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.
The growth of cloud kitchens in India is being fuelled by the increasing demand for affordable, convenient, and quality food delivered to homes. Additionally, cloud kitchens benefit from lower operational costs since they do not require expensive retail locations or large front-of-house investments.
India's cloud kitchen market is on a remarkable trajectory - projected to hit approximately USD 2.84 billion by 2030, growing at a CAGR of 16.66%. This surge reflects how urbanization, evolving lifestyles, and the demand for convenient food delivery are rewriting the rules of dining.
Prominent companies have established prosperous multi-brand cloud kitchen empires, including Biryani by Kilo, Eat Sure, BOX8, Rebel Foods (Faasos, Behrouz Biryani), and Fresh Menu. In an effort to reach hyperlocal markets, a lot of restaurants are also introducing delivery-only sub-brands, marking 40-50% profits in the space.
The Ongoing Trends
Key trends shaping the cloud kitchen industry includes the adoption of multi-brand models within a single kitchen infrastructure to enhance operational efficiency. There is a notable rise in regional and comfort food delivery brands catering to diverse local tastes. Cloud kitchens are increasingly offering value-oriented options such as combo meals, meal boxes, and affordable single-serve meals.
“Businesses are also engaging in hyper local targeting to meet neighborhood-specific demand. To build stronger brand connections, they are leveraging influencer collaborations and social media engagement. Additionally, some cloud kitchen brands are beginning to explore physical formats like kiosks and food court outlets to provide an omni-channel experience,” added Aayush Madhusudan Agrawal, Founder & Director, Lenexis Foodworks.
Without décor or ambience to soften perception, hygiene becomes your frontline. Mohammed Bhol, Co-Founder and CEO at House of Biryan said, “I’ve found that daily protocols, rigorous training, and real-time audits aren’t just safety nets - they’re confidence builders. When people can’t see your kitchen, they need to feel your standards.”
He mentioned that he has learned the hard way, if it doesn’t arrive right, it doesn’t matter how good it tasted in the kitchen. “We’ve tested every layer: insulation, ventilation, seal integrity. Packaging isn’t a side gig, it's part of the recipe,” added Bhol.
Technology as the Backbone
Cloud kitchens function without a dine-in model, making technology vital at every operational level. From online ordering systems and kitchen display systems (KDS) to inventory and supply chain management, data analytics, smart POS integration, and automated marketing tools—each element plays a crucial role in ensuring seamless and efficient business operations.
Since cloud kitchens operate without a physical storefront, food aggregators serve as their primary digital marketplace. Platforms like Swiggy, Zomato, Zepto Café, Blinkit and Uber Eats offer immediate access to a wide customer base, making them essential for brand reach. They enhance brand discovery and visibility, while also handling delivery logistics—crucial for smooth operations.
Aggregators also provide performance dashboards with valuable insights into customer behavior, order patterns, and conversion rates, helping brands fine-tune their strategies. Additionally, aggregator-led promotional campaigns and paid placements can significantly boost order volumes and visibility.
The Challenges
Cloud kitchens face several challenges, including high customer acquisition costs driven by intense competition and platform commissions. This can be addressed by building direct digital connections with consumers through channels such as WhatsApp, loyalty programs, and emailers.
Another challenge is the dependence on delivery platforms for visibility which can be mitigated by investing in off-platform brand-building campaigns, digital content creation, and influencer partnerships. Agrawal added, “Maintaining consistent quality, hygiene, and delivery standards across various locations is also crucial and this requires strict adherence to standard operating procedures (SOPs) and regular kitchen audits. Lastly, in a cluttered market, it is essential to craft a sharp brand positioning and compelling product proposition to stand out.”
"Finding the right location was one of our key challenges," Aksha Kambhoj, Executive Chairperson of Aspect Hospitality explained by adding that they sought areas with high foot traffic to maximize visibility.
It’s a Profitable Biz
A well-run cloud kitchen isn’t just powered by good food - it runs on strong systems. Industry data shows that a lean, efficient model can hit EBITDA margins of 20–25%, with high-performing outlets pulling in ₹1.5–2 crore annually per location - depending on how well you read the market and build recall.
“High-performing brands have demonstrated the potential to scale even further, reaching ₹70–100 crore in ARR within three to four years, as seen in the case of Big Bowl,” added Agarwal.
While, the future will be focused on AI-powered kitchen operations, and tighter connectivity with fast commerce systems. Cloud kitchens are expected to become a major player in India's F&B industry with major focus on tier-2 and tier-3 cities.
Restaurant pop-ups are rapidly gaining momentum in India, not just as a culinary trend but as a strategic business and marketing tool. From experimental kitchens and chef collaborations to best bar takeovers and themed dining concepts, pop-ups are allowing restaurants and hospitality brands to stay agile, relevant, and culturally engaged.
This format offers a unique opportunity to test new ideas, like menus, concepts, or even partnerships without the long-term investment of a full-scale outlet. The trend is fuelled by social media buzz, influencer collaborations, and community platforms. With exclusivity, visual appeal, and time-bound availability, these events tap into FOMO while leveraging digital storytelling to generate viral traction and broader brand visibility. Around 80% of the restaurants in India are doing pop-ups to attract more customers.
What’s pushing the Growth?
Pop-up restaurants bring a fresh experience to a new market for a short span of time. In this type of formats, guests sample the cuisines, setting, service, etc. Pop-up restaurants are also a new way for restaurateurs to test out a product on a new market with a very low investment.
Pop-ups offer immense strategic value to restaurateurs. Ranbir Nagpal, CEO of Yazu Hospitality Pvt. Limited shared, “At KICO, we've seen how a well-executed popup can drive buzz, test new markets, and expand our brand footprint. They allow us to experiment with limited-time menus or collaborative formats without long-term overheads.”
More than just revenue generators, they’re excellent tools for community building and storytelling — particularly when done around cultural moments or niche interests like sneakers and cocktails, which are integral to our brand.
Saket Agarwal, Co-Founder, Manifest Hospitality said, “At Latoyá, we see them as cultural and culinary exchanges, an opportunity to showcase fresh ideas, collaborate with like-minded talent, and bring in footfall that extends beyond regular diners. From a brand perspective, pop-ups help build relevance and community, especially when there’s a strong concept, storytelling, and synergy behind the collaboration.
The Right Clientele
The target audience is typically urban millennials and Gen Z diners, those who are experimental, digitally active, and place a premium on novelty and curated experiences.
Angadh Singh, Co-Founder of Call Me Ten said, “While some events are priced at a premium due to their exclusivity or the involvement of celebrity chefs, others are more accessible to attract volume and footfall. The strategy often depends on the intent, brand building or revenue generation.”
Overcoming Challenges
Challenges typically lie in operational compatibility, from aligning kitchen setups to managing workflows with guest chefs or bar teams. The key is tight pre-planning: understanding their prep and service needs, doing dry runs, and keeping communication crystal clear.
Highlighting his views, Nagpal added, “We’ve learned that keeping the menu tight, using portable equipment, and pre-planning tech and design elements is key. Clear communication, a strong visual identity, and local influencer engagement go a long way in creating impact fast.
“Technology, especially tools that streamline ordering, inventory, and kitchen coordination can really help minimize chaos and maximize output,” pointed Agarwal.
The Business Scenario
A well-executed pop-up with the right audience fit can lead to a significant boost in sales during the event window and a strong halo effect afterward. More importantly, it adds to brand value and recall, which is harder to measure but incredibly important in the long run.
“In terms of business value, popups can lead to 20–30% increase in revenue during activation windows and offer huge intangible value — new customer acquisition, social media traction, and potential partnerships,” highlighted Nagpal.
While Singh added that the long-term value often lies in audience engagement, brand recall, and creating a deeper emotional connect with diners.
The future is quite certain that the trend will increase as pop-ups are no longer a novelty, they are becoming a powerful tool in a restaurant's culinary and cultural playbook.
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