By Raja Sekhar Reddy
In recent years, the Indian Restaurants and Food Services Industry has emerged as one of the fastest developing sectors of the country, witnessing a healthy and generous Y-o-Y growth in incomes. In fact, it has even managed to remain all but unaffected by the adverse impact of the country’s economic slowdown, which has stunted the growth of several other sectors, including automobile, manufacturing, and infrastructure.
Evidentially, the Indian restaurants and food services industry had an impressive market size of Rs 3.7 trillion in 2018, owing to a Y-o-Y growth of close to 10%, and a CAGR growth of 8.4%, between 2013 and 2018. The four major factors that have helped bring about this evolution are:
The emergence of Millennials and Gen X
Millennials and Gen X, have changed the consumption patterns of several industries and like so, the F&B industry as well. With low patience, high energy, and relatively higher income, higher cultural freedom, their spending patterns, behaviour patterns, family contexts and lifestyle has undergone substantial change as compared to the earlier generations. Cutting across SECs, there has been a huge change in the working styles and lifestyles of consumers. For working professionals, the average time spent at work or dealing with work has gone up to almost 12 hours, every day. This kind of lifestyle does not allow people time to cook each of their meals, either, which has changed their consumption patterns, as well. So, millennials who end up spending a major percentage of their earnings on food and beverages expect the experience of the restaurant to be completely out-of-the-box, and more than worth what they are paying for it. These have allowed concept restaurants, and fine dine restaurants to flourish as well.
Emergence of food aggregators
In 2017, India’s online food business industry had a market size of USD 750 million, witnessing a Y-o-Y revenue growth of 150%,during 2016 and 2017, and an incredible CAGR of close to 140% since 2014.However, while these portals have led to the rapid growth of the online food business, it has also had a similar impact on brick-and-mortar restaurants. These aggregators offer customers a plethora of information on a wide and varied range of restaurants, serving diverse cuisines, with unique ambience and décor, while also being priced accordingly. Customers can even read reviews from other individuals and get all the requisite information online, besides being able to book their tables in advance, which has helped enhance their convenience exponentially. In addition to this, these portals also offer businesses an opportunity to promote their establishments further, as well as reach and connect with their customers directly, which is the best way to build goodwill and recall value.
Market expansion in Tier 2 and Tier 3 cities
The growth in disposable income, in recent years, has not only transformed customers in metro cities, but also Tier 2 and Tier 3 cities, leading to a rise in aspirational demandsfrom the segment. Unlike earlier, customers from these cities are growing increasingly eager to indulge in unique experiences, leveraging their increased purchasing power. However, owing to previous trends, such cities continue to have few establishments which cater to their needs. This has presented an incredible opportunityfor major players to leverage the gap in the industry, to expand their presence and tap into this huge market. This has also played a key role in creating increased job opportunities, and providing employment to a large section of people in such cities. This will help drive the growth of the economy, and further create increased opportunities for the residents, as well as other businesses, in the years to come.
Willingness to experiment
Over the past decade, Indian customers have been increasingly eager to experiment with their palates and try new and exciting specialties from all corners of the world, be it an authentic Japanese Sushi, Mexican Enchiladas, or more. This has helped bring about a burst of innovation that is constantly driving businesses to redefine their offerings with new and exciting elements, inspired by world cuisines, cultures, and more. The direct result of this phenomenon has been the birth of a number of experimental concepts and offerings, such as fusion food, authentic country-specific delicacies, molecular gastronomy, and seasonal and festival-specific pop-ups, among others.
In the years to come, the Indian restaurant and food service industry is only expected to grow further, with the CARE Ratings projecting a growth of nearly 10.4% CAGR, during the period of 2018 and 2022, to help it reach a market size of Rs 5.5 trillion.
The author is a Founder of SquareMeal Foods