Opening a dhaba can be an attractive business opportunity in India, particularly near highways, industrial areas and busy travel routes. Travellers often prefer dhabas for freshly prepared food, familiar regional dishes, affordable prices and convenient roadside access.

However, running a successful dhaba involves much more than choosing a menu and hiring a cook. Location, food safety, licences, rent, kitchen equipment, staffing, parking and operating costs can determine whether the business becomes sustainable.

Anyone planning to start a dhaba in 2026 should therefore prepare a proper business plan and verify the licences required in the state and local jurisdiction where the establishment will operate.

Choosing the Right Location Is Crucial

Location can have a major impact on a dhaba's customer traffic.

A site close to a busy highway, state road, industrial cluster, commercial area or frequently travelled route can provide access to a steady flow of potential customers.

But traffic volume alone should not determine the decision.

Entrepreneurs should also consider whether vehicles can safely enter and exit the property, whether adequate parking is available and whether the location is legally permitted for the intended commercial use.

For highway locations, access and development can be subject to additional permissions from the relevant road or highway authority.

Adequate water supply, electricity, drainage, waste disposal and clean toilets can also be particularly important for a roadside food business.

Prepare a Dhaba Business Plan Before Spending Money

Before renting land or buying kitchen equipment, estimate both initial and recurring expenses.

Startup costs may include the security deposit or lease payment, renovation, kitchen construction, furniture, refrigerators, freezers, cooking equipment, utensils, exhaust systems, electrical work, signage, billing equipment and licence fees.

Recurring expenses can include rent, salaries, ingredients, LPG or other cooking fuel, electricity, water, cleaning, maintenance, packaging and digital-payment charges.

The investment required to open a dhaba can vary enormously. A small outlet on leased premises may cost far less than a large highway establishment with extensive seating, parking and a commercial kitchen.

For this reason, there is no single reliable figure that can be described as the standard cost of opening a dhaba in India.

FSSAI Registration or Licence Is Important

A dhaba is a food business and therefore needs to comply with food-safety regulations.

Depending on factors such as the nature and scale of the business, the establishment may require the appropriate FSSAI registration or licence.

Applications are handled through the Food Safety Compliance System, commonly known as FoSCoS.

Business owners should select the correct category rather than assuming that one type of FSSAI registration applies to every dhaba.

The FSSAI registration or licence number also needs to be displayed and used as required under applicable food-safety regulations.

Other Licences May Depend on Your Location

There is no single nationwide checklist covering every approval needed by every dhaba.

Depending on the state, municipality, panchayat, size of the establishment and nature of operations, a business may need additional registrations or permissions.

These can include a local trade licence, registration under the applicable Shops and Establishments law, health or sanitation permissions and fire-safety approval where required.

Large establishments or premises using particular equipment may have additional compliance obligations.

If the dhaba plans to serve alcohol, a separate liquor licence under the relevant state's excise laws would be required. An FSSAI licence does not authorise the sale of alcohol.

Music played commercially at the establishment can also involve separate licensing requirements in applicable situations.

Therefore, entrepreneurs should check the rules of the municipality, panchayat, state government and other relevant authorities before starting operations.

What Documents May Be Required?

Documentation depends on the licence being sought, but entrepreneurs should generally keep their identity and business records organised.

Commonly required documents can include PAN, identity proof, address proof, proof of possession of the business premises such as a lease or ownership document, photographs and details of the food establishment.

Utility bills or other address-related documents may also be requested depending on the application.

If the business is being operated through a partnership, LLP or company, additional entity-related documents can be required.

Applicants should check the exact document list shown by the relevant authority instead of relying on a generic checklist.

What About GST Registration?

GST registration is another area where new business owners should avoid assumptions.

Registration requirements depend on the applicable GST law, turnover thresholds, nature of supplies, state and other statutory conditions.

Crossing the applicable threshold can make registration mandatory, while certain businesses may have other reasons or requirements for registration.

Using digital payments does not by itself mean that a dhaba must obtain GST registration.

Business owners should assess their circumstances against the prevailing GST provisions or consult a qualified tax professional.

Once registered, the business also needs to comply with applicable invoicing, return-filing and tax-payment obligations.

Kitchen Hygiene Can Make or Break the Business

Legal registration alone does not make a food business successful.

A dhaba needs a clean and well-managed kitchen, safe drinking water, appropriate food storage and proper waste disposal.

Raw and cooked foods should be handled safely, refrigeration temperatures should be maintained where required and cooking areas should be regularly cleaned.

Staff handling food should also follow appropriate hygiene practices.

For roadside businesses, clean toilets and handwashing facilities can significantly improve the customer experience.

Customers may forgive basic furniture or simple interiors, but poor hygiene can quickly damage a food outlet's reputation.

Keep the Menu Focused in the Beginning

A new dhaba does not necessarily need an extremely large menu.

Starting with a smaller selection of dishes that the kitchen can prepare consistently may make inventory and quality easier to control.

Depending on the location and target customer, popular choices can include dal, seasonal vegetables, paneer dishes, rice, tandoori roti, paratha, curd, tea and lassi.

Regional specialities can also help differentiate one dhaba from another.

For a highway outlet, speed is particularly important because many travellers want fresh food without waiting too long.

Hire Staff According to the Size of the Business

A small dhaba may begin with a cook, kitchen assistant, server and cleaning worker, while a larger establishment could require a significantly bigger team.

Staffing costs should be included in the financial plan from the beginning.

Owners should also consider employee-related legal requirements that may become applicable depending on workforce size, wages and the nature of the establishment.

Training employees in hygiene, customer service and safe food handling can be as important as hiring experienced cooks.

Can a Dhaba Really Earn a 30% to 50% Profit Margin?

Claims that a highway dhaba automatically earns a 30% to 50% profit margin should be treated cautiously.

Food items can sometimes carry attractive gross margins, but gross margin is very different from the business owner's final net profit.

Rent, wages, food wastage, electricity, cooking fuel, maintenance, taxes, commissions and other expenses all reduce the amount ultimately left as profit.

Actual profitability depends on customer volume, average bill value, food costs, location expenses and operational efficiency.

There is therefore no guaranteed profit margin simply because a business is operating as a dhaba.

Start With Compliance and Cost Control

A successful dhaba requires a combination of good food, convenient location, hygiene, reasonable pricing and efficient service.

Before investing, prepare a realistic estimate of daily customers, average bill size, food cost, staff salaries, rent and other monthly expenses. Calculate how many orders will be needed each day to cover those expenses.

Most importantly, obtain the registrations and permissions applicable to the specific location before beginning commercial operations.

With proper planning, food-quality control and disciplined expense management, a dhaba can develop a loyal customer base. But like any food-service business, success and profitability depend on execution and are not guaranteed simply by choosing a busy highway location.

Disclaimer: Business registration, FSSAI, GST, fire-safety, trade-licence and other requirements can vary according to turnover, state, local authority, property and type of operation. Entrepreneurs should verify current requirements with the relevant government authorities before starting a dhaba.