Abdul Razaq (Siddique) and Fareeda (Praveena), a Muslim couple in Kerala, are expecting their first child. Razaq wants the child to be a boy, and wants to name the child Faizal and call him Feyzee, but to his disappointment, the child is a girl, and Razaq and Fareeda name her Fathima. Fareeda gives birth continuously to three more girls, which irritates Abdul Razaq, who migrates to Dubai. Finally, Fareeda gives birth to a boy, but because of her continuous deliveries, Fareeda becomes ill and dies. Abdul Razaq takes his five children to Dubai. Feyzee is looked after by his sisters whom he affectionately calls "Ithathas & Company" (Sisters and Company).
As Feyzee grows up, his sisters get married one by one, and his father marries for a second time. Feyzee hopes to be a chef, much against his father's aspirations. Feyzee goes to Switzerland to study hotel management at the University of Lausanne and when he returns with much fanfare after the course, it is revealed that he has secretly studied as a chef and not hotel management. This shatters Razaq's dream of opening a five-star hotel in his home town Kozhikode and costs Feyzee a marriage proposal from a wealthy family.
Razaq wanted Fayzee to marry a business tycoon's daughter Shahana (Nithya Menen). Razaq virtually disowns Feyzee and steals his passport and credit cards so that Feyzee cannot go to London, where he already has a job as a sous chef in the IV restaurant. In anger, Feyzee travels to Kozhikode to join his grandfather, Kareem (Thilakan) who is affectionately called "Kareem Ikka" locally. Kareem has been managing "Ustad Hotel" (named after him by people) for the last 35 years.
Feyzee stays in Kozhikode longer than he had anticipated. During his stay with his grandfather, Feyzee gets involved in the daily activities of Ustad Hotel. He also strikes friendship with the members of the band "Kallumakkayees"(mussels). A five-star hotel named "Beach Bay" next door wants to acquire the land on which Ustad Hotel stands. Kareem had incurred lakhs of debt and the bank was planning to seize the restaurant and give the property to the five-star hotel. Feyzee tells the owner of the five-star hotel that he will not allow it to take over Ustad Hotel's property. The owner of the five-star hotel then bribes the local health department and gets Ustad Hotel closed down because of uncleanliness.
Feyzee collects money from the employees and renovates and with Shahana's help, reopens the restaurant, which becomes very successful, enabling them to clear the debts. Feyzee wants to go to France to pursue his career and he gets an offer to work as an executive chef in a restaurant in Marseille, France. But before he leaves, Kareem asks Feyzee to visit his friend Narayanan Krishnan in Madurai, whom Kareem had been funding to feed the poor.
On seeing how poor Indian people are struggling for food, Feyzee now understands the meaning of Kareem's words that "anyone can fill a stomach, but a good cook should fill the heart as well". By the time Feyzee comes back, Kareem goes on a pilgrimage, never to return. Feyzee changes his mind and decides to stay with Ustad Hotel, and marries Shahana, who helps him run the restaurant. Feyzee's rich father also changes his mind and supports the restaurant, changing it to a profitable one.