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Indian food services market set to reach $144-152 bn by 2030
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Friday, 31 January, 2025, 13 : 00 PM [IST]
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Our Bureau, Bengaluru
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The Indian food services market, valued at an impressive $80 billion in 2024, is expected to grow, with projections indicating a compound annual growth rate (CAGR) of 10-11% through 2030. Redseer Strategy Consultants, in its latest report, The Big Bite: Scaling Success in India’s Food Services, highlights how multi-brand companies and cloud kitchens are well-positioned to capitalise on this opportunity. They have disrupted traditional dining models, offering scalability and flexibility to adapt to the different needs of various demographics.
Key Findings from the Report:
- Growth of the Organised Sector: The organised food services market, currently constituting half of the overall sector, is outpacing the unorganised segment, driven by online food delivery and brand influx.
- Shifting Consumer Preferences: Consumers in metro and Tier-1 cities are increasingly opting for ordering in and dining out, driven by convenience and a desire for a break from routine. Additionally, outside meals are increasingly viewed as a social activity, offering opportunities to spend quality time with loved ones and to celebrate all occasions. Social media, pop culture, and the demand for variety have fuelled the rise of niche cuisines, contributing to the rising frequency.
- The Multi-Brand Advantage: Multi-brand strategies have proven to be the winning formula, enabling businesses to diversify portfolios, mitigate risks, and scale efficiently across various customer segments and meal slots. Globally, multi-brand companies are increasingly leveraging acquisitions to broaden their offerings and cater to a wider audience across various meal slots.
- Rise of Cloud Kitchens: Among multi-brand companies, the cloud kitchen model is giving a tough competition to dine-in setups resulting in higher revenue per kitchen, optimising shared resources, and enabling brands to scale 2-3 times faster than traditional restaurant models.
Cloud kitchens grow faster and operate more efficiently by utilising shared kitchen spaces that significantly reduce capex and overhead costs. This centralised approach enables companies to optimise production, ensure consistent quality across multiple brands, and allow higher adaptability to market demands. It also facilitates them to launch and scale new brands. These cloud kitchens provide a cost-effective and agile growth platform for brands in the food service industry.
While traditional single-brand models are experiencing growth plateaus as customers demand more variety and unique experiences, the report reveals that multi-brand players, driven by acquisitions, collaborations, and innovative cloud kitchen models, are uniquely positioned to capture a larger market share.
Notably, only 1-2% of companies in India have scaled beyond Rs 500 crore, with most of this success driven by the multi-brand approach. However, even for these companies, rapidly expanding the number of stores alone to drive scale can lead to diminishing returns, especially as the market diversifies with new cuisines and service models.
Rohan Agarwal, partner at Redseer Strategy Consultancy, said, "The plug-and-play model of cloud kitchens facilitates scalability, with new brands reaching INR 100 crore revenue in as little as 2-3 years, significantly faster than the 6-10 years typically taken by dine-in-focused brands. By reducing the time and investment required to scale, cloud kitchens empower businesses to unlock higher margins while staying flexible and efficient in a competitive landscape. It is imperative that businesses focus on agility, operational excellence and innovation to succeed and lead the next wave of growth in this exciting sector.”
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