Go Organic

Presenting the most awaited and the crucial budget ahead of the Lok Sabha elections, Finance Minister Piyush Goyal mentioned that the government will focus on self-sufficiency in food and improving agricultural productivity with emphasis on organic food forms.

During his speech Goyal has cited the above agenda as the eighth dimension of the government’s vision.

“We also aim to create a healthy India, with distress-free and comprehensive wellness system for all,” added Goyal.

Also, as health- and hygiene-conscious consumers tend to adopt healthy eating options. Food operators have been forced to add healthy eating options to their food menus. Some restaurants have also started serving health food and organic food as their core offerings. And, this will be good news for all the restaurants serving organic staples and organic food players as the government now intend to focus on organic products and farms.

According to a report by FICCI-PwC, “Overall, the health and wellness food service industry will continue to grow as consumers become more conscious about their diet by trying to eat healthy, going for farm-to-table lunches, growing their own garden herbs, buying as much organic produce as they can afford, trying new millets and consciously avoiding junk as much as possible.”

The government in its interim budget also mentioned that it will focus on building digital India by creating more jobs in the sectors. Hence, we can see that the food-tech sector is going to grow at much faster pace. “We are poised to become a $5 trillion economy in the next five years and aspire to become a $10 trillion economy in the next eight years,” added Goyal in his speech.

Not only this, Indian food-tech industry after a brief turmoil that led to consolidation and exit of a number of start-ups, it is back on a high growth trajectory with the sector’s leading lights, Zomato and Swiggy26, raising huge amounts of capital this year, enabling optimisation of operations and a turnaround in fortunes.

“The consolidation frenzy saw as many as 24 mergers and acquisitions in the food technology space during 2015 and 2016 as against ~12 so far in 2017 and 2018. The sector has also raised ~US$950 million in Private Equity capital from ~60 transactions in the last 28 months.27 The recovery has been led by a reduction in delivery costs and market expansion with order volumes emerging as the primary metric for assessing growth that has increased from ~160,000 in 2016 to ~370,000 in 2017 at 130%,” added the report.

And, with India becoming the second largest hub of startups, we surely can expect more and more brands opening doors for us.

The QSR chains have given a tight competition to the other segments in the industry inviting them to re-discover their menu according to the customer behaviour.

In the past few years we have seen names like Dominos, Subway and McDonalds to grow exponentially. The latest National Restaurant Association of India (NRAI) report says the QSR segment in India is projected to grow at a CAGR of 25 percent to reach to Rs 16,785 crore (USD 3,230 million) by 2018 which was Rs 5,500 crore (USD 1,060 million) in 2013. Witnessing the rapid growth of the QSR chains, the hotel industry which has given a rise to the fine-dine segment has also geared up.  

Customers demand

In recent years consumer behaviour in the hospitality industry has changed dramatically. Easily available information coupled with economic uncertainty has made today's diners extremely discerning in their choices regarding the place they eat out. Consumers with high income bracket tend to spend more on eating out and they prefer to visit a hotel for a soothing dining option. On the other hand the younger and growing middle class are more inclined towards the QSR segment because of its relatively low priced food and easy to go menus. This trend put hoteliers under pressure to maximise the occupancy of their hotel and earn a loyal customer base.

Manish Kumar Baheyti, Owner, Haute Services Pvt Ltd, said, "QSR is a quick service restaurant whereas the restaurant in a hotel is fine dine with different price point and caters to a different clientele. QSRs has no dress code and are always located on high streets so, the location is different, the market is different."

Food served across the segments

A younger population, high rate of urbanisation and disposable income, increased participation of women in the workforce and exposure to western lifestyle are leading to the experimentation and adoption of new dietary habits and more occasions to eat out. QSRs are focusing on fresh and easy to choose menu with healthy snacks, burgers and sandwiches rather than making the food heavier by going the traditional way.

Hotels on the other hand have adopted organic foods at their restaurants focusing more on the gluten free foods. They have realised the importance of being organic and healthy and are appreciating the natural ways of preparing food without any chemical interactions. Chef Abhijit Saha, Owner and Head Chef, Avant Garde Hospitality says, “QSR and hotels cannot be compared as they cater to complete different segments of the market. We are also increasingly seeing no frill hotels outsource their food and beverage from stand alone, QSR and restaurant brands.”

Operational strategies

The marketing strategies at both the segments are different. Earlier the hotel used to focus on delivering their best by providing authenticity of the foods and offering less discounts as compared to that of the quick service restaurant. Today hotels are trying to position themselves to compete with the restaurants, offering new menus, foodservice hours, and grab-and-go options.

On the other hand QSR has always been in the news for its quick service maintaining the brand standard of the food throughout the world. Brands like Dominos and McDonalds have gone the regional way by incorporating the localisation of menu according to the Indian standard. QSR chains are running deeper promotions in a bid to lure consumers with a wider range of items and price options. Facebook, Twitter and other social media promotions have become a key in creating a success story for this segment.

Sharing his view about QSR, being a threat to the hotel industry, Eric Ho, Founder, Yo Yo Noodles, says, “Hotels will never be a threat to QSR’s. QSR’s will always be in a league of their own. Everyone likes consistency, speed and value. That’s the great thing about being in the QSR section; we are the only ones who don’t fear changes in the economic climates.”

Speaking on the same, Joseph Cherian, CEO, Global Franchise Architects (GFA), speaks, “The QSR segment is witnessing a strong shift towards the delivery segment of the business with changing life style trends, hectic work schedule, increased congestion levels in the city etc. Increased penetration of Internet and mobile communication is scaling up the demand further.”