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India’s food and beverage (F&B) industry is entering a defining phase. While metros have long dominated the sector, the real momentum lies outside the big cities. The F&B industry beyond metros is no longer a distant possibility—it’s a fast-unfolding reality. Tier-II and Tier-III cities are becoming vibrant consumption hubs where aspirations, affordability, and accessibility combine to reshape how India eats, dines, and spends.
Our report, Course Beyond Metros: Recipe for Growth, developed by Grant Thornton Bharat in collaboration with the National Restaurant Association of India (NRAI), offers a comprehensive view of this transformation. Based on survey responses from over 160 restaurant operators across 50+ cities and in-depth interviews with industry leaders, the study explores how restaurants are adapting to the emerging landscape, what challenges they face, and what strategies will define the next decade of expansion.
Cities such as Indore, Lucknow, Jaipur, Nagpur, and Coimbatore are witnessing rising disposable incomes, stronger infrastructure, and aspirational younger consumers. For families and millennials alike, dining out is no longer reserved for special occasions—it’s an everyday lifestyle choice.
These markets bring together:
Affordability for operators through lower rentals and faster breakeven
Aspirations for consumers, who seek branded experiences at accessible price points
Cultural depth, where eating out is linked not only to convenience but also to social connection
This combination creates the perfect environment for operators to test new formats and scale sustainably.
The opportunity in these markets is compelling because the economics look very different compared to metros. For instance, while commercial leases in prime metro zones often cross INR 1,800 per sq. ft., Tier-II markets typically offer rentals at one-tenth of that rate. This allows operators to experiment with formats such as larger casual dining spaces, hybrid cloud kitchen models, or even immersive QSR footprints.
But affordability varies within cities. Micro-markets like Gomti Nagar (Lucknow) or Indore’s Super Corridor are hotspots driven by IT parks, industrial corridors, and connectivity upgrades. Restaurants that succeed here focus on precision—choosing the right format for the right micro-market instead of adopting a blanket expansion approach.
The report shows that 94% of restaurant operators plan to expand within Tier-II cities or into new ones. Expansion strategies are no longer about copying metro playbooks but about adapting.
Key trends include:
Quick-service restaurants remain the most scalable format, offering faster breakeven and higher turnover.
Many brands combine dine-in with cloud kitchen operations to balance delivery and footfall demand.
With up to 60% of revenues concentrated on weekends, operators are testing flexible staffing and modular operations.
Brands prefer targeting groups of nearby cities to optimise logistics and marketing.
While the consumer demand is strong, several hurdles remain.
Yet, these challenges also create opportunities for innovation. Operators investing in local sourcing, building in-house training academies, and negotiating structured lease models are becoming stronger and more resilient.
The report highlights that only 24% of operators have implemented full operational systems (POS, ERP, CRM, kitchen automation). But those who have embraced technological adoption already see clear benefits: reduced waste, accurate demand forecasting, and scalable franchise oversight.
Technology is not just about efficiency—it is becoming the backbone of competitive advantage in non-metro markets.
Investor interest in India’s F&B sector has rebounded sharply. 2025 has already seen record-breaking deal values, with capital flowing into health-oriented, premium, and tech-enabled ventures. For investors, Tier-II and Tier-III cities represent untapped demand, better economics, and long-term growth.
But sustainable expansion requires ecosystem development—shared kitchen infrastructure, centralised training centres, vendor networks, and streamlined compliance. Collaborative efforts by industry associations, policymakers, and operators will be critical to unlocking the full potential of the F&B industry beyond metros India.
Based on survey insights and ground-level conversations, the report lays out a practical roadmap:
Target groups of cities for scale and operational leverage.
Use QSR models for scale, casual dining for differentiation, and cloud kitchen formats for delivery flexibility.
Build apprenticeships, local training programmes, and incentive-led retention strategies.
Treat platforms as community builders, not just sales channels.
Forecast demand, standardise SOPs, and personalise marketing.
Work with government and associations to shape licensing, real estate, and cold-chain infrastructure.
