India's restaurant industry is attracting serious capital, but building a profitable restaurant remains one of the most difficult businesses to crack. According to Lavanya Jayashankar, Founder and CEO of Hotshare, an F&B investment platform, around Rs 10,000 crore was deployed into the F&B business in 2025, while organised food services are expected to account for more than half the market by 2030.
Yet, despite growing consumer demand and investor interest, Lavanya points to an uncomfortable statistic: 80% of restaurants close within their first five years.
Hotshare funds restaurant businesses with a range of Rs 50 lakh to Rs 5 crore. For the investment platform, which raises capital for profitable restaurants and bars at the outlet level, the opportunity is not necessarily to change that statistic, but to identify and fund the businesses that have already demonstrated their ability to survive.
"My play here is to say, let's identify those 20," says Lavanya.
One example is Beyondburg, one of Hotshare’s portfolio companies. The burger brand began in Bengaluru in 2017 as a four-seater kiosk selling 40 to 50 burgers daily. Today, according to co-founder Mohammed Anas, the brand sells approximately 3,000 burgers a day and has just opened its sixth location
Its journey offers a practical illustration of what Lavanya believes separates a successful restaurant from an attractive but financially unsustainable concept.
The Rs 50 lakh to Rs 5 crore funding gap
India's F&B industry has traditionally attracted two types of capital: institutional investors backing large, scalable chains and informal investors financing individual restaurants through personal networks.
Lavanya believes a significant opportunity exists between these two categories.
"There is a vast middle of profitable, successful entrepreneurs who are under-capitalized," she says, arguing that investors frequently evaluate restaurant businesses using frameworks borrowed from technology and direct-to-consumer companies.
The distinction is fundamental. A restaurant chain can create enterprise value through expansion, but an individual outlet generates value primarily through its operating cash flows.
Hotshare therefore evaluates outlets as income-generating assets rather than businesses dependent on a future acquisition or exit.
According to Lavanya, opening a restaurant typically requires Rs 50 lakh to Rs 5 crore, an amount that can be too small for institutional investors but substantial enough to demand professional financial oversight.
She says Hotshare's selected outlets offer a projected 15% to 20% post-tax internal rate of return over five to seven years, with returns distributed through profit sharing. She also describes the possibility of higher effective returns when investors reinvest those distributions, although these remain investment projections rather than guaranteed outcomes.
Why great food is not enough
For Lavanya, the economics of running a restaurant are more important than its popularity.
She outlines specific financial benchmarks across restaurant formats. Quick-service restaurants should aim for food costs below 18% of revenue, manpower costs below 15% and EBITDA margins above 18%. Casual dining restaurants can accommodate food costs of 18% to 22%, but should still target EBITDA margins exceeding 15%.
Rent is another critical variable.
"Whatever category you are in, it's not great business if your rent is more than 12 to 15% of your revenue," she explains.
These numbers help explain why a restaurant with excellent food, strong social media visibility, and crowded tables can still struggle financially.
Lavanya believes first-time founders frequently spend too much on their initial outlet before establishing product-market fit. A restaurant requiring Rs 5 crore in capital expenditure is not necessarily better positioned than one requiring Rs 2 crore. It may simply be a more expensive experiment.
Beyondburg followed a different approach.
Beyondburg: From 50 to 3,000 burgers a day
Anas recalls arriving in Bengaluru on a holiday and meeting his future co-founders, Ajmal and Nishaf. Together, they decided to start a small burger business near Christ College in Koramangala.
"We used to do, uh, 40 to 50 burgers a day," he recalls.
The founders operated the kiosk for almost three years before deciding to rebuild Beyondburg as a scalable brand, beginning with a flagship outlet in Calicut.
Rather than attempting to establish a large restaurant chain immediately, the team used its initial years to understand the product, customer preferences and operating requirements.
Lavanya considers this approach one of Beyondburg's biggest strengths.
"They didn't start with a five crore capex," she says, explaining how the founders first tested the concept before committing to larger outlets.
By the time Beyondburg began expanding, it had already invested in central procurement, vendor relationships and operational systems.
For Lavanya, the brand demonstrated that expansion could follow operational readiness rather than precede it.
Why Beyondburg refuses to sell pasta
Anas identifies three priorities behind Beyondburg's growth: product, people and operations.
Despite customer requests to introduce additional dishes, the company has resisted expanding beyond its core burger proposition.
"If they want to try pasta, they can go to somewhere else, right?" he says.
The decision is not simply about brand positioning. Every additional menu item introduces complexity into procurement, inventory, kitchen operations and service.
Beyondburg has instead focused on reducing unnecessary stock-keeping units and improving kitchen throughput, particularly during busy weekends.
Anas explains that the company works with kitchen consultants to estimate peak demand and design its outlets accordingly. At the Bengaluru location in Indiranagar where the podcast was recorded, he says the business sells 700 to 800 burgers a day.
The company has also built a structured approach to training. New employees are paired with experienced colleagues, while a dedicated trainer travels between outlets to maintain consistency.
The challenge, Anas explains, is ensuring that a growing business delivers the same product and customer experience regardless of location.
What made Beyondburg investable?
Lavanya first met Anas in December 2024, when Hotshare was still developing its investment framework.
Beyondburg subsequently became one of its portfolio brands, and she credits the business with helping shape Hotshare's evaluation checklist.
"Gold standard of operations data was available from day one," she explains.
The company maintained historical financial information, treated outlet-level profitability as non-negotiable and developed central systems before they were essential for its existing scale.
Its vendor relationships were also designed to support future expansion rather than simply meet immediate requirements.
But Lavanya's conviction was not built on financial information alone.
During her first visit to Beyondburg, before meeting Anas, she noticed that her water glass was consistently refilled without asking. At the end of the meal, employees offered a complimentary dessert without seeking management approval.
For her, these were indicators of a culture in which employees understood hospitality and had the freedom to improve customer experiences.
The combination of financial discipline, repeatable operations, and service quality made Beyondburg particularly attractive.
The real test of restaurant success
Lavanya believes the restaurant industry's next phase of growth will require founders and investors to rethink how they define success.
Opening more outlets is not necessarily evidence of a stronger business. A restaurant that expands rapidly while sacrificing profitability may ultimately destroy value rather than create it.
Beyondburg's experience illustrates an alternative approach: establish demand with limited capital, build operating systems, maintain product focus and expand only when the underlying economics support it.
For aspiring restaurateurs, Lavanya also emphasises the importance of working with experienced operators rather than assuming that culinary ability translates into business expertise.
"Hospitality is an execution business, it is not an ideas business," she says.
Beyondburg's journey from a four-seater kiosk to thousands of burgers a day shows why that distinction matters. The visible success is a popular consumer brand. Behind it are years of disciplined decisions about costs, people, procurement, kitchens and profitability.
For Hotshare, those are precisely the businesses worth backing.