How To Start A Successful Food Business In India: Menu & Alcohol | Riyaaz Amlani | FO424 Raj Shamani
Executive Summary
Riyaaz Amlani, described in the episode as the man behind SOCIAL and the owner of more than 80 restaurants in India, joins Raj Shamani to explain how to start and run a food business. He says the episode will cover how to start a restaurant, how much investment it takes and how a long-lasting restaurant brand is built. Amlani shares how the first cafe came from the lack of places to hang out, his rule of thumb that a restaurant should return the invested money within 30 months, the typical cost split of a rupee of sales, why hookah went viral, the three most common mistakes new owners make, and why he expects India's eating-out market to keep growing. He says he runs about an 800 crore rupee restaurant business after 22 years. The episode is mostly in Hindi with English terms. PARTIAL COVERAGE: this summary is built from a sampled reading of the Hindi captions. All figures and views are the guest's own and not independently verified. Sponsor: none stated in the episode description. Nothing here is financial or legal advice, and any mention of alcohol or hookah is reported as discussion only.
Key Takeaways
The first cafe came from a gap in the market
Amlani recalls that when he started there was no place to hang out, so young couples ended up in cars, and that observation about missing social spaces led him to open his first cafe.
A 30-month payback rule for restaurant investment
His thumb rule is that return on capital deployed should be under 30 months, meaning you should get your money back within 30 months.
Stall-level profit should be 15 to 20 percent
He says stall-level EBITDA should be at least 15 to 20 percent, harder to reach now than before, and that corporate costs add another 6 to 8 percent on top of the stall.
A rough split of every 100 rupees of sales
Amlani gives a rough breakdown: about 30 to 35 percent food cost, 15 percent rent, 10 percent overheads and 20 percent for miscellaneous, leaving around 20 percent that an owner hopes to take home.
Three common mistakes new restaurant owners make
He lists bad choice of location, under-capitalizing the business, and panicking too quickly as the most common errors.
Newness fades fast, so relevance is the hard part
He says a new place is very cool for six months to a year because everyone wants to visit what is new, and then it can go dead, and that he has hardly seen a cafe or brand stay relevant for many years.
India's eating-out market is early and expected to grow
Amlani argues that eating out per capita is among the lowest in the world while the economy is growing fast, so people will eat out more often and new people enter the market every year.
The Conversation Breakdown
The first cafe came from a gap in the market
⏱ Untimed topicAmlani recalls that when he started there was no place to hang out, so young couples ended up in cars, and that observation about missing social spaces led him to open his first cafe.
A 30-month payback rule for restaurant investment
⏱ Untimed topicHis thumb rule is that return on capital deployed should be under 30 months, meaning you should get your money back within 30 months.
Stall-level profit should be 15 to 20 percent
⏱ Untimed topicHe says stall-level EBITDA should be at least 15 to 20 percent, harder to reach now than before, and that corporate costs add another 6 to 8 percent on top of the stall.
A rough split of every 100 rupees of sales
⏱ Untimed topicAmlani gives a rough breakdown: about 30 to 35 percent food cost, 15 percent rent, 10 percent overheads and 20 percent for miscellaneous, leaving around 20 percent that an owner hopes to take home.
Three common mistakes new restaurant owners make
⏱ Untimed topicHe lists bad choice of location, under-capitalizing the business, and panicking too quickly as the most common errors.
Newness fades fast, so relevance is the hard part
⏱ Untimed topicHe says a new place is very cool for six months to a year because everyone wants to visit what is new, and then it can go dead, and that he has hardly seen a cafe or brand stay relevant for many years.
India's eating-out market is early and expected to grow
⏱ Untimed topicAmlani argues that eating out per capita is among the lowest in the world while the economy is growing fast, so people will eat out more often and new people enter the market every year.
Core Frameworks & Ideas
The 30-month payback rule
A simple test for any restaurant investment: capital deployed should come back within 30 months, otherwise the project is too risky.
Stall-level versus corporate profit
Measure profit at the individual outlet first, then account for the extra 6 to 8 percent of corporate overhead once you build a company structure around it.
Own your mood space
Amlani's view that a restaurant cannot be everything for everybody, so an owner must pick and own one mood or space.
Actionable Next Steps
- ✓Before opening, work out whether your numbers can return the investment within about 30 months.
- ✓Budget the unit economics by line: food cost, rent, overheads and miscellaneous, and check what is left for you.
- ✓Choose your location carefully and keep enough capital in reserve so you do not panic in the first months.
- ✓Pick one clear mood or concept for the place instead of trying to appeal to everyone.
Notable Quotes
“You should get your money back in 30 months. (translated from Hindi)”
“You can't be everything for everybody. (translated from Hindi)”
“Eating out is the lowest in the world. (translated from Hindi)”
The One Thing to Remember
A restaurant should earn your money back within 30 months, and at the stall level the profit must stay at 15 to 20 percent, or the business model is not working.