In world tourism, Malaysia ranked among the top ten countries and there are more than 1000 restaurants operated by the foreigners. Like all other business, the key goal of the restaurant business is to make money and with numerous tourist, in a spot, Malaysia is an excellent place for starting place to start a food and restaurant business. In Malaysia, there are Indian, Lebanese, Persian, Taiwanese, French, Japanese and many more types of food. Starting a restaurant in Malaysia is an ambitious undertaking and it is one of the toughest business of all. Many restaurants fail within a few years of opening just because of poor planning. However, there are ways to establish a successful restaurant business in Malaysia and in this article we are going to provide the ideal resource.
Every year’s thousands of tourists visit in Malaysia from different origins and they all have different tastes. So in order to establish a food and restaurant business, at first identify the segment that we love to work. For example, if we do not love making coffee then we do not go to the coffee shop. Also to set up a restaurant in Malaysia we not only need to know serving food but also learn marketing, human resource management, finance, local law, certification etc. One study conducted on Malaysian restaurant shows average Malaysian restaurants earns 5-8% profit. Although every restaurant is different, the following data shows typical after sales money distribution.
- Food – 30%
- Labour – 25%
- Rent – 14%
- Insurance/Legal – 5%
- Bank repayment – 5%
- Marketing – 3%
- Maintenance – 3%
- Utilities (Gas, Electicity, water) – 3%
- Crockery – 3%
- Waste – 1%
- Profit – 8%
Location is very important for the restaurant business in Malaysia and this can make or break a restaurant. The things to be considered for finding a suitable place is the visibility or amount of foot traffic, available parking, potential outdoor and indoor seatings, competition etc. There are few online databases provided by a different real estate company in Malaysia that may help potential clients to find a suitable space for restaurants. After choosing the location, the question comes if we want to buy or lease the property. Buying a property is a deciding factor for new investors. The benefits of buying property are that we don’t have to worry about rent hike and the advantage of leasing property is low budget staring and easy to quit if things do not work out.
For overseas investors, a legal company may help the potential client to buy a property. For leasing a property in Malaysia, potential investors should also take support from a lawyer or a legal organization and not only look for rent but also the length of the lease, quitting conditions, insurance, repairs, service charges, guarantees, protection when the lease ends, restrictions, landlord history, property history etc.
For a successful food and restaurant business in Malaysia, choosing the right food is very important. It requires a balance high and low food cost with reasonable profit margin and that may produce easily in busy hours. The menu of the restaurant should be very versatile and it must go with the food act of Malaysia. If you want to serve halal food then you must have to take certificate. Before starting the restaurant you have to make sure that you have sufficient funds in reserve for operating the next six months. The most common startup cost for starting a restaurant in Malaysia is
- Leasing Fees
- Premises refit
- Kitchen setup, oven, refrigeration etc
- Staff and uniforms
- Furniture and crockery
- Initial stock of food
- Marketing fund
Working capital and also the hidden charges. We have to keep our startup cost as low as possible.
Restaurant owned and operated by 100% foreigner owned in Malaysia must incorporate a Malaysian company SDN BHD with minimum paid-up capital RM 1 Million. Also, restaurants have to apply for the necessary business licenses such as signboard license, halal license, MCP, and PPM (if you want to play music in your premises). The company those owned by 100% foreigner, need to apply for wholesale, retail trade license to approve the entity. This unique license only issued to the restaurants with unique concepts with the minimum size of 1500 sqft (unique means the food items are hard to find normally). Also, foreigners have to apply for the DP10 – 2years work permit after all above license are obtained. The processing of DP10 work permit is very fast and usually gets approved in a month. Additionally, if you create a specific unique image or logo for the business, then you have to register the trademark for protecting it from being copied. A registered trademark can protect the business name, slogan, domain name, logo, color, sound etc.
The potential investor can also consider investing in the franchise and there’s also many advantage and disadvantage. The main advantage of a franchise restaurant is an instant business and we don’t have to worry about the name, menu etc and it already has a name recognition. A restaurant franchise gets constant support from the mother
company and this is very helpful for the new restaurant owners. The drawback is the money and much bigger franchise requires you to have lots of money and property. Also, there are lots of rules that need to be followed and there is less freedom. Additionally, you have to pay the royalty fees that are usually 3-8% of yearly turnover.