plan’s projected profit so that you do not become building-poor.

Once you find your location, the layout and design of the interior should be taken into account. You should already have a concept of your restaurant in your business plan; bring this concept into the design of the dining room. When designing your kitchen area, think about what’s on your menu in order to determine what is needed for the food preparation area.

Getting the Appropriate Funding

The business plan will help you recognize how much money you will need to start your restaurant. If you are unsure about how much money you will need upfront, talking to other restaurant owners can help you project your expected start-up costs. There are numerous ways restaurateurs raise capital to start their business, including taking advantage of government programs that cater to upstart small business owners; liquidating assets or using them as collateral for a loan; or encouraging a family or friend to become the creditor.

Be Familiar with Safety Regulations

Restaurants are regulated and subject to inspection, and failing to be up to speed with these regulations could be detrimental to the fast food outlet. Therefore it is necessary to consult with old restaurateurs to become familiar with what one must do to meet the necessary legal requirements.

Hiring Employees

One of the biggest challenges restaurants face is a lack of qualified labor. In order to get and retain qualified employees, make sure your pay scales relate clearly to the job’s duties and responsibilities. In addition, find out what other restaurants are paying their employees so that you can be competitive in the job market, without spending too much on payroll. However try linking your payroll with the bottom line and see how much money can be squeezed out for the employees.

Advertise & Market

Every business needs a comprehensive marketing plan, and restaurants are no exception. After determining your marketing budget, price out billboard advertising, flyers in newspapers, and local cable TV advertising. Ask your customers how they found out about you, so that you can record where your advertising and marketing money are best spent. Opening up food stalls and setting up tasting booths at local neighborhood events or having an event at the restaurant benefiting can be an inexpensive way to achieve positive word-of-mouth.

Choosing the Location for Fast Food Business in Pakistan

Not every food-service operation needs to be in a retail location, but for those that do depend on retail traffic like fast food outlets, here are some factors to consider when deciding on a location:

Anticipated sales volume: How will the location contribute to your sales volume?

Accessibility to potential customers: Consider how easy it will be for customers to get into your outlet. If you are relying on strong pedestrian traffic, consider whether or not nearby businesses will generate foot traffic for you.

The rent-paying capacity of your business: If you’ve done a sales-and-profit projection for your first year of operation, you will know approximately how much revenue you can expect to generate, and you can use that information to decide how much rent you can afford to pay.

Traffic density: With careful examination of food traffic, you can determine the approximate sales potential of each pedestrian passing a given location. Two factors are especially important in this analysis: total pedestrian traffic during business hours and the percentage of it that is likely to patronize your food service business.

Visibility is a location’s ability to be seen and recognized: Good visibility can create opportunities for the impulse eating decision that is critical for fast food operators, and it allows the exposure full-service restaurants require.

Customer parking facilities: In case you allow for parking the site should provide convenient, adequate parking as well as easy access for customers.

Proximity to other businesses: Neighboring businesses may influence your store’s volume, and their presence can work for you or against you.

History of the site: Find out the recent history of each site under consideration before you make a final selection. Who were the previous tenants, and why are they no longer there?

Terms of the lease: Be sure you understand all the details of the lease, because it’s possible that an excellent site may have unacceptable leasing terms.

Future development: Check with the local planning board to see if anything is planned for the future that could affect your business, such as additional buildings nearby or road construction.

Deciding on the Layout of a Fast Food Restaurant in Pakistan

Layout and design are major factors in your restaurant’s success. You’ll need to take into account the size and layout of the dining room, kitchen space, storage space and counter. Typically, restaurants allot 40 to 60 percent of their space to the dining area, approximately 30 percent to the kitchen and prep area, and the remainder to storage and office space.

Dining area:

This is where you’ll be making the bulk of your money, so don’t cut corners when designing your dining room. Visit restaurants in your area and analyze the decor. Watch the diners; do they react positively to the decor? Is it comfortable or are people shifting in their seats throughout their meals? Note what works well and what doesn’t.

Much of your dining room design will depend on your concept. It will help you to know that 40 to 50 percent of all sit-down customers arrive in pairs; 30 percent come alone or in parties of three; and 20 percent come in groups of four or more.

To accommodate the different groups of customers, use tables for four that can be pushed together in areas where there is ample floor space. This gives you flexibility in accommodating both small and large parties. Place booths for four to six people along the walls.

Production area:

Too often, the production area in a restaurant is inefficiently designed- -the result is a poorly organized kitchen and less than top-notch service. Keep your menu in mind as you determine each element in the production area. You’ll need to include space for receiving, storage, food preparation, cooking, baking, dish washing, production aisles, trash storage, employee facilities and an area for a small office where you can perform daily management duties.

Arrange your food production area so that everything is just a few steps away from the cook. Your design should also allow for two or more cooks to be able to work side by side during your busiest hours.

Designing & Decor

Since customers ultimately drive restaurant design trends, many of your restaurant design ideas will come from your clientele. Successful restaurant design ideas are bred with an understanding of the types of experiences your customers are looking for and the promise your brand has made to them. You may know what types of menu items they crave, but do you know what kinds of restaurant design ideas create an atmosphere that will welcome them time and time again?

Step One: The restaurant designer’s process begins with a thorough understanding of the eatery’s menu, location, customers, architectural preferences and lighting concerns. More than just a design power, the restaurant designer’s process includes budget considerations, timelines and coordination with city officials to secure necessary building permits.

Step Two: The most effective restaurant design considers the flow of waiter staff from the kitchen to the dining area or from the dining area to the restrooms. The restaurant designer’s process contemplates the overall circulation within the restaurant for maximum efficiency

Step Three: With the floor plan in hand and a concept in mind, the next stage in the restaurant designer’s process is interior design. Sketches may depict color schemes, furniture placement, window treatments, artistic lighting and other aspects of the ambiance. This is also the part of the restaurant designer’s process where we consider paints, wallpapers, foliage and artwork.

Creating a Menu for Restaurant

Though menu variety has increased over the years, menus themselves are growing shorter. Busy consumers don’t want to read a lengthy menu before dinner; dining out is a recreational activity, so they’re in the restaurant to relax. Keep your number of items in check and menu descriptions simple and straightforward, providing customers with a variety of choices in a concise format. Your menu should also indicate what dishes can be prepared to meet special dietary requirements. Items low in fat, sodium and cholesterol should also be marked as such.

Restaurant Size

That depends to some extent on how you answered the fundamental question mentioned above. For the sake of discussion, a restaurant can be understood in two parts; the fronthouse component and the back-house component, which we will call the engine. The backhouse areas include, the cook-line, the food preparation areas, refrigerated any dry storage areas, office and the dishwashing area. The front-house functions are typically dining areas (interior and exterior), waiting area, to-go area, restroom, and private dining areas. The speed of product delivery; the size of the engine, a casual or formal atmosphere, and numbers of patrons you want to accommodate will all factor in to the amount of space you need for your restaurant. The goal is trying to maximize the number of patrons one can serve, out of the smallest most efficient back-house possible.

Hiring the Right Employees

Choosing employees who will do a good job is not only important to the success of your business, but will also contribute to the image of your establishment, provided they are properly trained.

There are several categories of personnel in the restaurant business: manager, cooks, servers, busboys, dishwashers and cleaners. When your restaurant is still new, some employees’ duties may cross over from one category to another. For example, your servers may double as the cleaners. Be sure to hire people who are willing to be flexible in their duties.

Manager / Owner: The most important employee in most restaurants is the manager. The best candidate is you or a person who has already managed a restaurant or restaurants in the area and will be familiar with local buying sources, suppliers and methods. The manager should have leadership skills and the ability to supervise personnel while reflecting the style and character of the restaurant.

Chefs and cooks: When you start out, you’ll need three cooks. But one lead cook may need to arrive early in the morning to begin preparing soups, bread and other items to be served that day. One cook should work days, and the other evenings. The third cook and one helper will help during peak hours, such as weekend rushes, and can work as a line cook during slower periods, doing simple preparation. Cooking schools can usually provide you with leads to the best in the business, but look around and place newspaper ads before you hire. Customers will become regulars only if they can expect the best every time they dine at your restaurant. To provide that, you’ll need top-notch cooks and chefs.

Servers: The servers will have the most interaction with customers, so they need to make a favorable impression and work well under pressure, meeting the demands of customers at several tables while maintaining a pleasant demeanor. There are two times of day for wait staff: very slow and very busy. Schedule your employees accordingly. The lunch rush, for example, starts around 12:00 a.m. and continues until 1:30 or 2 p.m. Restaurants are often slow again until the dinner crowd arrives around 6:30 to 7 p.m.

A Good Fast Food Restaurant Experience

Based on some surveys conducted with fast food goers following are some of the factors that contribute to a good fast food experience:

  • Location
  • Characteristics
  • Welcome
  • Food server
  • Food.
  • Environment (parking, restrooms, lighting)
  • Dessert Variety
  • Smile factor
  • Time factor
  • Profit factor (beverages offered, dessert menus presented).

Measuring good service is subjective, but generally what is expected from a server when reviewing restaurants.

  • The server should greet diners within 3 minutes of their being seated.
  • The server should neat and clean.
  • The server should not be too chatty or familiar.
  • The server should know the menu and be able to answer questions.
  • The server should bring drinks within 3 minutes of being ordered.
  • The appetizer (if any) should be served within 5 minutes of ordering.
  • Entrees should be served within 20 minutes of ordering.
  • Water or beverage glasses should be refilled regularly.
  • The server should silently survey the table and assess our needs without constantly interrupting to ask, “Do you need anything else?”
  • The bill should be brought promptly when requested, and change should be returned promptly.
  • Plates should be removed at the proper time, and the table should be cleared of bread and butter before dessert is served.

Legal Requirements to Start a Fast Food Restaurant in Pakistan

Legal Requirements The Pakistan Hotels and Restaurant Acts Act 1976 is the law which requires the owners of all types of restaurants to register and obtain a license with the government. The restaurant owner is required to apply to the controller for registration of the restaurant.

Application for registration and determination of fair rates shall be made to the controller in Form “G” together with a certificate of medical fitness in Form “I” from a registered medical officer of the civil hospital in respect of the staff of the restaurant.

For registration of a restaurant, the owner of the restaurant is required to conform to the standard of health, hygiene and comfort which standards have been set out in Schedule II of the act.

On receipt of application, the controller will carry out inspection of the aforementioned premises and once satisfied will initiate the registration process. Once registered the owner of the restaurant will apply to the controller for license as per the Act which needs to be renewed on a yearly basis for the prescribed fee.

Machinery & Equipment Required for a Restaurant in Pakistan

Understanding the customer’s individual needs and the capability to satisfy these completely is a vital part of the restaurant’s success. This is in turn dependent on the machinery and equipment used to produce good quality fast food. Fast Food Machines are easily available in the market wherein the owner has to choose between expensive brands and cheaper ones depending on how much he can afford to give quality to his customers. Secondhand equipment of world leading brands such as SPINZER, FRYMASTER, HENNY PENNY, LINCOLN, AYRKING, KEATING, MIRROR, CARPIGIANI, LINCAT, MORRETTI, ILSA, ROUND-UP, SANYO, ELETTROBAR are available while cheaper Chinese brands have gained popularity over the years. The machines can be ordered through international vendors with a minimum delivery period of 3 months while refurbished / reconditioned machines are also available. Some outlets closing their business also tend to sell their machinery at low prices but the durability and reliability factor must be taken into consideration while buying such machines.

Financial Requirements for a Fast Food Restaurant in Pakistan

The project cost estimates for the proposed fast food outlet have been formulated on the basis of discussions with relevant stakeholders and experts. The cost projections cover the cost of land, building, inventory, equipment including office furniture etc. The specific assumptions relating to individual cost components can be studies from the pre-feasibility study by SMEDA.

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9 Comments

  1. Great article.I also want to start my own kiosk of burmese dish and maybe veggue burger.My dream .I want to be financially independent and this is what I have done all my life cooked.Honestly I am lost at how to go about it my finances are limited.I was just wondering whats best for me to start with.I am looking at Islamabad as my kiosk option city.Any suggestions would be great.

  2. AOA, great article Awais! I was wondering what the cost would be to open in relatively high-scale urban area. I am a student in Norway, and have an affinity for pizza making. It is my dream to start a restaurant in Pakistan, but for the moment im looking to open a street cart. As a result of my unfamiliarity of the food scene in Pakistan, could you give me a rough estimate of expenses i am going to have to cover? Bear in mind that these expenses are to be excluded from price of produce etc..

  3. Very informative. Can you please send me the approximate cost of local and international fast food franchises. I want to open a food franchise in peshawar.

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