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Sector and Segments

Unlocking the potential in the food and beverage sector

The Food and Beverage service industry is one of the most vibrant service industries within India with over 25% yearly growth. Although predominantly concentrated in the unroganised space, with the advent of foreign and Indian restaurant chains, the organised market is likely to expand quite rapidly.

Food expenditure constitutes the majority of our consumption basket and with an increasing young population, eating out will only grow. Eating out has evolved from an occasion driven activity to an occasion in itself for the youth for whom eating out is the most favoured activity besides hanging out with friends.

Amongst the various segments within the restaurant sector, Quick Service Restaurants and Casual Dining Restaurants constitute the largest categories – combined they constitute more than 77% of the overall market.

The Restaurant Sector has been one of the first sectors to attract foreign interest due to huge opportunity. Indian entrepreneurs will capitalise on the opportunity and it is likely for more organised chains to emerge in the next decade.

Some of the key issues marring the industry include:

  • Lack of quality infrastructure
  • Shortage of skilled manpower
  • Increasing real estate cost
  • The large number of licenses required and the lead time to obtain them
  • Tax incidence

In this report, we have attempted to highlight the key issues and suggested certain measures to counter these based on industry feedback.

Overview of the Indian F&B sector

  • Changing demographics, increase in income, urbanisation and growth in organised retail is driving India’s F&B sector
  • The combined F&B service market is worth INR 204,438 crore, growing at compound annual growth rate (CAGR) of 23-24% and is expected to touch INR 380,000 crore by 2017
  • Quick Service Restaurants (QSR) and casual dining are the two most popular formats that form 45% and 32% of the overall market respectively.
  • The F&B service market is dominated by unorganised segment and although it will decline significantly over the next 4-5 years, it is likely to remain more than 60% of the market
  • Brands/ chains of both Indian and MNC brands are still less penetrated and there exists a large opportunity in this space to create bigger restaurant chains
  • The maximum growth being witnessed is still in the standalone restaurant space where local taste along with uniqueness of concept are the key deciding factors

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