Have you been dreaming about turning your love for cooking into a thriving business? You’re in the right place! This guide will walk you through the steps to start a successful small-scale restaurant in Nigeria.

A restaurant business involves providing food services to customers in exchange for payment. From office workers grabbing lunch to families and friends dining out, the demand for restaurant services is high, making it a lucrative venture. You can turn your passion for cooking into a business by starting your own restaurant business adding extra income to your earnings. 

Is it profitable to start a restaurant business in Nigeria?

Absolutely! A restaurant business in Nigeria can be highly profitable if you focus on customer preferences, deliver top-quality service, create a pleasant ambiance, set affordable prices, and choose a prime location. The demand for good food and dining experiences is always strong.

How to start a small-scale restaurant business in Nigeria: A step-by-step guide

Here are the steps you need to know and follow to successfully start your restaurant business:

Step 1: Run a market research or survey

This is the first thing you should do to know who your potential customers are whether they are students, working-class people, and the like. Knowing your target customers will help you in deciding things like menus, pricing, and marketing strategies in the best way that will meet their needs. Running market research will also help you look out for competitors and learn what you can do to have a competitive advantage.

Step 2: Create a business plan

Having a business plan is instrumental to your overall success and gives you direction for your vision. You should have your business goals, target market, marketing strategies, and budget outlined in your business plan. Apart from giving direction, having a documented business plan can help you gain the trust of business investors and secure funding for your business.

In planning your business, you also need to choose a suitable location to set up your restaurant. You need to choose a location with high foot traffic, that is visible and easily accessible to many people. You can consider opening your restaurant in areas like schools, offices, and residential areas as choosing the right location for your restaurant business can make all the difference in your profit margin.

Step 3: Make financial plans

Having a budget for your business is very crucial. ensuring you have the capital you need to start your restaurant business. First, estimate your startup costs including the cost of rent, purchase of equipment, and initial inventory. Then secure the funding for your business by using your savings or applying for business loans and exploring other sources like grants or investors. Moni can help you start and grow your restaurant business with loans at competitive rates. Click here to learn more.

How much do I need to start a restaurant business in Nigeria?

In making financial plans, you should have a budget you are working with. The amount of money or financial investment to open your restaurant depends on various factors including the location of your restaurant business, the type of equipment needed to run the business, and the concept of your business. Is it a buka-style eatery serving traditional dishes a modern restaurant style or a cozy cafe? These factors will determine how much you would need to start our restaurant business. The total amount should cover startup costs for rent, inventory purchase, and obtaining licenses and permits to get you started.

Step 4: Register your business

The next step is to register your restaurant with the Corporate Affairs Commission (CAC) to get a business name and legal recognition. You’ll also need to obtain necessary permits and licenses like health permits from the appropriate government agencies.  

Step 5: Set up your restaurant

Open up your restaurant in your chosen location. Have a design for your restaurant layout and outlook from the dining area to the cooking area and the pantry or storage space. A beautiful and effective design can improve your workflow and customer experience and satisfaction.

Step 6: Purchase your equipment

To run your restaurant smoothly, you should invest in quality kitchen equipment, furniture, cooking utensils, and appliances you need to prepare and serve your meals. Here’s a list of basic items you need to start your restaurant business:

Cooking pots

Chopping boards and knives

Cooking utensils like spoons, forks, plates, etc.

Gas cookers

Microwave and oven

Electric blender

Refrigerator

Freezer

Deep frying machine

Appropriate and fitting furniture

Step 7: Develop your menu

Next is to create a menu list with a variety of delicious dishes that appeal to your target market. While creating your menu list, take into consideration the availability and ease of getting ingredients as well as the food culture of the environment you are in.

Step 8: Hire and train your staff

You need a functional team of passionate and excellent staff members who will help run your restaurant business successfully. To start with, you can get a kitchen assistant and a waiter and as your customer base becomes larger, you can hire more staff members. Ensure to train your workers on the value and culture of your business and that every worker knows their roles and carries them out excellently.

Step 9: Market your restaurant business

There are various marketing strategies you can use to increase visibility and patronage for your restaurant business. Use both traditional and digital marketing methods from word of mouth to social media campaigns, fliers, posters, and referrals. You can also explore other options like promos and discounts to attract new customers and consistent patronage.

Common challenges and solutions in starting a restaurant business in Nigeria 

Increase in costs

According to reports by the National Bureau of Statistics, the inflation rate is 33.95% as at May 2024 which is 11.54% points higher compared to the rate recorded in May 2023. The continuous hike in prices of goods in Nigeria is quite alarming. To overcome this challenge, you will need to monitor your expenses well and look for ways to cut down costs without compromising the quality of your food services. You can also incorporate strategies like bulk purchases from wholesalers and ensure proper storage to minimize food wastage.

Good location

You might encounter challenges while trying to secure a good location or workspace for your restaurant business. However, your search would be a lot easier by employing the services of a house agent to help you secure a good location with high foot traffic.

Low patronage

Getting your first set of customers might seem a bit daunting but offering optimum services including serving quality meals at affordable prices, and good customer service coupled with advertisement, you would soon have people trooping in and out of your restaurant. Quality services aid multiple referrals to your restaurant business and eventually give you a large customer base.

Competition

To overcome this challenge and have an advantage over competitors, you could come up with distinguishing and unique recipes or dishes and establish a strong brand identity. Also incorporate effective marketing strategies like social media campaigns, fliers, posters, referrals, discounts, and so on to attract your target customers.