Investment in Restaurant in India.

9 years ago

Even with non-existant runing costs your ROI would be almost 3 years. It is good if you love frozen money, but I think if you invest in a crapload of promissing startups (look for startup incubators, angel investment, etc...) you could divide your risk and have a much faster ROI...

I for my part would not want to block so much cash for such a slow return

Thanks

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seasoned

9 years ago

In a case like that, you probably want to be in the same culture as THOSE indians, and HOPEFULLY have a 100% legal contract legal in india AND whereever they domicile, etc... You ALSO want to make sure it is setup right so you have NO obligations. And look at the business plan, and know the culture(s) they want to deal with. If you deal wrong, you can actually lose MORE than 100% of your investment. BTW restaurants ALSO have to deal with waste and spoilage!

From what I understand, it is a LOT harder than something in the US, and the US can seem daunting.

Steve

Thanks

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salegurus

9 years ago

I would like to see more info.
I have no idea how much it costs to open a new restaurant in India but $350K looks to be high.
I can and have opened restaurants in the USA for far less than that...

Thanks
1 reply

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seasoned

9 years ago

Originally Posted by salegurus

I would like to see more info.
I have no idea how much it costs to open a new restaurant in India but $350K looks to be high.
I can and have opened restaurants in the USA for far less than that...

I have spoken to a number of people from India, and they have told me that the major cities, seeing ALL this income from investors, call centers, and workers working abroad, have GREATLY increased costs, and property values have skyrocketed. And THEY are the best equiped as far as infrastructure. So costs COULD be very high.

But that is ANOTHER reason why I think only indians should invest locally like that, and be from the same culture, etc... They should be better able to judge such costs.

Steve

Thanks
1 reply

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onSubie

9 years ago

Originally Posted by seasoned

I have spoken to a number of people from India, and they have told me that the major cities, seeing ALL this income from investors, call centers, and workers working abroad, have GREATLY increased costs, and property values have skyrocketed. And THEY are the best equiped as far as infrastructure. So costs COULD be very high.

But that is ANOTHER reason why I think only indians should invest locally like that, and be from the same culture, etc... They should be better able to judge such costs.

Steve

The more you say, the riskier it sounds.

Especially for such a low return. The risk might be worth it for 5-10x the expected profit. Is the $10-15K after expenses and paying out to others?

That sounds like a very slim margin in a place where things are booming and costs are going up.

It would depend a lot on how well you know the culture and how restaurants and businesses operate there.

Would you be a hands-on investor and help run the place or would you be a long-distance angel investor just getting a return?

I assume all the details of how everything works and what obligations are for each side of the deal. Do you know the business and culture there well enough to see if the plan is solid?

Will they come to you for more money in six months because taxes have increased and costs have gone up but they are just around the corner from clear sailing?

Do you have a past relationship or ties to the other people that lends trust and credibility?

More questions than suggestions I'm afraid.

On the surface it sounds risky, but maybe you have background information and experience that mitigates that.

Thanks
2 replies

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positivenegative 9 years ago

OP,

Did you really think the loon hang out of a forum is the best place to seek suggestions for a proposed investment of that magnitude?

Send me a sample of their chicken vindaloo, and I'll let you know.
- Thanks
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seasoned

9 years ago

Originally Posted by onSubie

The more you say, the riskier it sounds.

Especially for such a low return. The risk might be worth it for 5-10x the expected profit. Is the $10-15K after expenses and paying out to others?

That sounds like a very slim margin in a place where things are booming and costs are going up.

It would depend a lot on how well you know the culture and how restaurants and businesses operate there.

Would you be a hands-on investor and help run the place or would you be a long-distance angel investor just getting a return?

I assume all the details of how everything works and what obligations are for each side of the deal. Do you know the business and culture there well enough to see if the plan is solid?

Will they come to you for more money in six months because taxes have increased and costs have gone up but they are just around the corner from clear sailing?

Do you have a past relationship or ties to the other people that lends trust and credibility?

More questions than suggestions I'm afraid.

On the surface it sounds risky, but maybe you have background information and experience that mitigates that.

Ever see Back to school? The father character tries to tell the students how HE sees the real business with bribes, and theft. Well, in the US that is NOT normal, legal, or sanctioned.

I have heard from people that have been in india, most of them are INDIANS, that they have the same sort of thing, IN SPADES, and it is just taken for granted. So YEAH, RISKY! And I knew a restaurant owner, in the US, but it is a good example, that was actually like the one on "I love lucy"! People saw how well he was doing, bought a restaurant from him, drove it into the ground, and he bought them back for a SONG! As I recall, he had 3 restaurants, a little corner BBQ place, a BAR, and a high scale place that was really nice, that was actually named after his family. I was in the BBQ place, and the high scale place and they were nice and did well. I went to them a LOT while his family owned them, My point is that the new tenants ALWAYS seemed to FAIL!

But YEAH, there is a LOT to watch out for!

Steve

Thanks

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orangecopper

9 years ago

if you have had experience in that industry, it would make sense starting your own restaurant. Its always true that hard work coupled with experience / passion can for sure bring good ROI

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TheWriteOne

9 years ago

Originally Posted by Affiliatebuddy

Hi
They will run and manage restaurant.

You better be hands on if you are going to invest your money. Never have I experienced a business that you just wait for money to come. How trustworthy are these people. What the others said was true, you better be knowledgeable in the culture to understand if it is worth the investment. Is the 10-15k purely profit or do you have to take off the expenses from it too.

If you really don't want to get involved in the investment, why not just loan the money with a fixed monthly return to you. You could make up a contract to bind them, just make sure you get a collateral that maybe worth twice what you are loaning.

Thanks

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Cali16

9 years ago

Is that $10-15K per month net profit or gross income before overhead costs? And what percentage of that (or whatever's left after expenses) would be yours?

To be honest, it doesn't sound like a wise investment. But it's your money. I think there would be far better things to invest $300K into in India than a restaurant.

Thanks

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yukon

Banned 9 years ago

Apparently rice is expensive.

Thanks

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bizgrower

9 years ago

Originally Posted by Affiliatebuddy

Hi

I have some money and i am having an offer to invest in a restaurant in India. Total investment will be around $300-350k. They are a big managed brand and project an income of $10-15k per month. I myself think that it is rational projection. They will run and manage restaurant.

Suggestions?

Regards
AB

It seems like you are from India?

Do you know the industry well?

Just to clarify, you are investing in something like what in the US is called a franchise, and the people asking you to invest will run the restaurant? (Hopefully not close friends or relatives, sadly.)

Location, location, location. Parking, parking, parking. Access, access, access.

I'd look carefully at all property management expenses, lease or mortgage, utilities, maintenance,
immediate equipment expenses or repairs needed, property taxes, tariffs, insurance, etc.

I'd look carefully at the investment and requirements of the big managed brand. What to they have to do to uphold brand standards? How much do they have to contribute back to co-op advertising? How restricted are they when it comes to operating and marketing? How well does the brand support the owner operators?

I'd also look carefully and objectively at the skills and finances of the operators and the labor market itself. Are
they experienced? Do they know they want to own and operate a restaurant? Do they love the business? Can
they run a good operation? Can they hire good employees? Do they have enough financial reserves for the
routine and unexpected (such as freezer, boiler, or oven replacement)?

I'd say that all over the world, it is a high failure rate business.

Dan

[ 1 ] Thanks
1 reply

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Affiliatebuddy

9 years ago

They are good at what they do. Known in all North india and personal wealth of them will be approaching a billion.

Originally Posted by bizgrower

It seems like you are from India?

Do you know the industry well?

Just to clarify, you are investing in something like what in the US is called a franchise, and the people asking you to invest will run the restaurant? (Hopefully not close friends or relatives, sadly.)

Location, location, location. Parking, parking, parking. Access, access, access.

I'd look carefully at all property management expenses, lease or mortgage, utilities, maintenance,
immediate equipment expenses or repairs needed, property taxes, tariffs, insurance, etc.

I'd look carefully at the investment and requirements of the big managed brand. What to they have to do to uphold brand standards? How much do they have to contribute back to co-op advertising? How restricted are they when it comes to operating and marketing? How well does the brand support the owner operators?

I'd also look carefully and objectively at the skills and finances of the operators and the labor market itself. Are
they experienced? Do they know they want to own and operate a restaurant? Do they love the business? Can
they run a good operation? Can they hire good employees? Do they have enough financial reserves for the
routine and unexpected (such as freezer, boiler, or oven replacement)?

I'd say that all over the world, it is a high failure rate business.

Dan

[ 1 ] Thanks

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Affiliatebuddy

9 years ago

Hi

Thanks for response. Here is more information. That business is present in all major cities doing daily sale from $3-8k. And I own property already. When I talk about profit, it will exclude rent I will charge from my own business. It is at very good location and have good parking.

Secondly, they will run the show.
And very important about cost.

Even property in small towns sometimes is more expensive than some properties in Newyork . You may laugh on this or ask your Indian friends about it.
Setup is costly. All furnishing for 5000 sq ft.
Machines are costly as well. I believe they will spend around 200k or more in such costs as they will build it on my behalf.

When it is property, India is very expensive.