What are the Future Prospects of Quick Service Restaurants in India?

23 Nov 2021  Read 1183 Views

Ever experienced the need for midnight munchies? Or afternoon munchies? Maybe even morning munchies? Well, perhaps there is such a thing as “thinking about food too much.” But let’s be honest, if you’ve existed, you’ve craved food that isn’t “Ghar ka khana.”

There would have been a time when these cravings would have gone unanswered. Do any of these problems sound familiar?
“Utna dur kaun jaye?”
“Mausam kharab hai!”(kabhi kabhi mausam=parents’ mood)
“Time hi nahi bachta yaar!”

Well gone are those days (the right kind of achhe din are here, tbh)!

A hero to the rescue and the hero of today's post is... (drumroll please) QSR! Yeah, the short form doesn’t exactly roll off the tongue but under the “QSR” shirt hides the superhero identity, our very favourite, the fast-food restaurants!

So sit down, grab a snack (obviously), and prepare to take a look at what’s cooking with the QSR industry.

Numericals of quick service restaurants to feed the brain

The Quick Service Restaurant (a.k.a. QSR going forward) market grew at a rate of 17.27% from FY 2016 to FY 2020 and is expected to reach an enormous size of ~₹826.37 billion by FY2025. 

While both chain and standalone QSR are set to contribute to the predicted growth equally, chain QSRs lead the market share with an occupancy of ~54.2%.

The QSR segment is experiencing growth as a result of technological innovations as well, like improved Point of Sale(POS) systems, varied payment options, and improved geolocation to aid the delivery segment.
The take-away segment is expected to grow at ~18.0%, and the home delivery segment is expected to grow at around 17.4% between FY 2021 and 2025.

The major ingredients

The QSR industry in India has Jubilant FoodWorks (Domino’s Pizza, Dunkin’ Donuts, and Popeyes), Westlife Development (McDonald’s), Burger King India Limited, and Burman Hospitality (Taco Bell) as some of the leading players in the chain segment. It also has many standalone restaurants that function in various states throughout the nation (we know them, and we love them).

 

Jubilant FoodWorks, with a PAT of ₹236 crores, seems to have the secret sauce to success as its major competitors, Westlife Development and Burger King India Limited, bear losses of ₹99.4 crores and ₹173.91 crores for the financial year 2021.

Want to know why and how Dominos is leading the QSR market in India? Learn more about the pizzeria’s business model and other QSR giants with Quest’s handpicked course Will Dominos replace Ghar ka Khaana?

The pandemic takes a bite

There’s no Corona without a bit of rona. The Covid-19 pandemic hit everyone hard, whether it was individuals, companies, or entire industries. The food market was no exception, with a contagious disease hitting the sector due to the ever-present infection scare.

The lockdown and stay in restrictions proved to be a fatal hit to unorganised or standalone businesses. Moreover, the branches of significant players in the industry also experienced sizable contractions due to reduced foot traffic.

The silver lining to this bleak situation was that the segment was set to benefit from the affordability and ease of access they provided their customers through contactless purchases, home deliveries.
Unfortunately, the Full-Service Restaurants experienced no such luxuries.

Can you smell what the QSRs are cooking?

In FY 2020, Delhi & Mumbai contributed to 21.9% of the revenue in the food service industry. The six mini-metros, Kolkata, Bengaluru, Chennai, Hyderabad, Pune, and Ahmedabad combined, contributed 20.8%.
These were the facts of the year past. Here’s what the future for QSR looks like:

  • QSR brands have been most commonly seen in mega and mini-metros, as far as the number of outlets goes, with around 50% of their total branches being centered around these areas. For the sake of growth, however, attempts have been made to make headway into tier-1 cities over the last decade, with presence in smaller cities being seen only in the more recent years.
    With increasing digitisation and smartphones being readily available throughout the country, QSRs might have an easier time getting established in these new domains they set foot in.

  • The increasing likelihood of eating out without a special occasion and ease of access to multiple options is a driving force in getting the masses attracted to this new entrant in the food industry.
    Another factor that the QSR segment benefits from is the increasing number of people in the age group of 15-40 that are influenced by foreign cultures. They are more likely to experiment with and try different tastes.
    Ease of migration and settlement in new territories also drives greater engagement with QSRs as people are more likely to eat out rather than cook for themselves during the initial period of settling in.

 

  • Rapid urbanisation and greater employment opportunities resulting from it have generated higher disposable income among the classes. As a result, people have become more open to spending on eating out rather than eating at home.

While setting up Full-Service Restaurants is time-consuming and resource-hungry (get it, because food? ok, I’ll stop for a bit :p ), QSRs boast an asset-light business model compared to its full-fledged counterpart.
It is also beneficial for the QSRs that most are either self-servicing or take-aways, reducing the necessity for wait staff and allowing them to function well on a skeletal team just to run the kitchen.

Did you Know section - There was a time when getting into McDonald’s was more competitive than Harvard! In 2011 the fast-food conglomerate made a job offer with 50,000 positions at a job fair in the U.S. and received 1 million applications in response.
McDonald’s went above and beyond their offer and hired 62,000 people, making the acceptance rate 6.2%, causing the Ivy League college’s 7.2% to look magnanimous.

Something a little tough to swallow

Well, if it were all tasty food and big bucks, everyone and their aunt would open up a food service point of sorts now, wouldn’t they?

With these growth perspectives also comes certain risks, risks that could cause rot to any player in the food industry if not monitored well.

While the covid situation helped divert the public’s attention from FSRs to QSR, it hasn’t been just praises and songs of greatness. The extreme health hazard has also made people more aware of their well-being, and a keen eye is kept on the hygiene and its maintenance in various food serving entities.

With the age of smartphones and the internet acting as a severe magnifying glass on the slightest slip-up on the server’s part, not just QSRs, but the entire food industry needs to tighten its apron and put forward their cleanest and best-tasting platters.

The technological aspect of the benefits of QSRs is a double-edged sword as well. Each facility to one major player in the industry is just as readily available to all of the competitors, with chain concerns and standalone joints going toe to toe trying to get a piece of the very fertile market.

Some dessert to round everything up

Talking so much about food must have made some of you hungry, if not for food, then probably for some more info about an industry closely intertwined with our lives. The QSR industry is definitely an up-and-coming player both in the food service sector and the lives of the majority of any discernible demographic.

With a lot on its plate and even more on its menu, QSRs are on the verge of greatness and an industry many people will be watching with great interest.

'The most powerful social media is not the Internet, not Facebook. It is food. Food connects all human beings. ' - Chef Alex Atala.

What are your expectations from the QSR industry or even with the food service sector going forward? Let us know in the comments below and share with your peers to tell them the good word of food ;D.

About the Author: Deb Preetendu Samaddar | 7 Post(s)

Deb is a Company Secretary pursuant. He is a keen learner and eager to learn about the finance world. With an increased proclivity towards tech and language, he aims to capitalise on his interests as a content writer at Finology.

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