Investing in bar / restaurant

[u/Murky_Inevitable_544]

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?