‘Recover your money in 30 months’: Social founder’s formula for smart restaurant investing

Riyaz Amlani, founder of Social and owner of over 80 restaurants, who now runs a Rs 800-crore restaurant empire, shared his rules of thumb before investing in restaurants.

During a podcast with Raj Chamani, he explained, “If you’re investing in a restaurant, your distributed capital is supposed to return within 30 months. That is, you should get your money back within 30 months. That’s one of the rules we follow.”

He also stressed the importance of achieving EBITDA at the stall level of 15-20%, saying: “It has become very difficult to achieve 20%, but let’s say if your turnover is INR 100, you want to take home INR 20 – so EBITDA is expected to be 15-20%.”​

Amlani cautioned that while PAT (profit after tax) is an enterprise metric, “at the stall level, EBITDA should be around 15-20%. Why? Because if you want to build a corporate structure around it, the company expenses will take another 6-8% of your revenue at the stall level. So, your ROI should still be recoverable within 30 months.

Reflecting on his own business journey, Amlani said, “Right now, our business is around Rs 800 crore, and we have been doing this for 22 years. There is no one bigger than us in the restaurant space in India, barring quick service restaurants like McDonald’s or the Indian version of Domino’s. In terms of pure retail, we are the largest unlisted food service company.”

Talking about the expansion, he added: “I would rather have Rs 50-200 crore brands than a Rs 2,000 crore brand, because I feel change is imminent. Right now, 50% of all food services are in 10 cities in India. These top 10 cities are growing faster than tier II cities. So I would rather have 20 brands in 10 cities than 1,000 outlets spread out.” “Cross it.” “1,000 different locations, it’s more interesting to have a larger share of wallet in a larger market niche than a smaller share in a smaller market.”

Amlani described the licensing maze facing restaurateurs, “For every restaurant, you need about 40 different licences, and every city has different rules. Mumbai and Navi Mumbai have very different rules. Delhi and Gurgaon are different. Noida is different. Every license has multiple windows – Gujarat has a one-window policy, but in reality, even one window has 10 counters, and there are 40 windows in total.” “If you just want to sell a sandwich, you still need police permission, municipal permission and FSSAI permission,” he added.

Amlani believes that simplifying these regulations could help more entrepreneurs enter the sector, saying: “If all four licenses are listed in one place, it will motivate people to enter the industry instead of discouraging them. At the moment, this is frustrating.”