The Indian restaurant industry is at a crossroads. On one hand, it is one of the largest employers in the country, full of energy and ambition. On the other, it is a fiercely competitive space where survival is becoming increasingly difficult. According to Jasper Reid, an industry veteran, the picture is tough—businesses should be consolidating and adjusting to market realities, but many are instead operating in a “zombie” state, stretching payables and playing for time.
Too Many Slices of the Same Pie
Reid highlights an important challenge: the oversaturation of competition. A decade ago, there were only a handful of gourmet pizza brands in India. Today, every third new restaurant seems to be a high-end pizza joint, making the market incredibly fragmented. While this should ideally lead to natural contraction, many businesses find ways to keep afloat, preventing the industry from balancing itself.
Adding to the pressure is India’s unique business culture, where promoters are often hesitant to let go, instead adopting short-term survival tactics. “India is world-class at playing for time,” Reid notes, explaining how this slows down necessary market corrections.
Continue Exploring: NONSTOP launches first flagship store in Mumbai, offering mobility and wellness solutions
The Illusion of Big Numbers
A major reason many entrepreneurs are drawn to the food business is the perception of quick cash flow and high margins. Reid acknowledges that several local brands have managed to scale past ₹100 crore in revenue. However, the challenge is sustainability. The restaurant business is notorious for being capital-intensive, and many brands struggle to maintain profitability once they expand.
Rentals, a major fixed cost, often make or break a business. While some brands succeed despite high overheads, most falter when their revenue projections don’t match reality. “The difference between a weapons-grade operator and just getting into the business is massive,” Reid points out, emphasizing the need for expertise in operations, marketing, and financial management.
The GST Roadblock and a Call for Reform
One of the biggest financial hurdles for restaurants in India is the removal of input tax credits on GST. Reid argues that if the government were to restore this provision, it would instantly turn many struggling businesses profitable. “It’s a single policy change that could transform the industry,” he says, making a strong appeal to regulators.
Continue Exploring: NONSTOP launches first flagship store in Mumbai, offering mobility and wellness solutions
The Dine-In vs. Delivery Dilemma
Another post-pandemic shift that has disrupted the industry is the rise of food delivery. While platforms like Swiggy and Zomato have made it easier for consumers to order food, they have also squeezed restaurant margins with high commissions. Reid explains that for most operators, delivery is simply not profitable. Meanwhile, dine-in business, which is far more lucrative, hasn’t recovered to pre-pandemic levels.
Looking Ahead: Hope in an Uncertain Future
Despite these challenges, there are signs of optimism. Reid believes that with the right policy changes and market adjustments, the industry can regain momentum. He also foresees that the great restaurant brands of the future will be built in India, for India, by Indian entrepreneurs.
The restaurant business is not for the faint-hearted, but for those who can navigate its complexities, there is still plenty of room to grow.
