Home deliveries drive India’s foodservice sector

The sector is expected to witness new formats such as cloud kitchens.

The Indian foodservice sector is expected to grow strongly at a compound annual growth rate (CAGR) of 15.5% to $219.4b (INR17.22t) in 2025, as a growing affinity amongst the consumers for home deliveries will drive the growth of delivery service providers like Zomato, according to a report from GlobalData.

The quick-service restaurant (QSR) channel remained the largest foodservice profit sector channel in 2020. At a CAGR of 5.5%, QSR registered the steepest growth amongst all profit sector channels, driven by the growing popularity of the more affordable western fast food and the rising exposure of consumers to western media.

On the other hand, the travel channel recorded the sharpest decline of 5.5% from 2015 to 2020. However, with the rebound in consumer confidence in coming years after the pandemic, all channels are projected to register growth from 2020 to 2025.

“A drastic drop in the purchasing power of consumers and restrictions on operations of on-premise channels played a key role in the decline of sales across different profit sector channels,” GlobalData’s Consumer Analyst Ravi Teja said.

GlobalData expects that all foodservice profit sector channels will experience outlet and transaction growth from 2020 to 2025. Chain operators will particularly grow at a higher rate compared to independent operators across restaurant channels.

Amidst a shift in consumer eating patterns during the pandemic, the profit sector is expected to witness the introduction of new formats such as cloud kitchens, which are designed for takeaways, Teja noted.

“Operators will increase the share of takeaways in their revenues to cut their own real estate expenses and serve consumers seeking convenience,” Teja added.