Growth of the Indian QSR Industry

The fast-food and quick-service restaurant industry has evolved to encompass the changing needs of its customers in its business model.

In a global time like today’s QSRs (Quick Service Restaurants), has witnessed a steep hike especially in the Indian market where it is estimated to touch a 51,000 crore mark by 2021. Popular frontline players in the market include but are not limited to Domino's Pizza, McDonald's, Cafe Coffee Day, KFC (Kentucky Fried Chicken), Pizza Hut, Burger King, Starbucks, Dunkin' Donuts, Costa Coffee, Subway, and Taco Bell. The main factors behind the continued invasion of the Indian market are the increasing population and cheap labor. India, being a young country with a major population of ages between 18 – 35, makes a significant contribution. 

The Indian casual dining and quick service restaurant(QSR) segment is attracting significant interest from private equity and venture capitals, with PE players such as Everstone Capital, Goldman Sachs, India Value Fund Advisors, and Samara Capital making big investments in this space. Recently, Charcoal Eats, the Mumbai-headquartered QSR startup, raised Rs 16 crore in a funding round led by Lokmat Investments.

“India’s consumption landscape is moving on to the next stage of evolution, powered by 360 million millennials and, more specifically, approximately 120 million millennials who live in urban clusters. They are becoming more discerning in their consumption habits, both in terms of the frequency at which they eat or order from outside as well as the variety they seek, and this is not a trend but a pattern,” stated Jaspal Singh Sabharwal, partner, private equity, Everstone Capital.

The restaurant industry was one of the worst-hit victims of the 2020 pandemic followed by the lockdowns. most restaurants saw a decline of approximately 2-6% in sales in the first quarter of 2020, which is substantial considering the 25-30% growth they witnessed during the same period last year. Food aggregators saw a 50-60% decline in orders being placed on their platforms. These had extremely terrifying consequences like certain restaurants declaring bankruptcy and some chains letting go of their workers due to lack of financial capacity to accommodate them. 

To tackle everything thrown their way QSRs started taking measures to welcome their customers post lockdown. KFC India had stopped taking delivery orders through its portals and instead provided its services through Swiggy and Zomato. All Company devised changes in its restaurant design and processes to enable contactless dining including signage and floor stickers to help delivery riders maintain a safe distance while waiting to collect orders. These QSRs are also mulling servicing customers via contactless takeaways even after being allowed to resume operations fully. 

Eating out is not just a common phenomenon in India but an experience with a lot of individual expectations. Customers are exploring and expanding their preferences leaving out nothing untouched and tend to show a variety-seeking behavior in terms of outlets and food. This has created a large potential in this industry and caused the industry to grow at a rapid rate with some of the formats growing at more than 20% per annum. Among the emerging economies, China, India, and Brazil dominate fast-food consumption, owing to their large population base and growth in the number of QSRs such as McDonald’s, Burger King, Wendy's, Subway, and Dunkin' Donuts.

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