INDIA- According to the Food Service and Restaurant Business Report 2022/2023 by Francorp, the Indian food service market is projected to grow at a combined annual growth rate (CAGR) of 11.19% and reach the US$79.65 billion valuation by 2028.
The Food Service and Restaurant Business Report 2022/2023 also revealed India’s quick service restaurant (QSR) market is expected to grow at a CAGR of 9.15% and cross the US$1.069 billion valuation by 2028.
According to Francorp, the QSR is the largest growing sub-segment of the sector.
This growth is attributed to large QSR chains like Domino’s, Burger King and McDonald’s, which have expanded their presence in India’s smaller cities. They have also gained from a more receptive younger customer base.
Francorp also disclosed monthly middle-class spending on QSR chains in Tier II and III cities has grown by 108% in the past two years, from INR 2,500 (US$29.79) to INR5,400 (US$64.34).
The report also pointed out that the biggest challenge plaguing the country’s QSR market is supply chain delays and shortage of key ingredients and raw materials.
It revealed 96% of Indian QSR operators experienced this challenge in 2021 and are likely to continue in the next few years.
The other major challenge in the country’s food service market was inflation.
High inflation has caused a cost increase in raw materials and key ingredients, which has caused a corresponding increase in the price of fast food products.
Customers have reacted to this increase in prices by ordering less and dining out less. The report further revealed that 40% of customers order less while 51% eat out less.
It has also made it difficult for QSR brands to access credit due to higher interest rates.
However, despite these challenges, Francorp expressed optimism over India’s QSR market. It expects investments by large multinational QSR chains and the growth of the online ordering sub-sector.
The report also revealed the industry is expected to employ 10 million people by 2025. This shows the sector’s steady recovery since the COVID-19 pandemic, where 2 million jobs were lost.
The sector currently employs 7.3 million people.
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