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What’s Cooking in India’s Food and Drinks Business? Here’s why the sector is likely to grow quickly after the pandemic

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After the pandemic, the Indian F&B industry is expecting good business. The sector is primed for substantial expansion after two washout years following the COVID-19 epidemic. Nearly 65% of the industry’s $4.5 billion in unorganized business Experts claim the Indian F&B industry’s double-digit compound annual growth rate (CAGR) is a good indicator. It should reach Rs. 6 lakh crore in two years. According to the “Food, Service, and Restaurant Business Report,” pages 22–23, the restaurant sector is revealing new trends that are important to the industry’s development in the coming years. Inflation is a big operational issue in a highly disruptive industry. 

The market value of the restaurants and food services business, which was above Rs 4 lakh crore, is generally divided into two groups: the unorganized segment, which accounts for the primary portion of the market size, and the organized sector, which increased at a significant rate between 2014 and 2020. The Indian food services market is predicted to increase by 11.19 percent and reach $79.65 billion by 2028. After subtracting the inflation rate of 4%, the value of the chain category, including quick service restaurants (QSR), doubled, and the global food services industry rose 9.3%. 


Unorganized vendors, dhabas, food carts, street kiosks, and others serve ready-to-eat food. 

According to the poll, takeout and home delivery are expanding moderately after a greater growth rate between FY20 and FY21, whereas dine-in is growing gradually from FY21. Food chain stores saw big growth in 2021-2022. Q2 FY22 saw QSR companies rebound due to increasing footfalls once lockdown limitations were lifted and the vaccination programme accelerated. Q2 FY22 QSR margins increased 383 bps and climbed 67% YoY. 

It predicted the QSR chain industry would be the fastest-growing food services subsegment during the next five years. “Over FY20-25, the QSR chain market is anticipated to be the most rapidly expanding sub-segment, with a 23 percent CAGR, of not just the chain market but also the whole foodservice sector,” Edelweiss reported. QSR demand has increased as urban Indians of all economic groups eat out more often without a specific occasion. 

People increasingly enjoy eating outside as a part of their leisure activities or shopping experiences. This trend is mostly seen in 25–40-year-olds. People are eating out more to try new cuisines as they become more exposed to international lifestyles and cultures. Food services companies in India spend 4-6 percent of their net revenue on marketing, with 45 percent on the internet and digital media. INDIA’S QSR India’s quick-service restaurant (QSR) industry is predicted to clock a CAGR of 23 percent between now and the fiscal year 2025 as global food service chains like McDonald’s, Burger King, and Domino’s, among others, broaden their presence in India’s smaller cities and profit from a younger demographic. Tier-II and Tier-III towns have a $134.3 million QSR business due to strong growth. 

2021–2022 QSR companies rebounded in Q2 FY22 due to greater footfalls following the unlocking of lockdown limits. Q2 FY22 margins improved by 383 bps, and the industry gained 67% YoY. It predicted the QSR chain industry would be the fastest-growing food services subsegment during the next five years. Edelweiss reported that the QSR chain industry is expected to grow at a CAGR of 23% over FY20–25. QSR demand has increased as urban Indians of all economic groups eat out more often without a specific occasion. Leisure and shopping trips often include eating out. This trend is mostly seen in 25–40-year-olds. New Products and Menu Changes Restaurants have new product developments and menu concepts. New product development will promote traffic despite headwinds. 

Exploring Collaborations: This follows synergistic collaborations amongst consumer favorites. To differentiate themselves, restaurants are pushing brand collaborations to unusual locations. KFC India, for example, works with Nestle to bring fans the KFC Popcorn Bowl Made with Maggi. Products Positioning: Products’ positioning on health, nutrition, wellbeing, convenience, local sourcing, and sustainability will remain advantageous to customers throughout the present conditions. Subway is our go-to healthy restaurant. In 2021, Subway India improved its protein flavors and menus throughout its 660-plus restaurants to suit client tastes. Subway wants to give customers a healthier, tastier lunch. 

NUTRITION Modern diets emphasize protein. Vegan and vegetarian restaurants are focusing more on plant-based proteins. Restaurants are also offering salads and fried chicken. Harnessing the plant-based revolution, Starbucks has released its new dairy-free addition to its menu across stores in India: oat milk. The addition of oats is an extension of the coffee industry’s already existing selection of plant-based alternatives such as almond and soy. ROADBLOCKS The industry has food, labor, and supply chain issues. Food costs: Some industry staples rose 38% during the epidemic, according to restaurant supply chain businesses. A variety of food products are seeing price increases. According to the Poultry Federation of India (PFI), egg production costs have climbed by 20–25% this year, chicken prices surged by over 20.74 percent in March 2022, and meat and fish food inflation was 9.63 percent. The new average retail costs for ordinary garden vegetables have suddenly risen to Rs 120–140 per kg from Rs 60–80 earlier in metros. 

Labor costs: The hospitality industry relies on human resources, and labor costs make up most restaurant expenses. The percentage of restaurant staff costs to sales averages 22–40 percent, and in rare situations, it can be almost as high as 75 percent. With minimum wage increases and an unclear future, restaurant owners will spend more on labor than ever before. Supply chain disruptions have had a major influence on the sector. Along with COVID-19 lockdowns, the geopolitical tensions throughout the globe have disrupted restaurant supply lines, making it impossible for some restaurants to get their typical components and affecting raw material prices. INDUSTRY Rajat Agrawal, CEO, Barista: Business post-Covid has come back with a vengeance, and eat-out ratios and home deliveries have picked up extremely well. Our business recovered rapidly before COVID. Our FY22 business surged 70% compared to FY21, and FY23 is growing similarly. Further, we have grown our market share and increased our places of presence. 

As independent cafes struggled throughout the COVID era, appealing real estate and business consolidation occurred. In the two years since the pandemic, Barista has expanded to nearly 100 outlets. Today, we manage 340-plus shops across numerous cities. 

Bakingo co-founder Himanshu Chawla: The COVID-19 epidemic has affected tourism, hospitality, food production, and retail. Restaurants across the country have been decimated by this pandemic. 

Cloud kitchens, delivery applications, and home chefs grabbed the industry by storm back in 2020 during the lockdowns. Restaurants focused on learning from these trends and creating specialty experiences to boost client loyalty and international experiences this year. Since the epidemic, cashless transactions, improved health and safety procedures, and improved digital menus have benefited the restaurant sector. 

A significant rise in online deliveries has also been a major contributing factor. These changes made the industry run more smoothly than before COVID. Online deliveries have grown, while eating experiences have declined. As the world recovers and normalcy returns, dine-in restaurants and Cloud Kitchens with at-home delivery are thriving.

Article Credit – https://news.abplive.com/india-at-2047/what-s-cooking-in-india-s-food-beverage-industry-here-s-why-the-sector-is-poised-to-see-rapid-post-pandemic-growth-1565592/amp

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