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Business Management analysis

How to start a restaurant business in Kenya.

Urbanization the world over has resulted in millions of people moving to live in towns and cities. These people move in search of jobs and to do businesses to make a living. 

As a result, they spend many hours away from their houses and homes. Many of these people cannot find time to get back home for meals and must eat wherever they are. This has resulted in a rise of eating places such as fast foods, restaurants, hotels and many others in these towns. Since food is one of the basic human needs, demand for eating places has continued to rise in urban centers.

As Kenya experiences steady economic growth and increase in population, demand for restaurant services is on the rise, especially in the cities and towns. This has provided an opportunity for entrepreneurs to set up eating places such as restaurants and hotels to cater for this demand and make money. 

If you are looking for a lucrative business idea, you can consider setting up a restaurant to feed this growing number of Kenyans who find themselves away from home most of the day. Setting up a restaurant is challenging due to the preparations involved, changing tastes, capital requirements and the cut throat competition that is currently in the food business.

Location.

As with many other businesses, the location you choose to set up your restaurant business in Kenya will make or break your business. Find a suitable location that is in visible, high traffic, easily accessed area that is not too crowded with similar restaurants.

Those who are looking for a place to eat should easily find you, it is as simple as that. Don’t set up in a hidden place where no one can spot your restaurant. Look for a location in a high traffic area, human traffic also called leg traffic. If you start your restaurant in a deserted street, don’t wonder why people are not coming to eat in there. They are not there in the first place. A high leg traffic location will give you a chance of being frequented by a good number of customers. A restaurant business needs enough space, and space is expensive in many towns. Don’t cram your customers in a small and crowded room. Allow for comfortable space for movement and eating. 

Be ready to pay as much as Ksh.200,000 in monthly rent for a medium-sized ground floor space in upper side of Nairobi such as Kimathi Street, Moi Avenue etc. or about Ksh.50,000 — Ksh.100,000 in the areas of Tom Mboya, Ronald Ngala Streets, River Road etc. 

The rent may be lower if you choose the upper floors but getting people up there will be a challenge, with competition all over. 

In addition to the rent, watch out for “goodwill”, an exploitative fee charged by landlords who have made many business premises in the city center unaffordable to most people.

Licenses.

Food or restaurant businesses need specific licenses issued by the County government. To run your restaurant smoothly without constant harassment by authorities, it is advisable to get all these licenses and meet the conditions set out.

You will need county Single Business Permit to operate your restaurant. This is a basic necessity for all business operating within a county. Price will range from county to county, and size of the premises. Budget at least Ksh.10,000 — Sh.40,000 renewable annually.

Your restaurant will also need a food and hygiene license which will be issued by the county government after inspection of the premises by public health officers. A fee of Ksh.5,000 will be charged for this license annually. 

Your staff will also be required to undergo a medical examination and get a medical report. Each staff will require Ksh.1,000 for this report, renewable after 6 months. A food handler’s health certificate will be issued for staff. Your staff should also be in uniform.

Others are fire certificate and garbage collection which you will also be expected to pay for. Ensure you install a fire extinguisher to qualify for a fire certificate.

Equipment.

Your restaurant will need cooking equipment such as big and small jikos. Local workshops can install commercial inbuilt jikos complete with sufuria at a cost of Ksh.100,000 or even less. 

Smaller jikos will cost Ksh.2,000 to Sh.3,000. You will need a variety since you will be cooking different types and quantities of food at various times.

Cooking gas cylinders will also be a good thing to invest in. Other equipment needed will be microwave, refrigerator, juice blenders, kitchenware etc. 

Exact requirements will depend on the size of the restaurant, types of food offered and set up. With another Ksh.100,000 you will need to afford this other equipment to enable you to start up the restaurant business.

Set Up.

Whether small, medium or big, your restaurant business will need furniture. The space that you operate in can be divided into a sitting/dining area, serving area and kitchen. The sitting area will be occupied by tables and chairs. This is the place where customers will sit and take their meals.

The kitchen area is where the chefs will prepare the food while the serving area will be used to give food orders by waiters and waitresses. There should be enough room in these areas for smooth operations of your restaurant. This will be particularly important during peak hours such as lunch time.

Furniture can be ordered from various workshops where they are made. Typically, a table will cost about Ksh.5,000 and seats Ksh.800 depending on material and design. The number of tables and seats will depend on the size and design of your restaurant.

Supplies.

Success of a restaurant business is dependent upon the reliability, quality and cost of your supplies. Sourcing for your supplies should therefore be taken very seriously since food qualities vary and human tastes and customer preferences keep changing, without notice.

One very reliable source of your supplies is a supermarket around the area where you operate. Basic inputs such as flour, cooking fat/oil, sugar, salt e.t.c can easily and conveniently be sourced from the local supermarket or wholesalers.

If there is a bakery nearby, you can get your everyday supply of bread from there. If there is none around, you can organize with any that delivers bread in the locality to drop your supply together with others.

For your supply of beef, consider sourcing from the slaughterhouse if possible or arrange with them to deliver to you. 

Charcoal and milk can also be supplied by local dealers while vegetables and potatoes are readily available from local markets.

Income.

A busy medium or big restaurant business in Kenya can generate good profits. However, this will depend on the location, type of food offered, menu prices and honesty among your workers. A good location that is fairly busy can give a net profit of anything between Ksh.20,000 and Ksh.80,000 in a day depending on the size.

Menu prices vary depending on the location. The same food costing for example Ksh.200 in one location may cost Ksh.350 or Sh.150 in another location. It is therefore important to set your prices carefully after researching on prices of similar meals in other restaurants nearby.

Challenges.

Starting and running a restaurant business comes with challenges that you must overcome in order to succeed. Dishonesty among your staff is a major challenge among many restaurant owners. 

Many employees want to reap where they did not sow. Many instances of theft of food and money are being experienced. Workers need very close supervision and constant monitoring.

Some employees will want to do their own businesses within your restaurant by buying foodstuff and selling and pocketing the money. 

These cases can be controlled by constant presence and monitoring. Some employees are just careless in writing receipts and billing customers. You can lose large sums of money if this is not checked. In other cases, some customers may leave without paying for their meals, especially during lunchtime peak hours when the restaurant is crowded. Look out for such cases.

Finally.

It is not all gloom. You can reap numerous benefits by starting a restaurant business in Kenya. By sourcing for the best cooks and workers who have good work ethics, choosing a strategic location, going for friendly food prices, listening to your customers and watching out for changes in tastes and customer preferences, you can make serious cash in this business. 

Watch what your competitors are doing and improve on them and you will never go wrong in the restaurant business. People must eat, and although they may not all eat in your restaurant, try as much as possible to trap a good number of them.

THANKS FOR READING.

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Written By: Timothy Angwenyi.

Business Consultant.

Content created and supplied by: VinnyNgalia (via Opera News )

Kenya

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