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.
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.
In-house bakeries are becoming a defining feature of modern cafés, driven by growing consumer demand for freshness, craft, and ingredient transparency. On-site baking enables brands to craft unique offerings, enhance sensory appeal, and ensure stricter quality control. Though, it demands skilled talent and higher operational investment, the model offers lasting brand distinction, improved profit margins, and a more meaningful guest experience.
The Indian bakery market is expected to grow at a CAGR of 9.12% from 2025 to 2033, reaching a projected value of USD 31.5 billion by 2033. Around 45-50% of the cafes are focusing on in-house bakeries to increase their profits.
Ongoing trends in this sector
There is a shift towards more mindful baking—where indulgence meets intention. Trends include a rise in gluten-free, eggless, and refined sugar–free options, along with small-batch viennoiserie, nostalgic desserts with a twist, and seasonal menus that reflect local produce.
Rahul Bajaj, Founder of The Blue Gourmet said, “Sustainability is also playing a larger role as cafés are choosing clean-label ingredients, reducing food waste and packaging consciously.”
Pairing coffees with baked goods
Coffee and pastry are being curated more intentionally than ever before. Eesha Sukhi, Director, The Bluebop Café said, “Curated pairing menus for e.g., espresso with chocolate tarts, pour-overs with almond croissants are on rise as brands can promote combo deals to drive trial and boost average spend.”
Adding to this, M. Balaji, Co-Founder & CEO, Dolci, Bengaluru said, “You’ll find options like bagels, flaky croissants, spiced tea cakes, and even Indian-inspired bakes—think masala breads or cardamom-infused pastries—that are designed to complement specific brews or blends.”
Cafés are doing pairings to enhance both flavour and guest experience. This level of thoughtfulness encourages exploration, increases average spend, and elevates the café from a transactional pit stop to a destination.
Overcoming Challenges
Running an in-house bakery comes with operational hurdles—early prep cycles, space limitations, skilled manpower, and maintaining consistency. Bajaj highlighted, “The key is to build a focused menu, invest in versatile baking equipment, and cross-train staff to ensure flexibility.”
Baked goods also have a shorter shelf life, so managing wastage becomes crucial. “There’s food safety and hygiene—something that’s under increasing scrutiny. If you don’t get that right, it can lead to serious consequences, including license cancellations,” added Balaji. Ingredient sourcing is another hurdle, especially with fluctuating prices and supply inconsistencies.
The Business Perspective
Exact numbers vary from brand to brand, but in-house bakeries definitely help increase average spend per customer. While Sukhi pointed that in-house bakery sales can contribute 20%–30% of total revenue, depending on the café’s focus.
“India’s bakery market is already valued in billions, and it’s growing steadily—around 9% year-on-year. So, for cafés, having a bakery section isn’t just nice to have—it’s becoming essential to stay competitive,” added Balaji.
Signature bakes often drive impulse buys, have higher margins than beverages, and perform well across both dine-in and delivery formats. “In-house bakery sales can contribute anywhere between 25% to 45% of the total café revenue, depending on how integrated and visible the offering is,” added Bajaj.
Hence, we can surely say that cafés with in-house bakeries are redefining the new age café experience. It’s no longer just about a good cup of coffee—it’s about the story, the aroma of fresh bakes, the quality, and the comfort that comes with it.
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