I think he speaks from the perspective of effort reward relationship as well as cost to benefit ratio. I have also always preferred to stay away from restaurants business. I am positive and invested in the foods business, but in general and for the most part, starting a restaurant business from scratch has more risk than any other traditional retail business.
@@Theactualstoic we can take the largest demographic or most common subset. For eg. What are majority restaurant space ownership structure like? It’s rented. Maybe an extremely small minority of restaurant owners actually own the property. Which makes the business look like it will only be successful at certain entry points and cannot be considered a successful business in a developed place.
This video can be made into a series Varun. You could analyze every business sector and give your views on it. Like you can do a grocery or medical business analysis next. They are two hot business sectors everyone's interested in after hotel business.
My city momos wala (My cousin) has 8 outlets(reddi) sells 1000 momos per outlet & ₹4 per momo. That is 32k per day. Makes 1 crore a year, with 40% margin. But he shows & tells everybody that the margin is 10% . This 10% Margin scheme is for Income tax dept 😂😂😂. Plus if he will tell that margin is 10 % , those who are thinking to open, will change idea. Many members of my family is in restaurant business, a ₹350 butter paneer, costs hardly ₹80 at maxx. & about loyalty, you are absolutely wrong,check out kunal shah video about this.
@@yugyadavyadav8440 I think every body in food space, makes good money. Ever heard sagar gaire from Bhopal? 10-15 store in whole city, making at an average 50 lakh per store per month. It was started from soup but now a full fledged qsr
Also viz loyalty: most mid size restaurants shut shop within a year. Loyalty for the brands that survive is survivorship bias. Lots of deaths for the few that have won.
And finally a 350 rupees paneer butter masala may cost 80 rupees in terms of grocery cost, but you have to factor in electricity, rent, staff, etc in the product cost
@@VarunMayya You are right, but still whatever I have seen, they make huge amts of money. There will be thing like, 9/10 restaurants shuts their shops. But you will see that kind of statistics in every business, that is quick to start. Even in e-commerce space, shopify says 95% of the people shuts down within first 3-6 months.
Brother! I would like to Thank you for making this video. I have been in the restaurant/cafe business for more than 4 years, took a franchise, build a cafe of my own and have seen the entire space. All the points that you have mentioned about the expenses, staff retention, customer retention, aggregators, all of these things really needed to come out for people to understand that the restaurant business is not that fancy as it looks and these points should be clear before you enter this space. I learnt all these things after my first year making so many mistakes, for anyone who is willing to start a restaurant/cafe you have saved at least an year of time for them and a lot of money. ✨
We have been in fast food business for 31 years and it’s awesome source of income, making a doctor salary in 5 months. So owning a restaurant is hard at the era but it is possible and make millions a year. It’s same with RUclips some people start RUclips channel and fail within the first year, I’ve seen so many. With any type of business , it will either cost lot of money , lot of time or lot of energy. Have you owned a restaurant Varuna mayya? I’ve done it for 31 years and it still growing , so you should have someone who actually owned a restaurant to tell the insights.
Survivorship bias at its finest. Btw big difference between starting a RUclips Channel and a restaurant is that starting a channel is free, restaurant costs lots of money and time. Success rates with RUclips is also very low, just like restaurants.
@@VarunMayya As if starting a restaurant and making a software has no big difference? Dude, I mean no disrespect, but learn to take some constructive criticism.
The problem with software is switching costs are very low for customers. That's the reason why food delivery and cab hailing services are bleeding. They have high margins but you need to keep innovating fast and not let the competitor catch up with you
Comparison of tangible product against the intangible product makes me think here. Not everyone is doing software even they have lots of money. No businessman is heavily dependent on software industry. There are numerous industry still exists even if software is repeatable. Software is enabler and not the product by itself. That pasta that you are ordering is the product and app is just a medium/agent. This can be done in any industry and product. At then end it would require tangible products to keep the app alive. Metal, infra, aviation, food, transportation and many more industries are still functioning and are the backbone of the economy. This if one has money not necessarily they will put in a software alone but they will put it in bunch of supportive businesses to investor's major business. I agree and disagree to many points from this video. Great work. Appreciate for putting you thought.
Varun i have the same viewpoint of yours in restaurant business. But it took me 2 years to realise this and come out of it. Im glad you and your team have figured this out by research and analysis itself, instead of going into it. I always tell people before starting any business we should talk to the people who already does the business. We might think they will feel jealous (indian mindset 😅) or they wont reveal the facts. But its not true. They will share their experience 99.9% of the times.
As someone whos family, relatives, family friends everyone is in restaurant business, this is quite true to large extend. The investment that goes in making and running restaurant is so huge compared to what it provides you back. For refrence a family friend runs restaurant + banquet(most of people in our circle have banquetes along with restaurant as they are more profitable) in ahmedabad. The cost of entire project generally runs around 10 to 15 crore in good locality(not even extremly posh area). This is considering that they own the place not rented place. Now there are lot of partners in such projects due to huge capital so if you are looking for 10% partnership it will cost you 1 crore. Now if the restaurant runs pretty good it generates net profit of 1 crore approx. So for person with 10% stake and 1 crore investment gets 10 lakh in return. That would be 10 years to reach break even point because the revenue does not go up considerably year to year. Instead it generally goes down. So by the time it reached age of 10 years it becomes necessary to undergo major renovation and give it new face. so that eats up profit of partners for next few years.
If he is already rich, then running a restaurant can help to keep black money and save taxes. If he is running just a starting business, it will even take a decade of hardwork.
Each and every point is rightly said and explained. People from non restaurant or F&B background definitely needs to watch this video. I'm a Chef myself and planning to open restaurants truly because I love everything about it. Friends of mine from non F&B background come every now and then and pitch me a f&b idea, whereas they don't even consider all these factors before planning. Thank you for the content and the tip on the software side. 🙂👍🏻
Restaurant idea comes to most of the people as the operations are perceived to be apparent and easy. people find it to be easy way out and often give up 6 months into the business when they find it is not a cakewalk.
Whatever he said is 💯 truee My Dad is soo stressed up by owning a restaurant. Although profit margin could be like 25-35% in rular and semi-urban areas
People in the comments (Specially ones that own restaurants ) … This video is for people who are "venturing into the business" ; Varun's opinions aside , he addresses the risk factors in running the business that's about it. It more or less makes the cut. I'm sure there are shit load of people that failed when venturing so … which is why this video makes sense.
2 years ago my dad's friend sold one of his few lands and his son started his "small" restaurant with that money. After 8-10 months they shut down the restaurant and converted it into a wine shop
I agree on most of the points Varun but the restaurant business comes from heart and does not have much logical and numerical thoughts to it. It is because, if we measure each aspect of the restaurant business we won't be able to run it.
What about bakeries/cake/sweet shops or fast food shops...like their investment behind interior decoration is minimal ? Also what's your take on bars/pubs ?
Watch the interview of POSIST founder on Founders Unfiltered. He ran a restaurant before the startup. He discusses not only the problems but how he tackled them, which is anyday a better bet than listening to why a restaurant wouldn't work by someone who's not run one in the first place (no offense).
Generally I don't comment on videos much. But here I had to. The only video of your's I found completely wrong. We cannot compare restaurant business with software business. We are group of friends owning almost 15 restaurants in Maharashtra and from that experience I can say that every business has its challenge. A software business too has challenges but of a difference kind than the restaurant business. Just because you run a successful software company it's not wise to comment on a complicated business like restaurant without actually doing it. In fact restaurant businesses are mostly profitable. It's not major risk like you are describing in this video. I understand that software companies are asset light models but there are many software companies got shut down due to their sets of challenges. And one more thing, no restaurant owner will tell anyone the exact margin of his business as it may create tax implications or competition. Restaurant business is easy to start but difficult to sustain due to easy-coming competition. Hence, the restaurant owners do whatever they can to avoid competition even if they have to cry over lack of profits in front of you. I like your business case studies videos. Here you should have given your video a title as "Why I would never start a restaurant!" and mentioned in video that it's your personal opinion.
I find only zero time off a good reason as my father is in snack business in festivals and sundays he cant get break if he takes it means losing out big opportunity of profit and revenue. But only one reason to serve quality food to customers as passion is enough to be in this business no matter if there are 1000 reasons not to do.
You do make some good points in the video Varun, but I don't think arriving at the attrition rate based on sample set derived from conversations (I'm assuming offline ones without actual data) with 7 restaurants out of the approximate 70 lakh restaurants in organized category and 2.3 crore restaurants in unorganised sector doesn't seem like statistically significant.
You got it wrong varun bhai. I know a Pani puri wall who has ten guys and ten stalls in different places. He makes 5k to 10k profit daily excluding all his expenses including labour. Which is far bigger than many softwares earning today.
First thing risk involves in each and every business... To develop a software you need a specific skill set... Not every Nick and harry has that type of skills.... And about margins longevity of resturant depends on three things quality ...quantity and affordability... And most important thing running cost of resturant is fix and your margin increases by sale..yes you need renovation but in every 2-3 years... And employee retention is concern it depends owner to owner.. If you treat your employees good and look after about their needs then you can retain them easily and if you want to replace then its not a herculean task as for a waiter you don't need a IIT graduate to replace... And about pandemic... It's a one's in a life time event.. No one imagined about this before 2020 covid 19 episode.. And if you consider pandemic before starting something.. Then no business except medicine and grocery is permanent...
In the pandamic time every other person I know in the software industry came to try restaurants or eatery business and they don't know thing about this industry they thing that's simple cook job they just do and get money back
Start a cloud kitchen and sell on aggregators. Spend the money on marketing than on real estate. One can really start small and build from there onwards.
I always thought that owning a restaurant is a good business, but after watching this video, I change my mind. Thanks for your wonderful content Varun. :)
This video clearly overgenralizes Software. If you actually go in depth it's is also not as easy as you say it is. 1. Scaling can get harder as you grow becase you need to comply with government norms and impliment better security measures. 2. You also need to spend more on servers and need better talent to make your architecture. which again is not easy to find. Almost anyone can write a bunch of CSS but someone who knows how to setup an architecture to serve a million people is a different ballgame altogether. 3. Again, although the retention is very high in software, the amount knowledge transfer needed to be done if an employee leaves is so much that it can potentially take weeks or even months. A waiter can be replaced in an hour. 4. You wanna change the color of the app, the code should have been written like that. Bad code or code debt is another issue you need to think about. 5. Also, if you make a unique software, it takes less than a week to copy your whole idea and set it up. So the competition is stiff. You need to be updated on SEO, marketing, fetaures every second because your competitor sure is. Same can't be said for a unique restraunt. There's only one gnome place , isn't it? 6. That makes the software margins tighter than anything else. Name any startup in software and it's running with a loss, Uber? Zomato? No profits I think your views are from a person who has done some code, but not at a level where it will serve the population. You are grossly overgenralizing the domain as if you can make billions by writing a hello world program.
all that you said might seem right but at the end of the day you wanna go out to a restaurant and spend time with family or you'll visit a start up (software) and enjoy with them ?
yeah, the co-founders of POSist started a restaurant first and while running that built the first prototype of POSist. Their first customer was Giani Ice cream
Bro......If everyone gets into building software, then who is going to invest in better product based projects??? ........A good economy is a combination of both product and service based industries..........Please give your opinion
But due to scalability, only one monopoly of software business runs and everyone else dies. While restaurent/physical businesses can be 1 in every district.
Valid point, just like in real estate. I Remember this owner in Jaipur highly increased the rental price, but he just needed one rich kid who'll prefer that room as it was closer to where he work and he found him eventually. Same way restaurant do make profits as they don't have to convince everyone in the local area. How else we should think real estate is costing too much in the first place?
True. Wherever there are people, restaurants will earn if it is run properly, but in software, it only takes another company to come up and take your slice of profits.
Why not just increase margin? Resturants still offer things that are hard to be matched by zomatos or swiggys. Like, 1: Vibe, music, view 2: A place to network 3: luxury for sometime Resturants are evolving, they are charging different prices for in-person and deliverables.
Watch the full video. People get bored of one vibe and move to another. It doesn’t have high enough retention for it to make a good business. Upkeep of a physical space is very expensive in metros today.
It's interesting to see how a decade back people were saying delivery apps will be a big failure because of restaurant ambience, experience and freshness and now the opposite is being said haha. This society will always keep changing.
OTOH a reality of software is, to make infinitely scalable software, the skill level of people required is very high - which is always in short supply. Hiring costs in software have been ridiculous off late in India.
I completely support this view and owning a restaurant in Delhi is like killing your soul and loosing all your money slowly. I lost over 60L when I opened a restaurant even when I had a great idea.
Scalability is a double edged sword. Yes software can scale exponentially very fast. So for new comer software business is easy. But then its as easy for someone else to come in too. So competition goes incredibly high.
Hey Varun, what about Cloud Kitchen ? Low investment, high reach now (because of Zomato and Swiggy). I am thinking of starting one, what do you say, is it viable ?
You can make a software service but it's not easy to sell a software service. If that was so, IT companies wouldn't have paid hefty sums to sales and marketing guys. It's a tough market and most importantly it's about trust. If you start small, you will get small client with stupid budgets and huge expectations and since you can't have 1000 customers your initial cost is way high. Until client get it dirt cheap they are not going to buy from you. A mid sized and large companies will deal with other large companies because it's just easy for them. They can replace consulting employees as they want, and can be confident of having support for 10 to 20 years without fear of company shutting down.Zomato is not a software company but a food delivery company. I have a software company and I can tell you at ease that it's not easy. Government taxes, Completed GST, too stringent rules and compliance regulations in India for software companies. Plus GST is way to high that if you charge a customer say 100 then you add 18% GST on it. Bangldesh has a VAT of 15% and a mere 7% in Singapore and 5% in Phillipines. Service market is not viable anymore in India. Those who are thriving are not providing services but providing bench strength of employee to product companies and earning from "renting" out employees. Product companies are booking in India but these product companies are again not software product companies. Flipkart, zomato, Acko etc don't sell softwares as a product. Software as a product is still far away when it comes to India and until Indian engineers don't change their mindset from working on a database to making a database, working on firewall to making firewalls, there is no concept of margin or growth.
We can make pasta seeing on RUclips and literally copying what the person does, but we can learn to code from youtube but we have to think by ourselves of a software which everybody is gonna use. We cannot simply copy an existing software and expect it to give us revenue.
I didn't really feel this is varun mayya felt like this is some Content Creator validating his thoughts....please man I expect more of just thoughts and not a solidified proof of why you think it is right...This is not really you 💀
Hey varun really loved the vid, does this also apply to franchise places like subway or starbucks as i do think that reputation and a preset mindset about the place will help in a steady flow of income
Your margin info is way too wrong, being someone who owns a fairly decent restaurant, we have a margin of about 40-50%, I guess it just depends on the genre of the restaurant to whether it is a cafe or diner or a fast food shop. I think you should improve your research team.
Varun don't mind, I get that you're trying to reach the masses or so called m(ASSes) with this type of content but it is diluting your channel we need those strong actionable entrepreneurial insights from the varun mayya who gave us a series like meta-startup.
Hey!, I know we don't have a relation yet, and I know I am being too forward, also as you said we don't do this much, anyways here goes, I just wanted to know how much do you make?. 🙊
What a freaking coincidence man! I was thinking about whether I should start a restaurant and suddenly stopped scrolling to this video... Now I'm afraid of the YT algorithm...
Something is missing in your analysis. I know lot of Restaurants which are 40-50 year old and some closed down in a year or two. You shouldn't compare food with software. Software business is new and it has its own pros and cons. I don't agree with your view on this topic.
Can you please make a video on how different software branches will cost you for business and average revenue for branches like Data science, Web Development, App development (desktop/mobile), VFX, game development, etc...
Looks like there's a lot of bias in your presentation. Although you must have done a lot of research, it comes out like you are determined to just sell the business of software business.
i was running a restaurant a year ago and I can relate to this. you are right I was hunting for waiters 365 days because no one was work more than 4-5 months.
Exactly and saying initial cost is very less in software as if you're going to give the same salary to the people working at a restaurant and a software engineer Dude completely forgot about how the lowest earning guy in a software company will be higher than the highest earner of a restaurant (except the cook)
I guess 50% of restaurants are run by Shettys and Mangaloreans. For us its more of a status kind of a thing to do. But at least I'm glad business runs in our blood.
I know someone who Owns a dhaba in a National Highway which is near a River and a hill station, And also 3 big Cities are almost Equally close To That Location, He earns Like 6 figures out Of it. That almost because of The location, his dhaba Attract tourists and Truck Drivers. He Has only 3 permanent employees (2 chef, and 1 waiter and he also clean Dishes) 50k goes for salary of Employees, Electricity and water is free because of Some fishy reasons, He owns the land so no rent Lol
I think there must be or needs to be a way to scale a business where product is physical. Please make a video on explaining how to deal with scalability in physical product based business!!
Know a friend or uncle who is planning to start a restaurant? Ask them to subscribe to this channel. You also do 🚀
Which is that Back drop
@Varun Mayya very curious
I think Daru ka Theka will make a lot of money.
Sure, Barun uncle :)
@@yaduyash pp
I own a restaurant and I am just amazed at how wrong you were about almost everything. Your confidence was commendable!!😂😂
The people who have zero experience of that field telling what pro n cons of the thing.
I think he speaks from the perspective of effort reward relationship as well as cost to benefit ratio. I have also always preferred to stay away from restaurants business. I am positive and invested in the foods business, but in general and for the most part, starting a restaurant business from scratch has more risk than any other traditional retail business.
I agree to you Prateek, I own a restaurant too.
@@Theactualstoic we can take the largest demographic or most common subset. For eg. What are majority restaurant space ownership structure like? It’s rented. Maybe an extremely small minority of restaurant owners actually own the property. Which makes the business look like it will only be successful at certain entry points and cannot be considered a successful business in a developed place.
he is almost like this in most videos. Bear that, just do cherry pick and move on!
This video can be made into a series Varun. You could analyze every business sector and give your views on it. Like you can do a grocery or medical business analysis next. They are two hot business sectors everyone's interested in after hotel business.
My city momos wala (My cousin) has
8 outlets(reddi) sells
1000 momos per outlet
& ₹4 per momo.
That is 32k per day.
Makes 1 crore a year, with 40% margin.
But he shows & tells everybody that the margin is 10% . This 10% Margin scheme is for Income tax dept 😂😂😂. Plus if he will tell that margin is 10 % , those who are thinking to open, will change idea.
Many members of my family is in restaurant business, a ₹350 butter paneer, costs hardly ₹80 at maxx.
& about loyalty, you are absolutely wrong,check out kunal shah video about this.
@@yugyadavyadav8440 I think every body in food space, makes good money. Ever heard sagar gaire from Bhopal? 10-15 store in whole city, making at an average 50 lakh per store per month. It was started from soup but now a full fledged qsr
Capital for 8 stores/city is not cheap
Also viz loyalty: most mid size restaurants shut shop within a year. Loyalty for the brands that survive is survivorship bias. Lots of deaths for the few that have won.
And finally a 350 rupees paneer butter masala may cost 80 rupees in terms of grocery cost, but you have to factor in electricity, rent, staff, etc in the product cost
@@VarunMayya You are right, but still whatever I have seen, they make huge amts of money.
There will be thing like, 9/10 restaurants shuts their shops. But you will see that kind of statistics in every business, that is quick to start. Even in e-commerce space, shopify says 95% of the people shuts down within first 3-6 months.
It's better to have a snacks / fast food stall at a good location then to have a restaurant IMO
Yes, these Posh Restaurent he is talking about is redundant in today's economy, but as you said Fast Food chains are going better than ever.
True !
yeah. qsr is a better idea
Varun one video on new opportunities after booming in virtual reality like meta verse
+1
Yeah I agree
Yes i agree too
Learn unreal engine
@@neeloferkhan2233 what is your current job?
Brother! I would like to Thank you for making this video. I have been in the restaurant/cafe business for more than 4 years, took a franchise, build a cafe of my own and have seen the entire space. All the points that you have mentioned about the expenses, staff retention, customer retention, aggregators, all of these things really needed to come out for people to understand that the restaurant business is not that fancy as it looks and these points should be clear before you enter this space. I learnt all these things after my first year making so many mistakes, for anyone who is willing to start a restaurant/cafe you have saved at least an year of time for them and a lot of money. ✨
We have been in fast food business for 31 years and it’s awesome source of income, making a doctor salary in 5 months. So owning a restaurant is hard at the era but it is possible and make millions a year. It’s same with RUclips some people start RUclips channel and fail within the first year, I’ve seen so many. With any type of business , it will either cost lot of money , lot of time or lot of energy. Have you owned a restaurant Varuna mayya? I’ve done it for 31 years and it still growing , so you should have someone who actually owned a restaurant to tell the insights.
Survivorship bias at its finest.
Btw big difference between starting a RUclips Channel and a restaurant is that starting a channel is free, restaurant costs lots of money and time. Success rates with RUclips is also very low, just like restaurants.
@@VarunMayya As if starting a restaurant and making a software has no big difference? Dude, I mean no disrespect, but learn to take some constructive criticism.
Re bhai tereko yt channel banane ke liye rent , taxes , bills nhi bharrne padenge na hi tujhe yt channel shuru karrne ke liye koi salary nhi deni padegi
@@RealRohanConan This donkey keeps peddling the 'learn to code' narrative. Realistically speaking it's not at all feasible for most people.
The problem with software is switching costs are very low for customers. That's the reason why food delivery and cab hailing services are bleeding. They have high margins but you need to keep innovating fast and not let the competitor catch up with you
Comparison of tangible product against the intangible product makes me think here. Not everyone is doing software even they have lots of money. No businessman is heavily dependent on software industry. There are numerous industry still exists even if software is repeatable. Software is enabler and not the product by itself. That pasta that you are ordering is the product and app is just a medium/agent. This can be done in any industry and product. At then end it would require tangible products to keep the app alive. Metal, infra, aviation, food, transportation and many more industries are still functioning and are the backbone of the economy. This if one has money not necessarily they will put in a software alone but they will put it in bunch of supportive businesses to investor's major business. I agree and disagree to many points from this video.
Great work. Appreciate for putting you thought.
Varun i have the same viewpoint of yours in restaurant business. But it took me 2 years to realise this and come out of it. Im glad you and your team have figured this out by research and analysis itself, instead of going into it. I always tell people before starting any business we should talk to the people who already does the business. We might think they will feel jealous (indian mindset 😅) or they wont reveal the facts. But its not true. They will share their experience 99.9% of the times.
As someone whos family, relatives, family friends everyone is in restaurant business, this is quite true to large extend. The investment that goes in making and running restaurant is so huge compared to what it provides you back. For refrence a family friend runs restaurant + banquet(most of people in our circle have banquetes along with restaurant as they are more profitable) in ahmedabad. The cost of entire project generally runs around 10 to 15 crore in good locality(not even extremly posh area). This is considering that they own the place not rented place. Now there are lot of partners in such projects due to huge capital so if you are looking for 10% partnership it will cost you 1 crore. Now if the restaurant runs pretty good it generates net profit of 1 crore approx. So for person with 10% stake and 1 crore investment gets 10 lakh in return. That would be 10 years to reach break even point because the revenue does not go up considerably year to year. Instead it generally goes down. So by the time it reached age of 10 years it becomes necessary to undergo major renovation and give it new face. so that eats up profit of partners for next few years.
Gr8 feedback
My uncle just opened a restaurant last month, should I send this video to him ,lol 🤣
lol
Lol
If he is already rich, then running a restaurant can help to keep black money and save taxes.
If he is running just a starting business, it will even take a decade of hardwork.
Each and every point is rightly said and explained. People from non restaurant or F&B background definitely needs to watch this video. I'm a Chef myself and planning to open restaurants truly because I love everything about it. Friends of mine from non F&B background come every now and then and pitch me a f&b idea, whereas they don't even consider all these factors before planning. Thank you for the content and the tip on the software side. 🙂👍🏻
Absolutely love the thumbnail design and aesthetic
Restaurant idea comes to most of the people as the operations are perceived to be apparent and easy. people find it to be easy way out and often give up 6 months into the business when they find it is not a cakewalk.
Whatever he said is 💯 truee
My Dad is soo stressed up by owning a restaurant.
Although profit margin could be like 25-35% in rular and semi-urban areas
yeah economics for tier 2/3 cities are different than metros
Listen to your father, he don't own a tapri and he is making videos for views..
@@asid8558 wtf is wrong with you ?
@@bindutiwari4263 I am telling him to listen to his father.. What is wrong with that.. Not all said will be correct in this video...
Good one, Varun.
Scalability is the huge unfair advantage in software business.
People in the comments (Specially ones that own restaurants ) … This video is for people who are "venturing into the business" ; Varun's opinions aside , he addresses the risk factors in running the business that's about it. It more or less makes the cut. I'm sure there are shit load of people that failed when venturing so … which is why this video makes sense.
Please everyone note that he is talking about a proper restaurant in tier 1 and tier 2 cities.
2 years ago my dad's friend sold one of his few lands and his son started his "small" restaurant with that money. After 8-10 months they shut down the restaurant and converted it into a wine shop
Modern problems need modern solutions
And here my dad won't sell it so I can move abroad 😒 but it's agricultural land a million years old so yeah
@@aena5995 expecting your parents to finance your going abroad is selfish and immature.
@@aena5995 chutiya baap k paise p kyu aj rha h job karke thora year m chla ja india p boj bna huva h apne baap p bhi
I agree on most of the points Varun but the restaurant business comes from heart and does not have much logical and numerical thoughts to it. It is because, if we measure each aspect of the restaurant business we won't be able to run it.
What about bakeries/cake/sweet shops or fast food shops...like their investment behind interior decoration is minimal ? Also what's your take on bars/pubs ?
Watch the interview of POSIST founder on Founders Unfiltered. He ran a restaurant before the startup. He discusses not only the problems but how he tackled them, which is anyday a better bet than listening to why a restaurant wouldn't work by someone who's not run one in the first place (no offense).
Generally I don't comment on videos much. But here I had to. The only video of your's I found completely wrong. We cannot compare restaurant business with software business.
We are group of friends owning almost 15 restaurants in Maharashtra and from that experience I can say that every business has its challenge. A software business too has challenges but of a difference kind than the restaurant business. Just because you run a successful software company it's not wise to comment on a complicated business like restaurant without actually doing it. In fact restaurant businesses are mostly profitable. It's not major risk like you are describing in this video.
I understand that software companies are asset light models but there are many software companies got shut down due to their sets of challenges.
And one more thing, no restaurant owner will tell anyone the exact margin of his business as it may create tax implications or competition. Restaurant business is easy to start but difficult to sustain due to easy-coming competition. Hence, the restaurant owners do whatever they can to avoid competition even if they have to cry over lack of profits in front of you.
I like your business case studies videos. Here you should have given your video a title as "Why I would never start a restaurant!" and mentioned in video that it's your personal opinion.
I'm watching your content after a few months. The video production quality increase is stunning bro! You have really leveled up.
Money laundering 101 is running a restaurant. 102 owning a cinema hall.
I find only zero time off a good reason as my father is in snack business in festivals and sundays he cant get break if he takes it means losing out big opportunity of profit and revenue. But only one reason to serve quality food to customers as passion is enough to be in this business no matter if there are 1000 reasons not to do.
You do make some good points in the video Varun, but I don't think arriving at the attrition rate based on sample set derived from conversations (I'm assuming offline ones without actual data) with 7 restaurants out of the approximate 70 lakh restaurants in organized category and 2.3 crore restaurants in unorganised sector doesn't seem like statistically significant.
You got it wrong varun bhai. I know a Pani puri wall who has ten guys and ten stalls in different places. He makes 5k to 10k profit daily excluding all his expenses including labour. Which is far bigger than many softwares earning today.
First thing risk involves in each and every business... To develop a software you need a specific skill set... Not every Nick and harry has that type of skills.... And about margins longevity of resturant depends on three things quality ...quantity and affordability... And most important thing running cost of resturant is fix and your margin increases by sale..yes you need renovation but in every 2-3 years... And employee retention is concern it depends owner to owner.. If you treat your employees good and look after about their needs then you can retain them easily and if you want to replace then its not a herculean task as for a waiter you don't need a IIT graduate to replace... And about pandemic... It's a one's in a life time event.. No one imagined about this before 2020 covid 19 episode.. And if you consider pandemic before starting something.. Then no business except medicine and grocery is permanent...
Software and restaurant is more or like same
In the pandamic time every other person I know in the software industry came to try restaurants or eatery business and they don't know thing about this industry they thing that's simple cook job they just do and get money back
your set for shooting is very good brother....less expensive and proper lighting and its looks like a good setup
When varun feels hungry , he eats software. Be smart like varun.
Actually bro I order from a cloud kitchen or make food at home. People don’t go out enough to make physical restaurants a viable business.
🤣
@@VarunMayya okay so on Zomato you order specifically from cloud kitchen and you not order if the dish is from a regular restaurant....strange!!🌚
Yeah, I have also read that in Zero to One
ur videos are more focused on wt can't be done..rather than wt can be done
Start a cloud kitchen and sell on aggregators. Spend the money on marketing than on real estate. One can really start small and build from there onwards.
I always thought that owning a restaurant is a good business, but after watching this video, I change my mind. Thanks for your wonderful content Varun. :)
This video clearly overgenralizes Software. If you actually go in depth it's is also not as easy as you say it is.
1. Scaling can get harder as you grow becase you need to comply with government norms and impliment better security measures.
2. You also need to spend more on servers and need better talent to make your architecture. which again is not easy to find. Almost anyone can write a bunch of CSS but someone who knows how to setup an architecture to serve a million people is a different ballgame altogether.
3. Again, although the retention is very high in software, the amount knowledge transfer needed to be done if an employee leaves is so much that it can potentially take weeks or even months. A waiter can be replaced in an hour.
4. You wanna change the color of the app, the code should have been written like that. Bad code or code debt is another issue you need to think about.
5. Also, if you make a unique software, it takes less than a week to copy your whole idea and set it up. So the competition is stiff. You need to be updated on SEO, marketing, fetaures every second because your competitor sure is. Same can't be said for a unique restraunt. There's only one gnome place , isn't it?
6. That makes the software margins tighter than anything else. Name any startup in software and it's running with a loss, Uber? Zomato? No profits
I think your views are from a person who has done some code, but not at a level where it will serve the population. You are grossly overgenralizing the domain as if you can make billions by writing a hello world program.
Apart from a handful of consumer apps, everyone else (especially Saas) are profitable as fuck.
i agree ..
For the people not getting it, term "Restaurant" is a metaphor!
all that you said might seem right but at the end of the day you wanna go out to a restaurant and spend time with family or you'll visit a start up (software) and enjoy with them ?
In near Future, Robots with Softwares will make Food for you! Restaurants Destroyed!
yeah, the co-founders of POSist started a restaurant first and while running that built the first prototype of POSist. Their first customer was Giani Ice cream
Bro......If everyone gets into building software, then who is going to invest in better product based projects??? ........A good economy is a combination of both product and service based industries..........Please give your opinion
everyone cannot get into building software neither will everyone succeed ,so people will always build physical businesses
I believe if you passionate about doing business in physical product then you should definately do it
@@algaming695 why is he making yt video's instead of building a software company?
@@yosangle he is making videos for two reasons I think,
1st one is distribution for their startup and 2nd one is passion
@@yosangle he has already built one . Avalon scenes
But due to scalability, only one monopoly of software business runs and everyone else dies. While restaurent/physical businesses can be 1 in every district.
not after zomato swiggy
Valid point, just like in real estate. I Remember this owner in Jaipur highly increased the rental price, but he just needed one rich kid who'll prefer that room as it was closer to where he work and he found him eventually. Same way restaurant do make profits as they don't have to convince everyone in the local area. How else we should think real estate is costing too much in the first place?
True. Wherever there are people, restaurants will earn if it is run properly, but in software, it only takes another company to come up and take your slice of profits.
Why not just increase margin?
Resturants still offer things that are hard to be matched by zomatos or swiggys.
Like,
1: Vibe, music, view
2: A place to network
3: luxury for sometime
Resturants are evolving, they are charging different prices for in-person and deliverables.
Watch the full video. People get bored of one vibe and move to another. It doesn’t have high enough retention for it to make a good business. Upkeep of a physical space is very expensive in metros today.
Would this mean that non-tech startups are no more a good option? But what if a person is just not into the software things?
Want an answer..
It's interesting to see how a decade back people were saying delivery apps will be a big failure because of restaurant ambience, experience and freshness and now the opposite is being said haha. This society will always keep changing.
Love these videos! Please keep these coming
Such a great informative content 👏🏻😊
OTOH a reality of software is, to make infinitely scalable software, the skill level of people required is very high - which is always in short supply. Hiring costs in software have been ridiculous off late in India.
I completely support this view and owning a restaurant in Delhi is like killing your soul and loosing all your money slowly. I lost over 60L when I opened a restaurant even when I had a great idea.
mai kabhi bhi restaurant nahi kholne vala tha , phir bhi ye video dekh raha hu ki mereko restaurant kyu nahi kholna chahiye
Scalability is a double edged sword. Yes software can scale exponentially very fast. So for new comer software business is easy. But then its as easy for someone else to come in too. So competition goes incredibly high.
Hey Varun, what about Cloud Kitchen ?
Low investment, high reach now (because of Zomato and Swiggy).
I am thinking of starting one, what do you say, is it viable ?
You can make a software service but it's not easy to sell a software service. If that was so, IT companies wouldn't have paid hefty sums to sales and marketing guys. It's a tough market and most importantly it's about trust.
If you start small, you will get small client with stupid budgets and huge expectations and since you can't have 1000 customers your initial cost is way high. Until client get it dirt cheap they are not going to buy from you. A mid sized and large companies will deal with other large companies because it's just easy for them. They can replace consulting employees as they want, and can be confident of having support for 10 to 20 years without fear of company shutting down.Zomato is not a software company but a food delivery company.
I have a software company and I can tell you at ease that it's not easy. Government taxes, Completed GST, too stringent rules and compliance regulations in India for software companies. Plus GST is way to high that if you charge a customer say 100 then you add 18% GST on it. Bangldesh has a VAT of 15% and a mere 7% in Singapore and 5% in Phillipines. Service market is not viable anymore in India.
Those who are thriving are not providing services but providing bench strength of employee to product companies and earning from "renting" out employees. Product companies are booking in India but these product companies are again not software product companies. Flipkart, zomato, Acko etc don't sell softwares as a product.
Software as a product is still far away when it comes to India and until Indian engineers don't change their mindset from working on a database to making a database, working on firewall to making firewalls, there is no concept of margin or growth.
Please make a video on whether you should start a gym or not
quite an insightful video.!! actually giving us more knowledge than a motivational video
We can make pasta seeing on RUclips and literally copying what the person does, but we can learn to code from youtube but we have to think by ourselves of a software which everybody is gonna use. We cannot simply copy an existing software and expect it to give us revenue.
Varun bhai, next time when you quote articles or research paper then please mention it's link in bio too please.
i was totally gonna start a restaurant before watching this video thank you so much
I didn't really feel this is varun mayya felt like this is some Content Creator validating his thoughts....please man I expect more of just thoughts and not a solidified proof of why you think it is right...This is not really you 💀
+1
Hey varun really loved the vid, does this also apply to franchise places like subway or starbucks as i do think that reputation and a preset mindset about the place will help in a steady flow of income
If this blows up a lil extra, we’ll stop having restaurants in the ecosystem
I think in today's era
Cloud kitchen makes much more sense
Meanwhile vadapav stall wale bhaiya having an iPhone and gold chains 😂
Your margin info is way too wrong, being someone who owns a fairly decent restaurant, we have a margin of about 40-50%, I guess it just depends on the genre of the restaurant to whether it is a cafe or diner or a fast food shop. I think you should improve your research team.
Better to have a food truck/stall instead of big restaurant bulidings.
Great insights dude ..
Varun don't mind, I get that you're trying to reach the masses or so called m(ASSes) with this type of content but it is diluting your channel we need those strong actionable entrepreneurial insights from the varun mayya who gave us a series like meta-startup.
Hey!, I know we don't have a relation yet, and I know I am being too forward, also as you said we don't do this much, anyways here goes, I just wanted to know how much do you make?. 🙊
He is a millionaire already like his cousin shashank
Superb content 💯..... keep on making such videos 😉✨👍
MBA Chaiwala Left the Chat
You can't compare what he does with a restaurant
Even he is selling franchises
I want that Goku please help me from where can I get that ?
How are you able to change your background color for every video? It's high quality & it's beautiful
What a freaking coincidence man! I was thinking about whether I should start a restaurant and suddenly stopped scrolling to this video... Now I'm afraid of the YT algorithm...
You are an genius boss 💯
The risky part is not that we wouldnt know until a year. Its that we know it beforehand.
Why did u compare restaurant with a software company?
Awesome value-packed content. Thanks, Goku!
great video. learnt a lot of things!
Plot twist : he is paid by all the big restaurant owners around India so there will not be much competition in coming years 🌚
Varun I want to learn about cryptocurrency development but I don't where to start how to get into it ? Give some framework
When you are hungary late at night, no food at home, hope your software tastes good
Something is missing in your analysis. I know lot of Restaurants which are 40-50 year old and some closed down in a year or two. You shouldn't compare food with software. Software business is new and it has its own pros and cons. I don't agree with your view on this topic.
Can you please make a video on how different software branches will cost you for business and average revenue for branches like Data science, Web Development, App development (desktop/mobile), VFX, game development, etc...
What about a cafe , like the “ Third wave coffee roasters” that are expanding like crazy even though the past failure of CCD. Any thoughts ?
Thriving and niche loyalty and brand
i will prove this wrong one day
Looks like there's a lot of bias in your presentation. Although you must have done a lot of research, it comes out like you are determined to just sell the business of software business.
True
i was running a restaurant a year ago and I can relate to this. you are right I was hunting for waiters 365 days because no one was work more than 4-5 months.
Then You didn't took care of them you didn't have people skill and retention skill try to grow it
Idk y but ig restraunts like Udupi grand do better than 5 star restaurants
Great content but i suggest you to post them as podcast too in spotify
isn't it unfair comparing a restaurant to software?? aren't both different things
Exactly and saying initial cost is very less in software as if you're going to give the same salary to the people working at a restaurant and a software engineer
Dude completely forgot about how the lowest earning guy in a software company will be higher than the highest earner of a restaurant (except the cook)
This guy is an idiot, he compares all businesses with software , like everyone can just start a software buinesss
Same with co-working business, low margine, difficult to scale.
I guess 50% of restaurants are run by Shettys and Mangaloreans. For us its more of a status kind of a thing to do. But at least I'm glad business runs in our blood.
especially in Mumbai, but mainly in lodging
But earlier real-estate was dirt cheap in Mumbai, so they made it , They were early birds that's why Bunts were benifitted , But now not
Love these vids on business models
I think agency businesses are also doomed for something similar in the long run.
What happened to Avalon Meta RUclips channel?
Would like to suggest itewon Town k drama
Suits perfect on this topic
I know someone who Owns a dhaba in a National Highway which is near a River and a hill station, And also 3 big Cities are almost Equally close To That Location, He earns Like 6 figures out Of it.
That almost because of The location, his dhaba Attract tourists and Truck Drivers.
He Has only 3 permanent employees (2 chef, and 1 waiter and he also clean Dishes) 50k goes for salary of Employees, Electricity and water is free because of Some fishy reasons, He owns the land so no rent Lol
I think there must be or needs to be a way to scale a business where product is physical.
Please make a video on explaining how to deal with scalability in physical product based business!!