Food Services business in India

The hot and sizzling food services business with its high turnover and fragmented players, is surprisingly larger than the Indian telecom sector. The rise of ‘eating out’ economy has propelled the restaurant industry to $48 billion, according to a report by the National Restaurant Association of India.
Urbanizing double-income households, changing lifestyles and food preferences are spurring the organized market within the sector, which is now estimated to be $13 billion but expected to reach $28 billion in five years. Casual dining and quick service restaurants (QSRs) account for 70% of the organized segment, while pubs, bars, clubs and lounges (PBCL) form 12%, cafes take 8% share leaving the rest with fine-dining and frozen dessert outlets.
The market potential is encouraging home-grown and existing players to expand their foot print, while new European and US brands are charting India entry plans. London’s dim sum eatery Ping Pong will make its debut next month in Mumbai, while other global brands like Nobu, Carluccios and Zuma are preparing strategies for the second largest food services market in Asia-Pacific. China is far ahead, leading the pack with a $510-billion industry.
Global food and beverage (F&B) brands have revved up India action after Starbucks’s high-profile entry late last year.
New locations, unique formats, innovative menus and exciting themes are influencing increased consumption.
Private equity investors like New Silk Route and Everstone Capital have chased F&B-specific deals to build a specialized asset platform in the sector. Other investors like Sequoia and TVS Capital Funds have fuelled entrepreneurial ambitions where real estate cost is the biggest deterrent in scaling up business models.