"Biryani is One of the Most Premium Dishes in India"

The global economy is projected to grow by 1.7 percent in 2023 and 2.7 percent in 2024. The sharp downturn in growth is expected to be widespread, with forecasts in 2023 revised down for 95 percent of advanced economies and nearly 70 percent of emerging market and developing economies.

During an economic recession, restaurant investment may be affected in several ways. On the one hand, a recession can lead to a decline in consumer spending, which could result in fewer customers visiting restaurants and a decrease in revenue for restaurant businesses. This could make restaurant investment less attractive for potential investors, as they may be less confident about the ability of a restaurant to generate profits in a challenging economic environment.

In some cases, economic recession can lead to increased food costs due to supply chain disruptions, shortages, and other factors. This can put pressure on restaurant profit margins, especially for businesses that rely heavily on certain types of ingredients.

Impact of Recession on Restaurants

During a recession, many people may be looking for work, which could make it easier for restaurants to find and hire employees. However, if the recession leads to a slowdown in business, restaurant owners may need to lay off staff or reduce hours, which can hurt employee morale and retention.

On the other hand, some investors may see opportunities in investing in restaurants during a recession, as distressed restaurant businesses may be available at a lower cost, and there may be less competition for prime real estate locations. Additionally, restaurants that are able to adapt to the challenging economic conditions and offer high-quality food and service at affordable prices may be able to thrive during a recession and attract customers who are looking to save money by eating out less frequently.

“With industries across the world facing economic headwinds, it goes without saying that restaurants and hospitality organizations across the world will face a tough time going ahead. With the IT industry laying off large swathes of its work force and commercial bank feeling the pressure, much of the world seems to the be bracing for economic doldrums and the restaurant industry is no different,” shared Teja Chekuri, Managing Partner at Ironhill India. 

However, he feels that some businesses, the innovative ones may choose to reposition their business, come out with innovative offerings or use the power of social media to boost their online footprint and consequently sales.

“Considering that consumers become extremely selective should they choose to dine out during an economic downturn, a healthy mix of the old strategy, the right price, product mix and promotion, and a robust social media presence could help restaurants surf the tide,” Chekuri further shared.

How to Sail over Tough Times

The food industry has a history of being resilient during economic downturns and has been able to adapt to changing market conditions. The recent pandemic is a prime example, where the industry pivoted to takeout and delivery options, as well as implementing safety protocols to ensure the safety of customers and employees. While an economic recession may present challenges for the food industry, it is not likely to slow down significantly.

However, during a recession, there may be micro changes related to menu pricing, operating models, and cuisine preferences that are necessary to suit market conditions. Restaurants that can offer high-quality food, exceptional service, and unique experiences may be able to differentiate themselves from competitors and attract customers despite economic challenges. It is also essential for restaurants to adapt to changing consumer preferences and implement cost-cutting measures to weather the economic downturn and emerge stronger when conditions improve.

Is it the Right Time to Invest?

According to Chekuri, though the restaurant industry is a tough segment to compete in, investments are safe. “If you are able to have a tab on the future, analyse the upcoming challenges and opportunities and devise an innovative strategy to weather the storm. Like we saw during the pandemic era, the organizations that are able to weather the early storm and sustain themselves, usually come out of those tough times healthier than before and tend to flourish once the economy takes the upturn,” he said.

Devanshi Tripathi, founder & CEO of TripGo Hospitality feels that despite the pandemic, the restaurant industry has seen significant growth, making it an ideal time for new restaurants and brands to emerge. The impact of the global economic recession on the restaurant industry in India has been less severe, presenting a good opportunity for new investments and expansion in the F&B industry. 

Tripathi further added that as a F&B brand, the company is in line with the changing dynamics of the industry and are confident about sailing through the tide with a consumer-centric approach. The industry prediction for 2023 looks promising, with emerging trends of health-focused brands and local sourcing of products becoming the accelerators for industry growth.

Oyster, Bar & Kitchen, the flagship brand of TripGo Hospitality has recently expanded its seating capacity from 150 to 250. Owing to the popularity, TripGo is looking forward to replicating the success of Oyster, Bar & Kitchen with new outlets in Bengaluru and neighboring F&B hubs like Pune and Goa.

Kushang, CEO of SupplyNote feel that while investing in restaurants during an economic recession can be risky, it is not impossible to succeed. Investors should carefully analyze market conditions, adapt to changes, and focus on delivering high-quality products and experiences to customers.

Overall, the impact of an economic recession on restaurant investment will depend on a variety of factors, including the severity and duration of the recession, the specific market conditions in the restaurant industry, and the ability of restaurant businesses to adapt to changing economic conditions.

In the last two years, amid rising cases of Covid-19 and continued worker shortages, some fast-food restaurants closed down their dining rooms and anticipated to never reopen again. While sit-in areas where closed, the locations offered other ways of getting food whether via pickup, delivery, and drive-thru. But as the pandemic continues to change the restaurant industry, whether that’s cutting back on staff, turning to delivery, or investing in new business models like ghost kitchens, it raises the question of whether fast-food chains still need dining rooms at all.

In some cases, the loss of indoor dining will be permanent because they are investing quite a bit in changing the architecture of their restaurants. Like few McDonalds opted for drive thrus and they remained a constant even after post pandemic mess. Meanwhile, few fast food chains have been turning to ghost kitchens, which are essentially restaurants without a storefront as they would rather deliver meals themselves than outsource it to third-party delivery companies and lose the commission. And, for some restaurants, the reopening of dining rooms may come with more hassle and expenses than it’s worth.

Customers are looking for spaces to step outside

But restaurants that are in malls or have playgrounds are likely to continue to have sit-in dining, as they cater to children which is a big market. Children would like to go and get some happy meal or enjoy and get some balloons. That is part of the fast food operations. At the same time, a delivery-only restaurant limits what type of food can be delivered.

But whatever the situation may be, the projrection of having no dine-in space for any fast food outlet is not a valuable proposition yet. As  Reetesh Shukla, business head of Charcoal Concepts, K Hospitality Corp commented, “Customers are looking for spaces to step outside their homes and offices, and fast-food restaurants with seating, where you can get food served quickly, conveniently and at value for money prices, provide a space for consumers to bring their families or colleagues, and let customers experience the brand. “As we scale up Joshh in the coming years, we would provide spaces where our customers can come experience the brand and our quality promise, in person,” he informed.

Are ghost kitchens replacing dine-in need?

Fast food restaurant owners know operating successful ghost kitchens require savvy planning, but it's a risk many chains seem willing to take. Following the coronavirus pandemic and the rise of third-party delivery apps, some fast food establishments are converting to these kitchens to satisfy off-site dining demands.

There's no storefront, dining room or front-of-house staff in a ghost kitchen. Instead, a team works solely to fulfill online orders requiring delivery, space gets rented to prepare food orders made through third-party apps. The adoption of ghost kitchens isn't new, but it has surely new takers post pandemic. But not all feel the same.

“In today's changing world, there are numerous options like dine-on, cloud-kitchen , etc. But the craze for and of dining spaces for restaurants is something which no one can replace. Today, fast food goes beyond greasy burgers and fries. Millennials are looking for greasy burgers, a flawless espresso shot is whipped up in record time by a medley of music, delicious food, pleasant surroundings, and live performances,” Rohit Tandon, co-founder of Zoca Café commented. 

India has a sizable market for dining establishments, and fast food cafes are turning heads with innovative ideas and expanded menus. Fast food cafes like ZOCA, YOLO (You Only Live Once) operated by Fraterniti Foods Private Limited, have already adapted themselves as competitors in India. Fast food outlets are transforming into dining establishments with a variety of their own brands and providing a distinctive food court experience from a stand-alone restaurant. 

May get eliminated abroad but not in India

The coffee business in which Tim Hortons competes has been roiled in recent years with the spread of drive-thru coffee huts abroad. Dutch Bros, which went public last year, rocketed to become the third-largest coffee chain with a model that features no seating. But when Tim Hortons decided to enter India, they were sure of the seating model and not the drive-thru model. Indian audience and consumers when compared to international consumers vary differently in terms of preferences. 

Large fast food brands that rushed to open cloud kitchens and double down on virtual first brands in the pandemic said they are focusing more on their dine-in business and prioritizing deliveries via existing stores. Sagar Daryani, co founder and CEO at Wow! Momo, which had opened 19 stand alone cloud kitchens post the pandemic, said they will follow a more hybrid model, building stores that service both dine-in and delivery. The company operates three fast-food brands. For several chains that have for years invested in pure-play dine-in formats, cloud kitchens were an alternative revenue stream during the pandemic and not a primary one. 

Many people who did cloud kitchens as a means of survival are now witnessing fewer orders or are not looking at expanding those kitchens and are back to expanding physical outlets. 

And for the only legible substitute of dine-in for fast food chains can be drive thru which cannot be a great idea considering Indian demographics. A country like India can never manage a drive-thru restaurant in its overpopulated cities like Delhi, Kolkata, Mumbai etc. Due to urbanization, competitors in the fast-food industry are increasing and it's almost impossible for a fast-food brand to acquire a large enough space and operate a drive-in in an already overcrowded place.

Looking at the current scenario, in the future, franchises will have more choice, from choosing between smaller size restaurants with kiosks to a full on brick-and-mortar restaurant, and now dine in or takeout-only services. However, going hybrid will be the way forward for fast-food brands. 

After more than 30 years of operations in the country, McDonald's Corporation announced it will exit the Russian market and has initiated a process to sell its Russian business.

This follows McDonald's announcement on March 8, 2022, that it had temporarily closed restaurants in Russia and paused operations in the market.

The humanitarian crisis caused by the war in Ukraine, and the precipitating unpredictable operating environment, have led McDonald's to conclude that continued ownership of the business in Russia is no longer tenable, nor is it consistent with McDonald's values.

As part of McDonald's decision to exit, the Company is pursuing the sale of its entire portfolio of McDonald's restaurants in Russia to a local buyer. The Company intends to initiate the process of "de-Arching" those restaurants, which entails no longer using the McDonald's name, logo, branding, and menu, though the company will continue to retain its trademarks in Russia.

McDonald's priorities include seeking to ensure the employees of McDonald's Russia continue to be paid until the close of any transaction and that employees have future employment with any potential buyer.

“We have a long history of establishing deep, local roots wherever the Arches shine. We're exceptionally proud of the 62,000 employees who work in our restaurants, along with the hundreds of Russian suppliers who support our business, and our local franchisees. Their dedication and loyalty to McDonald's make today's announcement extremely difficult. However, we have a commitment to our global community and must remain steadfast in our values. And our commitment to our values means that we can no longer keep the Arches shining there,” shared Chris Kempczinski, President and Chief Executive Officer, McDonald's.

McDonald's restaurants in Ukraine remain closed while the company continues to pay full salaries for its employees in the country and continues to support local relief efforts led by Ronald McDonald House Charities. Across Europe, the McDonald's System is supporting Ukrainian refugees through food donations, housing and employment.

As a result of its exit from Russia, the Company expects to record a charge, which is primarily non-cash, of approximately $1.2-1.4 billion to write off its net investment in the market and recognize significant foreign currency translation losses previously recorded in shareholders' equity.

Burger chain McDonald’s has announced that it is eliminating artificial colours, artificial preservatives and artificial flavouring from select food items.  

This World Health Day, McDonald's India West and South has strengthened its commitment to enhancing the goodness of the food served at its restaurants.

Being a pioneer of many firsts in the industry, McDonald’s is also the first QSR brand in India to do so.

The brand will now also display Allergen & Nutritional information in-store and on its McDelivery app for the entire menu to enable customers to make food choices that are good for them.

"Food is like technology, which continues to evolve with time”, shared Smita Jatia, Director, Westlife Development Ltd. At McDonald’s by pointing that they have been working relentlessly to enhance the nutritional profile of their food. 

“Some years back we introduced whole wheat buns across our restaurants to give consumers a nutritious choice for their burgers. Similarly, we have reengineered many of our products to enhance the nutritional profile of our food and make them more wholesome. As we go forward, we are committed to adding more products to our menu that give our consumers more wholesome options to choose from,” she added.

McDonald’s believes that consumers should have easy access to nutritional information to help them make informed food choices. Consumers today have not only become conscious of what their food contains but also about what it doesn’t contain. Hence, to bolster the trust of consumers in the brand, McDonald’s is creating more awareness about the components of its food by highlighting its progressive movement towards Clean Labels. 

Close your eyes and try to envision what restaurants will look like in the future. You might picture a dining room that’s filled with high-tech touches or a scene pulled straight from The Jetsons. Or it could look like your neighborhood McDonald’s.

Don’t believe us? Check out the newest Green & Good store in the Philippines, the second of its kind to open in the Southeast Asian country since 2020. The local initiative is aimed at finding sustainable, alternative business solutions that could help preserve the planet.

“We are committed to provide a better and more environmentally sustainable McDonald’s for our customers and the communities we are a part of,” Kenneth says. “We recognize that there is a lot more to be done, but through our Green & Good platform, we are a step closer towards finding innovative ways to keep waste out of nature and drive climate action.”

Situated in Mandaluyong City, parts of the restaurant were built with repurposed and recycled materials, including reclaimed wood, eco-pavers and eco-bricks. In fact, the structure of the entire store was built using a modular system, meaning that pieces of the building were produced off-site and then assembled on-site, which can help reduce waste and speed up construction.

There’s more to appreciate beyond those four walls, too. This McDonald’s is equipped with solar lampposts, eco-friendly air conditioning units and harvesting tanks that collect rainwater that’s used to wash the building’s exterior.

Dine-in customers can experience the finer details for themselves with the store’s reusable packaging, which includes rice bowls, utensils, cups and wooden stirrers. It’s part of McDonald’s Philippines’ aim to reduce landfill waste by converting paper waste to fuel, food waste to fertilizers and plastic waste to repurposed goods.

But perhaps coolest of all, the store is a haven for the city’s flourishing community of cyclists. The restaurant’s Bike & Dine area allows cyclists to pull up and enjoy their favorite menu items without worrying about their bikes. Need to reattach a slipped chain before getting back on the road? Grab a tool from the Bike Repair Station for a speedy  tune-up. And if you’re zipping around on an e-bike or an e-scooter, you can plug into a charging station while you finish off your fries.

McDonald’s Philippines President and CEO Kenneth S. Yang explains that this restaurant – and all of its incredible features – are just one step in the journey toward a more sustainable future.

For any QSR, casual or fine dining brand, Lucknow always has a place in India’s expansion plans. The growth of food aggregators to tier-II and III cities has elevated the F&B scene of Lucknow. The city of nawabs is now more than kabab and kormas, curries and biryani, and one can now indulge in Mexican, Spanish, English and Asian cuisines, among others.

The increasing frequency of people dining out is directly related to their average spending power. The last few years have seen tremendous growth in job opportunities in Lucknow, thereby the rise in spending power. The social media influence on millennials leads to the change in trends that can be seen in the city.

“I remember when we were young; no morning in Lucknow was complete without the special dahi-jalebi and khasta combination. No matter what time of the year it is, every morning pushcarts making fresh jalebis and khasta used to magically spring up across the city. While we still sell those items here, a lot has changed over the years in the eating culture of Lucknow. While people enjoy the old world charm, there is a sudden shift of modern restaurants, bars and cafes in the city,” Vishnu Gupta, Owner of the iconic shop Neelkanth Sweets started with.

Major restaurant companies such as the Zorawar Kalra-led Massive Restaurants, Priyank Sukhija’s First Fiddle Restaurants and Riyaaz Amlani’s Impresario Entertainment & Hospitality have already marked their presence in the city.

Fast-food QSR chains have also gauged well upon the opportunity. “I believe Lucknow has an advantage over metro cities as the options are less in terms of food chains when compared to Metropolitan cities like Delhi, and Bengaluru. In fact, this is one of the drivers for Wat-a-Burger. We are trying to fill this gap for tier-II cities. We have been getting an overwhelming response in cities like Lucknow and people are becoming familiar with the concept of QSRs and fast food chains,” Farman Beig, co-founder and CEO of Wat-a-Burger commented.

Break-even is faster in these cities owing to lower operating costs and better pricing due to less competition. Overheads such as manpower are also affordable, thanks to the lower cost of living in Lucknow.

However, the rentals are on the higher side in Lucknow but the rest balances out the overall cost. Usually, it takes two to three months for an outlet in Lucknow to reach break-even, which is a lot less time than the other cities, for which it is four to five months on an average.

“The earlier generation probably ate out once a week. The current generation eats out three to four times a week and this trend will only increase as our population becomes more prosperous and we become nuclear families where even the women contribute equally to the workforce as entrepreneurs or professionals. Due to the above trends, we will see an explosion in the QSR business especially with the younger generations wanting different options for different days and being more open-minded as well as having a higher disposable income,”  Owner of Urban Terrace in Lucknow added.

Not just restaurants and QSR chains but the 114-year-old Mahomed Bagh Club also indicates how the club life has always been a part and parcel of Lakhnavis. But the last few years have seen a phenomenal rise in club life. The basking of so many new clubs in the city and people becoming permanent members of clubs such as the golf clubs is becoming the new style statement of people in the city. This has caused a direct impact on the restaurant industry as well. The establishment of new lounges in the city has made Lucknow a more eventful city than it already was.

Delhi-based restaurateur, Dinesh Arora has also charted out expansion plans for his flagship brand Unplugged Courtyard where Lucknow is the first city on his radar. Arora feels that the city holds the capacity of a tier-I spend.

Hotelier Vijay Singh Bhadauria who recently opened food services at Pitambara Lawns in Vikas Nagar adds, “Our launch has been on the right time so with our cloud kitchen, multi-cuisine restaurant and quick-service café we will get extended time to serve. Late evening and night turnout gives us the main business,” he added.

Recently, Xbar.Club has also announced to invest USD 10 million for expansion which will be towards both company-owned and franchise outlets in prominent cities like Lucknow.  Indianised fusion burger chain, Burger Singh, has also announced its plan to open seven new outlets in Lucknow by the end of this financial year. The burger chain currently has two dine-in outlets in Lucknow, one in Gomati Nagar and another in Ashiyana.

Rahul Seth, Co-founder, Burger Singh, said, "We're one of the largest burger delivery players in the country but we didn't think we were recognised in Lucknow. The tremendous response we have received from our two outlets in Lucknow shows that the people of this city love the product. “

The food delivery ecosystem was organic to this rampant growth of Lucknow’s F&B space. It adds extra hands at visibility, the ability for a restaurant to reach its end customers. Most of the restaurants have associations and tie-ups with the food delivery partners as it aids in earning incremental revenue.

How many of you crave for the perfect cheese burger experience when you are stuck at home during these unprecedented times? Burger in India has taken many forms with passing of years. From creating the quintessential, crave-worthy cheeseburger experience, to the patties being freshly grilled, the way the burgers are carefully assembled; the main focus of all brands remain same, delivering authentic international flavours that hit the spot every single time. India tasted its first foreign burger in the late 1980s when UK-based QSR chain Wimpy entered Indian market by opening its first restaurant in Connaught Place, Delhi; and since then there is no turning back as we have seen brands like McDonald’s ruling Indian market like none other. From top global brands like Wendy’s, Carl’s Jt, Burger King to name a few to our very own home grown burger brands like Burger Singh, Wat-A-Burger, The Burger Club and Burgerama to name a few, burger has become Indian’s favourite go-to and grab on-the-go food item.

Must Read: Delhi tops in eating burger

Sailing through the pandemic

The pandemic has taught every single brand, restaurant ways to innovate and methods to keep them ahead of the trend. “We feel that brand trust and transparency of communication will play a huge role in influencing consumer’s choices and loyalty. We have already seen quality & hygiene having a deep impact on buying decisions and we feel this will lead to a period of consolidation in the industry. Only those that are straightforward, transparent, consistent and uncompromising in their brands will survive,” shared Kabir Bose of Burgerama that was started by three childhood friends Vivek Prakash & Viraaj Badhwar and Kabir Bose who share a common passion of good food.

The brand completely revamped their menu flow; by adding some incredible new dishes by making sure that the food is able to add just a little bit of joy to their customers’ days.

Though, the brands were sure that this is historically a period of adversity as these times will definitely yield some of the most groundbreaking ideas and businesses.

“We have been focusing more on tech integration in our operations. The pandemic has highlighted the much-needed tech transformation of the food and beverage industry. Also, at a QSR tech implementation plays a major role in the quality of service and management of the operations. Inventory softwares like Supplynote where we can keep live track of our inventory help us a lot,” pointed Farman Beig, Co-founder & CEO of Wat-a-Burger that is spread across 22 cities and 9 states serving 8,000+ delicious burgers on a daily basis.

The NCR-based burger chain with an idea to provide customers with burgers that are based on their preferred dish or flavor, for example, Tandoori Chicken makhani Burger, Aloo bechara, or Desi Street 2.0. “There are many brands in the market offering burgers, however, the products that we are serving are completely based on Indian taste,” added Beig who together with Rajat Jaiswal started Wat-a-Burger in 2016 with a sole mission to take fresh, delicious, yet affordable burgers to people.

Betting big on Delivery

Since, 2020 became the year of tech-innovation and delivery, not just brands like McDonald’s and Domino’s who are doing a big chunk of sale through delivery, home grown brands are also relying on delivery to catch the bigger segment in the market.

According to reports, the consumption and sale of burgers went up by 9% pointing towards the culture of binge-watching while also enjoying your favorite thing to eat. Burgers are believed to be that one favorite food-item because they aren’t very heavy and hence can be eaten at multiple times while doing office work or while catching up on a movie or a show. A lot of time on the consumer’s hand is believed to be the reason behind the rise in the consumption of light yet tasty food option like a burger.

Also Read: Chinese and Burgers saw an uptake in the last 3.5 months, report

“We built a strong product and kept the quality consistent without any compromise throughout that lead us to better numbers and our sale went up just the sale construct kept fluctuating between dine in and delivery but the overall numbers kept growing,” said Jatinder Gill, Director, The Burger Club for whom delivery has become an important part mostly during lockdown.  Also, for him being dependent on third party for delivery was bit difficult to maintain the same quality but his team worked very well to serve the best to customers.

Meanwhile, Wat-A-Burger that has become the fastest homegrown burger brand in the country claims that it is 2nd to Dominos in terms of delivery area coverage in Delhi/NCR with 76% visibility. “We knew from the beginning that online delivery is going to be the main driver of the business for us. We have associated with all the major online restaurant aggregators and delivery partners including Zomato, Swiggy, Dotpe. In Delhi NCR, where we have a major presence, we cover almost 70 % of the area through online delivery platforms,” added Beig who get 30 percent of orders through walk-in and 70 percent through online delivery/orders.

Well, before pandemic could hit us, Burgerma was clear that delivery was the best possible way for their kind of a product to reach customers. “It was quite apparent in 2018 that restaurant footfalls were on a downward trend and the food delivery market was growing quite quickly especially when compared to any other segment in the food & beverage industry,” added Bose who get around 70% repeat users and is targeting 20k orders a month.

Flying High

As stats says it all, the Quick Service Restaurants (QSR) market in India is projected to grow at a CAGR of over 18% during 2021-2025 due to increasing urbanization, rapid expansion in food delivery services, expanding young & working population, growing number of dual-income families and rising disposable income in the country. These chains are also planning to expand their wings by looking at newer markets, areas.

“After a being a well established and one of the best burger brand from top three burger brands in Delhi, we are planning to expand 50+ stores”, added Gill who is planning to enter Chandigarh, Kanpur, Hyderabad and Lucknow by the end of 2021.

Burgerama  that has raised a seed round of funding from group of entrepreneurs and strategic investors who share same passion and vision for the brand. They are using the capital to build their backend capacity and systems and further expand Burgerama across Delhi/NCR. “We are set to open our Noida outlet this month and plan on adding several more stores over the next 12 months. After NCR we hope to expand in the North region and then replicate the model in the West, South and East of India,” added Bose.

Similarly, Wat-A-Burger that has 60+ outlets in India is targeting to cross 100 outlets by the end of the current financial year. “At this moment, we are working on expanding our chain across Karnataka and Maharashtra,” added Beig who is witnessing around 4000 orders per day.

May Interest: How QSR Industry Has Immense Offering to People Looking For A Career

Hence, we can say that the fast, made-for-delivery, easy to grab and most importantly loved by we Indian, the burger concept may see more explosion with more tailored-made menu and taste for the Indian market.

Fast-food restaurants are responding to changing consumer tastes during the coronavirus pandemic. Some restaurants are focusing on expanding their takeout and drive-through businesses, while others are betting on delivery services amid a recent surge in new infections and changing regulations. And many expect these efforts to pay off longer-term as the pandemic shows no signs of fading and some consumer habits could change permanently.

Before the pandemic, the fast-food industry enjoyed the benefits of globalisation and had a CAGR rate of approximately 5 percent from 2014 to 2019. However, due to the global pandemic, the sector has lost the benefits of globalisation due to the regulations limiting the cross-border flow of people and commodities. However, large players were quick to remedy the impact on business by scaling their existing delivery capabilities.

Edelweiss estimates that while the entire food services market plunged 82 percent year-on-year in the first half of FY21, the contraction that organized chains such as Domino’s, Burger King, McDonald’s (West & South) reported was restricted to 45 percent; by September recovery was already at 85 percent of pre-covid levels.

With the Covid-19 shuttering in-person dining experiences and limiting restaurants from offering sit-down services to encourage social distancing, many businesses are struggling to keep afloat especially the ones who do not have a larger share in the pie. 

What is happening in the fast-food industry?

Fast food culture definitely took a turn over the past year. Kartik Juneja, Founder of Chickeera explained that now due to obvious restrictions and behavioural changes, fewer people step out of their houses to enjoy fast food meals. “Nevertheless, consumers indulge in their favourite meals from the comfort of their homes. Change being the only constant, it is essential for businesses to adapt and evolve with the current scenarios to ensure a productive outcome,” he commented. 

The pandemic has brought immense shifts in supply chains and imposed new hazard controls. Since the industry betted on eating out culture, most of the fast-food chains now are relying on its digital sales channels.

Commenting on the same, Kasinn Khaowprasert, Director of CP Avant mentioned, “We have seen technology as a transformative force in the industry, with the rise of digital ordering and online aggregators helping connect restaurants with customers.” Even restaurants that mainly offered dine-in before the pandemic are adjusting their business.

Getting fast food delivered at home

Fast food is best enjoyed hot and fresh. During the lockdown, people have no option but to order online via Swiggy or Zomato. Jumboking saw an increase in orders during the IPL where food was ordered online. 

“Once the lockdown is lifted, customers will go right back to visit their favourite stores. Home delivery of a Jumboking meal takes at least 30 minutes and not all fast food tracks well. Fries for instance never taste the same when delivered,” Gupta pointed. 

The pandemic isn’t over yet, but people have grown accustomed to the new normal wherein food chains have adopted more safety measures and are delivering while maintaining all the necessary precautions.

“Last year when the pandemic struck, everything in the food industry hit a standstill. People were avoiding eating out of ordering in. During the lockdown, all the restaurants were closed. However, now things are very different. There has been a shift of traffic from dine out to order in which has covered a lot for the sector,” Farman Beig, Co-founder & CEO of Wat-a-Burger informed. 

Will fast-food companies sustain through the pandemic? 

Although some fast food outlets have tried to integrate technology and drive-through windows in their operations, many have not adapted to the new normal and experience a huge financial struggle. The pandemic has impeded global investment, consumption, and trade, shrinking the international aggregate demand. The fast-food industry is no exception, as quarantine has affected household consumption. 

Those people who enjoyed dining in restaurants before the outbreak have to ensure their safety by staying home. Meanwhile, the Covid-19 impacts have made people pessimistic about their finances and job opportunities in the future. Consequently, consumer confidence is gradually declining, resulting in a reduced number of customers.

Gupta strongly feels that over-leveraged and over-expended brands will take a blow. Focused players will come out of the pandemic with minor bruises and bounce back fastest and strongest post the reopening. “They will keep serving their customers with greater vigour. To put it colloquially, this lockdown will separate the boys from the men in the world of business,” he added. 

At Wat-a-Burger, the transactional volumes of outlets from last year April 2020 to April 2021 has increased indicating that the scenario is slightly better than the first wave.

“While some fast-food restaurants may unfortunately not survive through the pandemic, we believe that those restaurants/chains with are able to adapt with the redefined rules of ordering in as well eating out will survive and sustain the pandemic,” Khaowprasert anticipated. 

The Future

Innovations in the fast-food sector have taken over a century since the founding of the first quick-service restaurant (QSR) serving fast food, White Castle, in 1921. With the ongoing pandemic, fast food businesses lead the restaurant segment into a digitally improved and automated tomorrow.

Amid the global pandemic, fast-food outlets have to change their strategies to cope with zero-contact food demand. Many food giants have expanded their drive-through, increased the number of workers, digitized transformation, and streamlined menus. But will these changes continue? What does the future hold?

“We are certain that if the delivery experience remains intact, our customers are here to stay,” Juneja strongly believed.  

Owners of McDonald’s west and south in India, Westlife Development Ltd, revenues for Q3FY21 zoomed to 85-90% of pre-COVID levels with December revenues almost back to pre-COVID levels.

Hardcastle Restaurants that owns the franchisee right for the brand is also planning to expand the QSR chain by adding more stores to its network.

Also Read: McDonald's opens outlet at Mumbai-Terminal 2

“The company plans to open three new stores in this quarter and then resume its growth journey of adding 25-40 stores every year from the next fiscal,” shared Amit Jatia, Vice Chairman, Westlife Development. 

"Convenience channels are here to stay. For occasional use for the restaurants, where people used to come for hang-outs and celebrate, this was not being met and that need is coming back. It would not take away (business) from the convenience channels," he added.

Westlife Development’s strong sales performance in the quarter was driven by the Ccompany’s omni-channel strategy.  It started its recovery journey in October when its biggest market – Maharashtra finally opened up for dine-in.

"The business has gone up month after month. In December, we were almost 97 per cent of the pre-COVID-19 sales. Even Ebitda margin for the month of December was 13.1 per cent, which gave us a lot of hope, as we are moving up month on month. I feel it is here to stay," added Jatia.

In December, despite substantial regulatory restrictions in several of its markets, the Company saw a phenomenal uptake in sales with revenues coming back to 97% pre-COVID levels. Dine-in recovered 75-80%, even with night curfews and the 50% capacity constraint. McCafé recovered over 80% vis a vis pre-COVID levels. At the same time, sales from convenience channels accelerated to 120% of pre-COVID levels in the month, again notwithstanding the night curfews in some of its key markets.

The Company also got back on its growth path and added three new McDonald's restaurants and three new McCafés to its portfolio.

Currently, Westlife Development operates 304 McDonald's stores in 42 cities of the western and southern India.

May Interest: Hardcastle Restaurants opens 300th outlet of McDonalds India

"Around 60-70 per cent of new stores would come in the six key cities - Mumbai, Pune, Ahmedabad, Bengaluru, Chennai and Hyderabad; and the rest 30 per cent into smaller towns," he concluded.

After a six-month-long COVID-19 led lockdown on restaurants, Westlife Development, the company that owns and operates McDonald’s restaurants in West and South India is all set to reopen its doors for customers in Maharashtra.

The company has left no stone unturned to ensure a completely safe and hygienic experience for its employees and customers. It is re-starting the dine-in service with its Golden Guarantee platform.

This Golden Guarantee platform by McDonald’s India West and South encapsulates 42 top-notch safety and hygiene processes that the company has added to their already world-class practices. These new processes ensure that the food is prepared and served without being touched by bare hands. They also ensure contactless operations, frequent sanitization, social distancing and usage of all required protective gears across dine-in, delivery and take-out channels, thus making sure that both employees and customers remain safe, every step of the way.

“The dine-in operations in the state are opening after more than 6 months and we are committed to making the experience completely safe, hygienic and special for our customers. In the wake of the ongoing health crisis, we have put in place global SoPs, created new processes and adhered to all Government mandates to ensure complete safety for both our customers and our people. We thank our customers for the trust and love they have shown for us so far and hope to keep delighting them going forward,” shared Saurabh Kalra, Chief Operating Officer, McDonald’s India (West and South).

Here is a sneak peek into what you can expect when you next visit a McDonald’s restaurant for dine-in:

·        You will see designated social distancing markings at the ordering counters and inside the kitchens for customers and employees, respectively.

Mandatory temperature checks will be conducted for all customers and employees at the entrance.

·        There will be alternate table and chair seating arrangement to ensure social distancing among customers in the dining area.

·        Employees will always be seen wearing protective gear like masks and gloves. Food will be prepared and served without being touched by bare hands. Kitchen equipments and tables will be sanitized every four hours.

May Interest: Restaurants gear-up for Re-opening, Hygiene, safety top menu

·       The brand has maintained separate kitchens, equipments, utensils, and cleaning cloths for veg and non-veg food right from the start of its operations in India.

·        Delivery riders will be seen standing ay designated markings while waiting to collect the order. There will be a special line with markings for customers who come to collect their takeaway orders.

·        The restaurant leadership team will be well trained in health and hygiene modules, conducted by FSSAI and each crew member will have received specialized training on precautionary measures against COVID- 19.

·        And this is not all! McDonald’s will be scrutinizing the safety and hygiene practices at their suppliers’ ends as well to make sure that every detail in the food safety management procedure is taken care of.

·        To ensure a completely contact-less dine-in experience, McDonald’s has also enabled contactless ordering through digital menus sent through Whatsapp and contactless payments through UPI or Tap n Pay.

With this Golden Guarantee, you can now be rest assured of your safety when you visit McDonald’s restaurants for a special dinner with family and friends and enjoy McDonald’s just the way you like it!

The story of drive-thru started when soldiers at Fort Huachuca Army Base, US received a standing order to not wear their fatigues in public, they could not order their favourite hamburgers at the nearest McDonald’s anymore. So, McDonald’s franchisee David Rich installed a sliding window into the wall. The soldiers could now order and pickup without getting out of their cars.

It became a normal part and parcel of any restaurant opening in the US and looking at drive-thru as a key driver for the business growth. But Indians were never fancied of eating at a drive-thru, for them drive-thru meant another highway restaurant.

Also Read: Tata Starbucks opens first drive-thru store in India

Luckily, coronavirus pandemic has changed the face of the restaurant sector with drive-thru becoming the latest boom among the global restaurant space in India. Starbucks, McDonald’s are some of the top restaurants who are betting big on drive-thru and highway locations during the coronavirus pandemic and it’s after effects to overcome the losses.

According to the experts now that more and more people are looking at contactless dining when ordering or dining at their favourite restaurants, drive-thru comes as a savior for restaurants especially in the fast food space wherein customers can just walk-in and pick their orders.

Globally, also we have seen top QSR chains like Wendy’s, McDonald’s, Starbucks, Chipotle Mexican Grill who have seen a double digit growth at the drive-thrus.

“Through the pandemic, there’s been a double-digit increase in revenue among those drive-thrus, and so it’s created a buyer frenzy among restaurant chains for that real estate,” said Aaron Allen, founder and chief executive of restaurant consultancy Aaron Allen & Associates to CNN.

Tata Starbucks Private Limited that is a joint venture between Starbucks global and Tata Group has opened its first drive-thru store in India at Dhillon Plaza, Ambala Chandigarh Expressway, Singhpura in Zirakpur.

The coffee chain is currently running over 187 stores, and a drive-thru in the mid of the pandemic might come as a vision of offering more ways for customers in India to enjoy the Starbucks Experience.

May Interest: McDonald’s starts Delivery and Drive-Thru’s in North and East India

“The opening of our first drive-thru store showcases our commitment to evolving our brand and business in India and providing new and meaningful experiences to our customers. The drive-thru format offers added convenience for customers who want to pick up their orders from their car, or travelers on the go,” shared Navin Gurnaney, CEO, Tata Starbucks Pvt. Ltd during the launch of its first drive-thru in India.

The coffee chain also launched a digital marketing campaign with the tagline “Why wait for your brew, when you can drive-thru?” before its launch.

In India, McDonald’s opened its first drive-thru in In India in Navi Mumbai’s Kalamboli in 2001. And, over the last 20 years, drive-thrus have been a key driver for McDonald’s.

McDonald’s- North and East opened its Drive-thru lanes in 17 of its restaurants located in Gurgaon, Noida, Punjab and Haryana, earlier in May when dine-in was completely shut and delivery was allowed at select restaurants.

"Given the real estate rates in India, having additional space for vehicles to drive around a restaurant, in cities is next to impossible. This is a possible advantage only on highways where real estate is cheaper than cities, ground floor location is possible and also vacant space for vehicle's to enter and exit the restaurant is possible," pointed Amit Puri, Restaurant Business Consultant.

Must Read: Restaurateurs Request Mall Developers, landlords to Waive Rents

For additional safety to their customers, the burger chain also added plastic shields at Drive-thru windows and all restaurant staff wear face masks at all times.

“In QSR industry, convenience is very important. Not all days are the same for a McDonald’s consumer i.e. there are bad weather days, don’t have no time days, would rather eat in the car days, buying for the picnic days, my friend are waiting at the next bus stop days and so on and so forth. These are the days when ordering and picking up from the car makes a lot more sense than sitting at the restaurant,” McDonald’s shared in an old blog post.

Quick service restaurant chains have also remained way ahead when it comes to adopting technology and enabling new technological developments. Growing at a CAGR of 4.2 percent between 2017 and 2022, global quick service market is believed to reach more than $690.80 billion in 2022.

Brands like Starbucks, McDonald’s, Burger King and Domino’s to name a few are continuously working hard to market their brand right in-front of the customers. They are partnering with top delivery players and also working hard on loyalty and rewards to attract new customers as well as retain the old customer base.

“Loyalty programs in top QSR apps were especially prominent in the US, UK, China and Japan in 2018. Loyalty programs incentivize repeat orders and allow for more personalized and relevant offers and notifications to be delivered to each user,” shared a report released by App Annie.

It also mentioned that in the US, McDonald’s and Chick-A-fil leveraged promotional text to market flash deals for consumers — a strategic App Store Optimization (ASO) tactic that, unlike most —such as description, logo and keyword bank updates — does not require a full version update.

Use of Mobile Apps in Promotion

Recently, McDonald’s UK overhauled its app experience, including the launch of McDelivery in partnership with UberEATS, and invested heavily in World Cup 2018 promotions to drive adoption. The efforts paid off and the app shot to #10 by smartphone MAU in July 2018, up 10 ranks year-over-year.

Similarly, Burger King leveraged location-based offers within 600-feet of a McDonald’s to unlock a Whopper for 1 cent through its app in December 2018.

“Mobile offers a treasure trove of data on consumer preferences and can be leveraged for strategic personalized and relevant promotions such as this,” added the report. As these efforts paid off — Burger King hit #1 for daily iPhone downloads of Food and Drink apps in the US on Dec 4, and retained that rank for 9 straight days. “Not to mention, the app hit #2 on Dec 5 for overall downloads. This was a significant jump in performance relative to November 2018,” it further added.

Hence, we can say that quick service restaurants have been growing fast like no other sector as people look out for value for money option, convenient.

When we talk about investors in companies, there is seed funds private equity or a venture capitalist, who may be ‘sleeping investors’ or ‘mentor investors’. They do not get involved in day-to-day operations and rely on promoters to achieve business targets and review the success of the business they have invested in from time to time. Thus, the fate of business does not heavily depend on the investors’ execution or operation capabilities.

However, we are in the business of franchising, and for us, investing has a whole new meaning. I’m eager to share my experiences with franchise investors. These investors are also operators of their business. And the ROI for their business depends on their execution and operational capabilities. What’s more, their execution also affects the over all brand equity and good will. Franchise investors hence work with more enthusiasm towards recovering the returns on their investment. Their behaviour affects the overall brand performance and other franchise investors. In a business like ours, there is a need to carefully choose the franchise as they form an integral part of company’s vision.

Here are some traits while you are choosing an investor for your restaurant:

CHARACTER SYNERGIES FOR SUSTAINABLE GROWTH: Coming together is the beginning. Keeping together is progress. Working together is success. We firmly believe in this old adage. But there’s a lot more required for the sustainable growth of a franchise. Our first main task is to spot investors who synergise with the franchise’s characteristics and have a special aptitude for the brand. Knowing that investors are in complete sync with the brand is a pre-requisite. It’s something that assures that this will go a long way.It is very important for the investor to be able to relate to the brand he is investing in. After all, it is going to be his daily ‘go to’ place for the next few years. He should be looking forward to visit the store every morning when he gets up and that can only happen if he relates with that brand.

ACCOUNTABILITY IS A NECESSITY: As a franchisor, one can provide know how, training, support and feedback to the franchise. And, can guide them and make them understand the businesss and various tactics of the business. They can also offer back end support, marketing and brand building support. However, the investor can reap returns of his investments only by taking ownership of the business on his own. The success or failure of any franchise depends on the accountability he has towards the store. The franchisee has to wear both hats in proper proportions: the hat of an investor and the hat of an operator. He has to understand that he is accountable for running the store as per set standards. He can leverage franchisor knowledge and support, but cannot rely on them.

THERE IS NO SUBSTITUTE FOR SKILL AND HARDWORK: A franchisee is not a typical investment model, where the investor is not expected to operate. The franchise investor should be actively involved in the running of the store. For that, he or she must treat this business as a full time business and not as a part time income source. Restaurant business requires your own time and involvement, at least till the time the store has reached optimum sales and efficiencies and till it has started to acquire customers who want to come back. There is a lot of hard work that goes in to it and we only prefer investors who are willing to put that much of dedication into the store. Our first question to them during their interview with us is “Who is going to operate the business full time?”

MUTUAL UNDERSTANDING STRENGTHENS OUR RELATIONSHIP: Like every relationship, it is imperative that the franchisee-franchisor relationship is respected. The franchisee must follow set norms and standard operating procedures (SOPs) set by the franchisor and not bypass them. Many a times, franchise owners tend to deviate from the SOPs, which adversely affects business. That’s why, we test the franchsie on his flexibility to amend his learning’s and adapt to brand’s standards. We partner with investors who add value in terms of their ideas for the brand, but we hesistate to partner with investors who give us the feeling that they will bypass the brand rules and start dictating their own rules. This results in inconsistency, which affects the overall brand name.

MONEY MATTERS: The franchisee should be well capitalised. The investor must bring the required investment capital and working capital to the table as there should be sufficient funds to acquire assets and run the day-to-day business without having to cut corners.Apart from that, they must also ensure that there is adequate money to put in negative cash flow, required to sustain the business.

PATIENCE IS A VIRTUE: Rome wasn’t built in a day! Every business or project requires a gestation period. And a franchisee must always take into account the fact that there may be teething issues. During this period, the investors are expected to follow prescribed standards consistently. With time, their hard work will pay off and they will not just break even, but achieve all the targets they had set. That's how we do things at Yellow Tie Hospitality.

Hence, we can say that a franchisee investor is a very interesting type of investor. He is accountable for his own returns. It is wonderful to work with investors who invest in the store to grow a brand and also provide their valuable human resource towards overall the development of the brand. The business will only grow if the brand helps franchisee investors get great returns on their investments. And for us, it is most important that the franchise investor gets good returns, so that he can perhaps reinvest with us or share his success story, thus adding to the credibility of the brand.