Unpacking the economics of quick service restaurants: Here's how to open your QSR

The Indian Quick Service Restaurant (QSR) industry is expected to reach $79.65 billion by 2028, with an 11.19 per cent CAGR from $41.1 billion in 2022 according to Food Service and Restaurant Business Report 2022-23, by Francorp and restaurantindia. Experts affirm that venturing into the fast food business can yield substantial profits with a significant ROI in just two to three years through prudent management.

"Starting a fast food business or QSR can yield substantial profits. With Smart execution it's not unusual to aim for an annual profit of 15 per cent to 20 per cent of your initial investment within two to four years," Nidhi Singh, Co-Founder Samosa Singh told Republic.

"Success in this industry hinges on strategic location, menu, staff, marketing, and financial management. Aspiring QSR owners who excel in these areas can tap into India's booming food services market and build a thriving venture," Singh added.

QSR success secrets

Experts suggest that tier II and tier III cities are promising choices to start your food venture.

"With tier II and tier III cities emerging as new financial hubs, the quick-service restaurant (QSR) industry is evolving rapidly, offering substantial opportunities for new enterprises to generate revenue," noted Himanshu Chawla, Founder & CEO, Bakingo.

"Adapting to local preferences, offering affordable menu options, and maintaining consistent quality have been key factors contributing to the success of popular QSR brands. Location, well-trained staff, and a robust marketing team are crucial considerations when opening a QSR. Social media marketing has proven to be an effective way to attract customers quickly," Chawla added.

Opening a Quick Service Restaurant (QSR) involves careful planning and approvals involved as highlighted by Nidhi Singh, Co-Founder Samosa Singh.

"To start a QSR in India, one must secure several licenses, including a Food License from FSSAI, GST Registration, Local Municipal Corporation / Trade License, Health License, and Fire License," Singh added.

In the food delivery sector, competition between QSR chains and food aggregators drives innovation. Rajat Agrawal, CEO of Barista Coffee Company, attributes this growth to factors like a youthful demographic, urbanisation, and evolving preferences.

All you need to know about the industry

According to experts the QSR Model is significantly different from the restaurant model, and understanding its intricacies is essential for success.

Deciding the location

The first crucial step in entering the QSR industry is choosing the right location. "High footfall areas such as marketplaces, university campuses, and shopping malls are ideal for QSRs. However, the challenge lies in the steep rentals of these prime locations, making survival until breakeven a daunting task," Agrawal said.

Staffing your quick service restaurant

In a QSR, the staff plays a pivotal role as they are responsible for multiple tasks, from assembling food to serving customers. Training staff for consistency is essential, but the high attrition rate in the industry poses a challenge. Building loyalty and engagement with employees is crucial to retaining them.

Managing operations

• Achieving taste standardisation is critical in QSRs, and it relies on staff training and recipe control. Base ingredients must be consistent to ensure uniformity in taste.
• In a QSR, there is no distinction between kitchen staff and counter staff. This all-in-one approach leads to seamless coordination and eliminates the need for specialists.
• Selecting suppliers who can meet your operational goals is vital. Local suppliers often offer better support, product knowledge, and cost-effectiveness compared to large chain suppliers.

Deciding the menu

QSRs thrive on impulse buying, offering simple and quick solutions to hunger. The menu must be straightforward, with items that are well-received by the general public. "Keep the menu simple to produce for consistency and operational efficiency," advised, Sahil Arya, Co-founder and Director, Fat Tiger.

Marketing strategy for QSRs

Marketing QSRs differs significantly from other restaurant formats. The focus is on speed and pricing, catering to impulse buyers. Localised marketing, online advertising, and social media promotions are effective strategies to attract customers.

Reaching the breakeven point

Breakeven points vary between individual outlets and the overall industry. While a single outlet may break even in 3-6 months with effective management, the industry may take up to 26 months to reach breakeven. Understanding these differences is crucial for sound business decisions.

Expanding the QSR

Expanding a QSR business should be approached strategically. Instead of city-hopping, focus on dominating a single city first with multiple outlets. Franchising is a viable option for growth, but only when your operations are robust and consistent.

Financing for food business

According to Arya, to successfully launch your QSR, it's essential to explore financing options carefully. 
"Consider personal savings, bank loans, Small Business Administration (SBA) loans, investors, franchising, crowdfunding, equipment financing, credit cards, grants, and bootstrapping. Each option has its pros and cons, so align your choice with your business model and financial goals," he emphasised.