Delivering Fast Food…Fast

According to an analysis by the Associated Chambers of Commerce and Industry of India (ASSOCHAM), the QSR segment in the restaurant industry is currently growing at a compounded annual growth rate (CAGR) of 25%, and is likely to touch Rs 25,000-crore mark by 2020. This is likely to make several enterprising investors want to enter this segment. However it is essential for a newcomer to realize that the fast food industry has seen a rise as never before and there are a number of QSRs now all over the country. Ashok Malkani, while outlining the opportunity for new entrepreneurs touches on various aspects that a newcomer must take into consideration.

The food industry, over the last few years, has been flourishing, The Indian restaurant s and food services industry has been growing at a healthy pace mainly due to the increasing incomes despite the slowdown in sectors like manufacturing. The market size of this industry, according to CARE Ratings, stood at Rs. 3.7 trillion in 2018, registering a y-o-y growth of about 10% and a CAGR growth of 8.4% between 2013 and 2018. The Agency expects the restaurant and food service industry to register a growth of about 10.4% CAGR for the next 5 years between 2018 and 2022 to reach Rs 5.5 trillion by 2022. The growth will be supported by long term healthy demand outlook backed by higher disposable income, favorable demographics and rising aspirations of the burgeoning middle class, increasing internet penetration, increasing number of women joining the workforce, increasing focus on health and wellness, technological advancements and growing urbanization.

The most indispensable segment of the food service industry is the quick service restaurants (QSR) sector, which has grown at a fast pace and, according to some reports, expected to become Rs 51,000 crore market by 2021. According to India Food Services Report National Restaurant Association of India (NRAI), the QSR format (followed by most cafes and chains) dominates the restaurant industry and is, currently, valued at Rs 20,400 crore.

The youth, estimated to be about 356 million according to UN reports, being the brand conscious segment of the population, have contributed largely to the dining out culture and it is found that a majority of them prefer QSRs. A study by the NRAI also reports that Quick Service Restaurants (QSRs) and Casual Dine-in formats account for 74% of the total chain market.