How To Open A Dhaba? [Steps, Location, Investment, Profits & More]

. 7 min read
How To Open A Dhaba? [Steps, Location, Investment, Profits & More]

Even in tough times of COVID-19, involvement of high risk and a large number of tough and tiring hours of work, owning a dhaba business is one of the best experiences of your life. Especially in the era of innovation, dhaba business is one of the many unique business ideas. In this article, we discuss in detail how to open a dhaba and how to start a dhaba business.

Restaurant Industry In India

The restaurant market in India is one of the fastest-growing markets in the world. With the contribution of the unorganised sector towards its market value to be about 2.5 trillion INR which is almost 65% of the total industry.

The entire restaurant industry of the company is expected to reach INR 5.99 lakh crore by 2022-23, growing at a compounded annual growth rate of 9 percent, as per the National Restaurant Association Of India(NRAI) report. Thanks to increasing construction of roads and ever-increasing travel being undertaken, dhaba has become the business to start.

Why start a Dhaba?

Starting a dhaba makes you a part of the huge Indian food market, which has high growth aspects in the future and low risk.

  • Best Business to start with little money
  • Never-ending demand
  • Low cost of investment involved compared to peers

Dhaba business is not amongst new business ideas but is getting more creative, profitable, and professional with time. The growth of this business is variable and according to the will of the owner, thus making it very flexible to handle in terms of investment, management, and working.

dhaba written in hindi on board

How To Start a Dhaba Business in India?

Given that the Indian food and beverage industry provides huge opportunities for future and existing dhaba businesses, there is no more time to waste but to enter this lucrative field quickly.

  • Decide the concept of your dhaba
  • Decide the size of your business
  • Evaluate the cost involved
  • Start to look for a location that will suit you the best
  • Get all the licenses required to start the dhaba business, keep ready with all the required documents for registration of business and other government requirements.
  • Arrange the vendors and suppliers of raw material

1. Decide the concept of your dhaba

Deciding on the concept of the dhaba involves considering a lot of details and concepts. The main consideration is the amount of capital you need to invest. After determining the concept, it is time to consider the theme and cuisine of dhaba. Then, you should prepare a business plan for your dhaba because this will help you plan the future development of dhaba and can be introduced to any potential investor.

2. Decide the size of your business

The size of the dhaba business is indeed the most important factor that decides on the success of the business. It involves deciding on how big the infrastructure should be, how many items will be listed on the menu, and how the staff will be organised. All this together leads to the idea of how much capital will be employed and what would be the cost of running the business. The bigger the dhaba is made, the more land would be needed to acquire, more construction and maintenance costs would be added to it, and more staff would be needed to handle it.

3. Evaluate the cost involved

It is best to evaluate the idea of the cost going to be involved both in starting and running the dhaba. The starting cost would involve acquiring land, construction of the building, and the running cost would include maintenance of the building, staff salaries, monthly bills, repairs, and taxes.

4. Look for a location that suits you best

Location is the key to success in the dhaba business. You can choose a busy area of the railway station, bus stand, temple, school, a national highway, factory site, and other sites that see huge fast-moving traffic. The location will directly affect the sales, profits, and the cost of business.

licenses folder focused in stack of the folders

5. Get the licenses and documents

You want to gather licenses from the authorities to run a dhaba enterprise in India. The fee of acquiring those licenses varies, relying on the scale of your venture. It is beneficial to use the permits early; otherwise, it will take a lot of time to get approved. Some of these licenses are:

  • Trade license from the municipal corporation
  • GST registration
  • Professional tax license
  • Business registration

There are some other different licenses required as properly, which include hearth place protection certificate, pollution management license, etc. Learn appropriately all the critical licenses vital to open a dhaba with professional legal guidance.

6. Arrange the vendors and suppliers of raw material

A decent and healthy relationship, along with your dealer and vendor, is crucial for the easy functioning of your dhaba. You have to have at least three vendors in every category. This might assist, evaluate prices and also will function as a backup in case a few hassles come up with one. You should always have two days of emergency supplies.

Goods should always be delivered in the morning and checked daily. Quality and quantity control should be carried out when the dhaba is closed. It is always recommended to sign a long-term contract with the supplier, as this will help maintain the consistency of the raw materials. You should also check the supplier's business identification number (TIN) before transferring the hotel supply contract.


In-depth research and a thorough analysis of dhaba business makes it easy to say that it is an excellent small-scale business that can easily be expanded at a gigantic level if one is willing to. It is indeed the best business to start with little money as well. If undertaken with complete planning and a practical execution can turn dhaba business amongst best business ideas.

Also Read:

1) How to Start a Goat or Sheep Farming Business in India?
2) How to start a café in Bangalore?
3) How to Start a Cold Storage Business in India?
4) OkCredit: All you need to know about OkCredit & how it works.

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Q. Is the dhaba business a good small profitable business idea?

Ans. Dhaba business, if run properly, can turn out to be a very profitable business idea. It involves a low cost of inventory with a high-profit margin. Usually, a dhaba business enjoys a high turnover due to a large number of customers it caters to in a very short period of time. This also creates a large number of loyal and repetitive customer bases if the service provided is up to the mark.

Q. Does the dhaba business involve a high amount of risk?

Ans. Even after the business has the capacity and the ability to make huge profits, the amount of risk connected is very limited. Most of the capital is employed in the setting up of the entity, like purchasing land, construction, and other capital expenses, which at the end of the date turns out to be an asset created. All other expenses, including monthly bills, staff remuneration, maintenance, and stock, etc., are completely variable. All this makes a dhaba business a less risky unique business idea.

Q. Does Dhaba only need to be traditional in look?

Ans. Dhabas no longer need to be traditional with a small fixed menu and ordinary seating. You can create the aura and decorum of your dhaba as you wish to. One can put a range of cuisines starting from traditional Punjabi to south Indian or even as decent as Mexican or continental. You can also plan the interiors the way you like. Advertising your eatery on the road is also the new inn. You can even keep professional management to a self-run place.

Q. Is Dhaba business scalable in nature?

Ans. Yes! Dhaba business is very much scalable. Not only can a Dhaba be renovated to be bigger, but it also can be converted into a franchise-based system, which is a widespread practice now. Other than scaling on a single Dhaba, people have started to enter into a royalty-based contract system to let others use their dhaba name if it is worth it. So sure, this business is very much scalable, and new, more advanced, and creative ways of turning it bigger are being explored with time.