India’s Quick Service Restaurants Industry

India is witnessing a restaurant revolution that is sweeping the country and changing the face of its casual dining landscape in a major way.

The revolution began in 1996 with McDonald’s, Pizza Hut, Domino’s Pizza, Subway and Yo! China, among others, setting up shop in the country. Since then, the food services market has grown continuously with more and more domestic and foreign quick service chains popping up both in the metros and smaller cities. This trend is fuelled by greater demand from Indian consumers who are now eating out much more frequently and experimenting with new food products. “A younger population, high rate of urbanisation, large disposable incomes, high protein consumption, increased participation of women in the workforce and exposure to western lifestyles are leading to the experimentation and adoption of new dietary habits and more occasions to eat out,” says Asitava Sen, India Head Food & Agribusiness Research & Advisory, Rabobank India.

Experts predict double digit growth of the QSR industry to hit approximately 30% CAGR by 2015 outpacing 11% CAGR for the overall Indian foodservice sector which is currently estimated to be $48 billion.

At present, according to the National Restaurant Association of India, 50% of Indian consumers are eating out at least once every three months and this lifestyle shift is epitomised by the growing presence of QSR chains which have started to implement aggressive nationwide expansion plans to tap into the huge potential of this sector.

Currently the chain restaurant space is marked by the presence of almost 100 brands with more than 3,000 outlets spread across various cities. While organised market players like McDonald’s, Sagar Ratna and Café Coffee Day are capitalising on untapped locations such as highways and airports with customised menu offerings, recent entrants like Starbucks Coffee and Mad Over Donuts are drawing up ambitious expansion plans to increase their market share in the QSR category. Mad Over Donuts recently opened its 20th store in Mumbai at Profit Center, Kandivali (West) which is the brand’s 47th store in the country and plans to more than double its store count in India by the end of this year. The chain is currently present in Delhi-NCR, Mumbai, Pune, and Bangalore.

It is clear that the Indian food service market has come a long way since the mid-nineties, when it was primarily dominated by unorganised players and few brands. However as with all new developments, it is not without its fair share of challenges which include high real estate costs, rising food prices, shortage of quality manpower, fragmented supply chains and over-licensing. Infrastructure bottlenecks such as irregular electricity supply and water also pose hindrances to growth.

In order to sustain this robust growth and overcome the numerous obstacles, there is a real need to establish collaborative and dedicated end-to-end supply chains – connecting local business partners, high quality vendors and supply chain solution providers to each other and making use of modern structures such as logistics parks, integrated cold chain and last mile connectivity.  This kind of consolidation opens up exciting new opportunities for UK logistics and supply chain companies to leverage their expertise to work in partnership with the Indian restaurant players and generate win-win outcomes.