After a pause of over two years due to the pandemic, the food services sector is abuzz with mergers and acquisitions (M&A) as well as increased investments and funding. Industry executives note a resurgence of new players, including global brands, and a revived investor interest driven by younger consumers with higher spending.
Speciality Restaurants, the operator of Mainland China and Oh! Calcutta, is in advanced negotiations for its initial set of acquisitions, with Chairman Anjan Chatterjee revealing that the listed company has earmarked INR 125 crore for mergers and acquisitions this calendar year. Meanwhile, Rebel Foods, the proprietor of Faasos and Mandarin Oak, is gearing up for its first initial public offering early next year, making it the first cloud kitchen company to go public.
“India’s young population is a key growth driver for food services now – that’s going in our favour; data says younger people are dining out or ordering in a lot more,” said Rohit Aggarwal, director at Lite Bite Foods, which operates Asia7 and Street Foods of India restaurants. “Many of these people will soon enter the earning bracket as well, which would also contribute to the growth story,” he said, adding Lite Bites is looking to double its network of restaurants from the current 200 over the next 3-5 years.
Despite worries about inflation and increased competitive pressure, there is a positive outlook for consumption.
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“Food services is a high growth potential sector, with socio-economic reasons such as significant increase in the numbers of nuclear families with more incomes, as well as people preferring established brands over unorganised ones – a trend that took off during the pandemic and has since stayed,” Chatterjee said.
Sagar Kochhar, Co-Founder of Peak XV-backed Rebel Foods, leading both the food court format EatSure and a vast cloud kitchen network, has announced the company’s intensified expansion strategy across all its brands.
“We expect our category-leading brands to continue growing 20-25% in 2024. This trajectory points to innovation and adaptation, setting the stage for multiple, successive S-curves as we expand,” he said.
Within the next two years, EatSure aims to open 100 brick-and-mortar stores as part of its expansion strategy.
Kochhar further mentioned that Rebel Foods achieved its most outstanding performance this New Year’s Eve, witnessing a remarkable increase of over 30% in same-store volume growth compared to the previous year.
Other prominent chains, such as the operator of Social, Impressario Handmade Restaurants, and Massive Restaurants led by Zorawar Kalra, have stated that they are currently either in the stages of going public or expanding their operations.
Last month, Wow! Momo Foods achieved its most substantial fundraising success, securing INR 350 crore from Khazanah Nasional Berhad, the sovereign wealth fund of Malaysia. Co-founder Sagar Daryani disclosed that the newly acquired capital would fuel the chain’s expansion into an additional 100 cities, with the ambitious target of establishing over 1,500 stores within the next three years. This expansion initiative comes as the company already operates in 35 cities with 630 stores.
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According to a report from Wazir Advisors in January, the organized food services sector in India is surpassing the growth of the unorganized sector, driven by the emergence of new brands and heightened investor interest.