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Indian food market poised at $48 billion; Projected growth $78 billion
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Friday, 06 December, 2013, 08 : 00 AM [IST]
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Ashwani Maindola, New Delhi
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fiogf49gjkf0d Indians love to eat, and eating out has become one of their favorite pastimes over the years. Earlier, they would frequent the neighbourhood vendor, but now the upwardly mobile are opting either for home delivery or to visit quick service restaurant (QSR) chains or casual dining eateries.
And with changing working patterns and lifestyles, ready-to-eat (RTE) or convenience foods have, to a certain extent, replaced regular meals in urban areas. The 2013 Indian Food Service Report, released by the National Restaurant Association of India (NRAI), said that the density of convenience food outlets is the highest in metros and mini-metros.
“Indian consumers used to perceive eating out as either a means of hanging out with peers or trying alternative cuisines at possibly new eating joints, again as either a change from eating home-made food or to celebrate certain occasions. Eating out also represent meals consumed after shopping or watching a movie and outside the office,” it said.
“It was essentially an indulgence across all age groups and at all socio-economic levels. And now consumers are constantly seeking diverse options to eat out, and have a preference for taste and quality,” the report - which focussed on consumer behaviour - added.
It added that transformation was underpinned by a surging economy, rapid urbanisation, and a rise in personal disposable income as well as in double-income households. Other factors influencing it included an increased exposure to international lifestyles and the elongation of individual life cycles.
According to the report, the Indian food market - comprising organised and unorganised players - is currently poised at Rs 2,47,680 crore ($48 billion), and is projected to grow to Rs 4,08,040 ($78 billion) by 2018 at a compound annual growth rate (CAGR) of 11 per cent.
Out of that, the share of chains and standalone outlets is approximately 19 per cent. It is worth Rs 12,785 crore ($2.5 billion), and is expected to grow at a CAGR of 21 per cent to reach Rs 33,250 crore ($6.5 billion) by 2018.
In the chain market, the share of QSR chains is Rs 5,500 crore, and that of casual dining restaurants is Rs 3,950 crore. They have a share of 43 per cent and 31 per cent respectively. The combined share of the convenience food market, therefore, is 74 per cent. A number of national and international brands are present across these formats.
QSR chains include McDonald’s Domino’s Pizza, California Pizza Kitchen, Goli Vada Pav, KaatiZone, Mast Kalandar, Jumbo King, Fasso’s, Bangs Fried Chicken.
The casual dining segment comprises Pizza Hut, Papa John’s, Pizza Express, Flavours of Italy, Café Zoe, Rajdhani, Moti Mahal, Indigo Delhi, Smoke House Deli, Amicci Café, etc.
The survey report added that across the format, the three or four most significant contributors have different operational models, including joint ventures and franchising (master and micro-franchisees).
QSR
Quick service restaurants are focussed on speed of service, affordability and convenience. They have a strong focus on takeaway/delivery with minimal table service.
McDonalds, Nirula’s, Domino’s Pizza, Haldiram’s, Subway, KFC and Bikanerwala are among the leading players in this segment.
This segment is expected to grow at an CAGR of 25 per cent to reach Rs 16,785 crore by 2018. The average price point per person in this segment ranges between Rs 75 and Rs 250.
The QSR concept has gained increased prominence in India, with an eye on affordable eating.
The market is very competitive, and has witnessed innovations and the introduction of variations in Indian and international foods.
Vikas Mittal, managing director, McCain Foods India, said that the fact that everyone was getting busier and required quick food was driving this segment.
“There are so many women working, and in fact, even the housewives are so busy,” he added.
As far as locations are concerned, the entry of a number of players in the QSR space has pushed the chain market. Now the focus is on the Tier-II and III cities, as the markets in the metropolitan cities have almost saturated.
According to NRAI, QSR’s presence is currently felt mostly in metros at the rate of 35 per cent, and in the mini-metros at 37 per cent. Their presence accounts for 18 and 10 per cent in Tier-I and II cities respectively.
Amongst these, QSR chains specialising in food account for 77 per cent, while those specialising in beverages account for 18 per cent. The rest specialise in both.
At 45 per cent, the QSR sales mix for vegetarian foods is marginally higher in comparison to 40 per cent for non-vegetarian foods.
The share of dine-in restaurants (67 per cent) is the highest, followed by takeaway (19 per cent) and home delivery (14 per cent).
These register maximum sales recorded between 7pm and 10pm, when about 36 per cent customers visit these outlets.
Casual dining
A restaurant serving moderately-priced food in an ambience oriented towards providing an affordable dining experience with table service.
The eateries bridging the gap between QSR and fine dining constitute the casual dining segment.
The leading players in this segment are Pizza Hut, Pind Baluchi, Rajdhani, Yo China, etc. “This segment is expected to grow at a CAGR of 18 per cent to reach Rs 9,035 crore by 2018,” the report said.
The average price points in this segment range between Rs 250 and Rs 500, but premium service could be availed between Rs 500 and Rs 1,000.
In this segment, dine in accounts for the largest share of the revenue, with 60 per cent, followed by delivery (30 per cent).
About 85 per cent of the business take place between 1pm and 4pm and between 7pm and 10pm.
Takeaway and delivery formats
These formats are in demand in big cities, particularly due to increasing congestion level and longer waiting time at many restaurants.
Mumbai has the largest share (79 per cent), followed by Delhi and the National Capital Region (65 per cent), Pune (62 per cent), and Chennai and Kolkata (51 per cent).
Consumers
The report categorised the consumers in six categories, with pizza topping the chart.
People in the age groups of 14-17 years and 18-21 years go out to eat mostly once a week. According to the report, eating out is a highly-impulsive activity for the group.
The impulse is triggered when indulging in other entertainment activities like movies, catching up with friends, etc.
Popular cuisines include pizza, Chinese, north Indian and south Indian.
In the age group of 22-25 years, 80 per cent eats out more than once a week. Of this, 65 per cent is implusive and 35 per cent is planned, mostly with friends. Pizza tops the choice here too.
In the age group of 26-30 years, over 80 per cent eats out more than once a week, but planned eating out is 40 per cent.
In the age group of 30-40 years, around 50 per cent prefer to eat out on a weekly basis. Here, the planned segment slightly rises with 42 per cent.
In the age group of 40-45 years, the eating out behaviour reduces, with around 57 per cent opting to eat out, and 45 per cent making it a planned occasion.
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