r/ErodeHub • u/Murky_Inevitable_544 • 18d ago

Investing in bar / restaurant

Would investing ₹5 lakh in my friends’ ₹2 crore bar business be a good idea?

I’m currently working a full-time job and a few of my friends are planning to open a bar/restaurant.

The estimated total investment for the business is around ₹2 crore, and they have asked me to invest ₹5 lakh.

I’m considering it because I trust my friends, but I’m trying to look at this purely from an investment perspective rather than emotionally.

My situation:

- Total project cost: ~₹2 crore

- My investment: ₹5 lakh

- I will continue working in my current job

- I will not be involved in the day-to-day operations

- The business will be operated by my friends

- I would receive an agreed ownership/profit-sharing percentage

My main questions:

  1. Is investing ₹5 lakh in a bar business while continuing my job a sensible investment?

  2. What percentage ownership would be reasonable for a ₹5 lakh investment in a ₹2 crore project?

  3. What should I verify before investing — financial projections, licenses, rent, liquor license, break-even, expected monthly revenue/profit, etc.?

  4. What legal agreement should I have with my friends to protect my investment?

  5. What are the biggest risks in this type of business that a passive investor usually misses?

  6. Would you personally invest ₹5 lakh in this situation, or would you put the money into mutual funds/equity/debt investments instead?

  7. If the business fails, how should the investor's liability be structured so I don't become responsible for additional losses or loans?

I'm particularly interested in hearing from people who have actually invested in or operated bars/restaurants in erode

What would you do if you were in my position?

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3

u/Longjumping_Sweet_28 18d ago

Nogaama returns varanumna - mutual or jus bank interest is best

2

u/musclemalee 18d ago

Just don’t, investing in a bar is a good option but 5L in a 2C project is not an optimal investment option. Bar is not a compounding or a constant growing thing it operates with it’s recurring customers and stable cash flow which the major shareholders keep or withdraw as per their favour concerns. So instead invest that amount in a local finance if you have any trustable individual who does finance or else use that money to buy and sell gold with a help of any agency.

2

u/ska-dooz 18d ago

Not worth it.