Restaurant India News: India Food Services Market Set to Reach Rs 12 Lakh Crore by FY30

India’s online food delivery market is moving into a new phase of growth, where higher order frequency, expansion into Tier-2+ cities, and rising average order values are expected to drive scale rather than new user additions, according to a report by Investec Equities.

The market is projected to grow from $ 9.1 billion in 2024 to nearly $ 27 billion by 2030, reflecting a 19 percent CAGR. This growth is being supported by increasing digital adoption and ongoing urbanisation, which are reshaping consumption patterns across the country.

The broader food services industry has also expanded significantly, increasing from Rs 4 lakh crore in FY20 to Rs 7 lakh crore in FY25. It is expected to reach Rs 11-12 lakh crore by FY30, implying an 11-12 percent CAGR. Despite this growth, penetration remains limited at 13 percent of total food consumption, compared to 58-62 percent in the US and 42-46 percent in China. This gap continues to be influenced by a strong preference for home-cooked meals and sensitivity to dining costs.

However, structural changes including smaller households, longer working hours, and migration away from traditional family support systems are gradually increasing the frequency of eating out and ordering in. These trends are creating new demand patterns that are relevant for both restaurant operators and delivery platforms.

The organised segment of the food services market is gaining share, increasing from 36-41 percent in FY20 to 47-52 percent in FY25, and is projected to reach 60-65 percent by FY30. Valued at Rs 3.2-3.5 lakh crore in FY25, the segment is expected to grow to Rs 6.6-7.8 lakh crore by FY30. This expansion is being driven by branded restaurant chains, cloud kitchens, and delivery-led formats that offer operational consistency and scalability.

India continues to face a supply gap in restaurant density compared to global markets, indicating room for organised players to expand. Within this, online food delivery remains the fastest-growing segment, increasing from Rs 270 billion in FY20 to Rs 79000 crore in FY25, and projected to reach Rs 1.7-2.2 lakh crore by FY30 at a 17-23 percent CAGR. Despite this, the segment accounts for only 11 percent of total food services, up from 3 percent in 2018, suggesting further growth potential.

The next stage of expansion is expected to be driven by higher engagement levels. The ecosystem recorded 85 million annual transacting users (ATUs) in 2024, with 27 percent or 23 million converting into monthly transacting users (MTUs). This conversion rate is expected to increase to 32 percent by 2029 as repeat usage strengthens.

Metro and Tier-1 cities currently contribute 75-80 percent of gross order value, but Tier-2+ cities already account for 20-25 percent, indicating a gradual shift in demand beyond core urban markets. The total user base is expected to reach 137 million by 2029.

Order frequency remains relatively low in India, with consumers placing 3-5 orders per month compared to 8-10 in the US and 5-10 in China. This gap presents an opportunity for platforms such as Zomato and Swiggy to increase engagement. Average order values are also rising, with projections indicating growth from Rs 282 and Rs 407 in FY22 to Rs 461 and Rs 463 in FY26E for the two platforms. Industry AOV is expected to reach Rs 542 by 2028 at a 6-8 percent CAGR, supported by premium restaurant additions and wider cuisine availability.

With formalisation increasing and penetration still relatively low, the report highlights a long growth runway for organised and delivery-led players. This signals a continued shift toward hybrid models that combine dine-in, delivery, and cloud kitchen formats to capture evolving consumer demand.