India Foodservice Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023 - 2028)

India Foodservice Market - Growth, Trends, COVID-19 Impact, and Forecasts (2023 - 2028)

The Indian food service market is expected to register a CAGR of 10.51% over the forecast period.

During the COVID-19 pandemic, India's food service market saw a sharp decline in revenues for street food vendors and food service companies. The major reason for the decline was the strict lockdowns enforced by the government to restrict consumers to their households. According to the National Restaurant Association of India (NRAI), 25% of restaurants closed shop completely in FY21, resulting in over 2.3 million jobs lost. Although normalcy has kicked in amid the steady vaccination campaign, it may take time for the industry to recover fully.

However, the Indian food service market is one of those vibrantly growing markets that has seen exceptional growth during the past decade and is expected to expand rapidly in the upcoming five years of the forecast period. A high percentage of the young and working population is driving the Indian food service market. The availability of organized retail space aids the industry in encouraging the growth of local and international brands across different formats.

Additionally, plant-based foods are undergoing a surge in growth around the country, owing to the increasing consumer demand for healthy foods that are also environmentally sustainable. Foodservice outlets are beginning to offer products that capitalize on this interest in vegan and vegetarian products in India, which in turn is set to boost the growth of the food service market in the country.

The Indian food service market companies are also attracting significant interest from domestic and international private equity and venture capital funds. This reflects the growth potential that the market holds.

The Indian food industry is expected to witness significant growth during the forecast period while increasing its contribution to the global food trade every year. Over the past few years, India has witnessed a proliferation of fine dining restaurants, cafes, pubs, bars, clubs, lounges, and international fast-food joints, which cater to the millennial population's changing food habits. Millennials or Generation Y (people between 18 and 35) make up about 65% of India's population. They are tech-savvy, constantly exposed to global trends and lifestyles, well-informed, travel widely, and have high spending power. Furthermore, they drive the growth index of restaurants and the food service market. Additionally, a high percentage of the Indian population is on the move, migrating to different cities for employment. These trends are further contributing to the growth of the Indian food service market.

Additionally, urbanization is happening at a fast pace in India, with an average of 35.39 % of the Indian population living in urban cities, according to the World Bank collection of development indicators data, 2021, thus rising urbanization is boosting the eating-out culture in the country due to increasing disposable income and hectic lifestyles in urban areas. Additionally, with an increasing proportion of the working women population, the trend for home-cooked meals has gone down, leading to robust demand for out-of-home food consumption.

India's food delivery market is seeing extensive growth due to increased access to high-speed internet and smartphone sales. This, together with India's growing working population and rising income levels, is fueling the rise of the online meal delivery sector. Although most of the players are focused on the country's urban areas, with Bangalore, Delhi, and Mumbai constituting the three largest markets, vendors are now focusing on smaller locations with high growth potential. With SoftBank's recent USD 1.25 billion investment in Swiggy, Zomato's USD 206 million acquisition of Uber Eats' India business in March 2020, Amazon's entry into the food delivery sector, and Zomato's recent IPO, India's online food delivery market is undoubtedly heating up and attracting a lot of global attention and investments.

The Indian food delivery segment is dominated by Swiggy and Zomato, with standalone restaurants dominating the market. All small and big restaurants are associating with these food delivery applications, which helped them reach out to a wider range of customers and has increased their orders manifold.

The Indian food service market is largely competitive and dominated by players in the unorganized sector. The organized sector restaurants are present only in the tier-1 and tier-2 cities in India and cannot cater to the demand from other Indian cities. The organized sector is expected to gain a high market share during the forecast period due to rapid urbanization and expansion of these existing players as chained restaurants. The top international food service companies are strongly engaged in innovating their services and strategizing their food menus per Indian tastes and preferences. Major organized players in the market studied include Westlife Development Ltd and Yum! Brands Inc.

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