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Despite slowdown, QSRs a big chunk of India’s chained restaurant market


Food service brands such as McDonald’s, Domino’s, Pizza Hut and KFC may be grappling with a discretionary slowdown, but these chains have been responsible for pushing growth in the domestic organised restaurant market, a just-released report by financial services firm Avendus Capital says.

The firm says that quick-service restaurants (QSRs) constitute 47% of the total chained restaurant market in India. The total market size of this segment (chained restaurants) is nearly $4 billion. Chained restaurants here mean those that have multiple outlets in either one city or different cities.

Apart from QSRs, there are other formats too such as fine-dining and casual dining restaurants that could have multiple outlets, but their proportion is smaller, Amit Kadoo, vice-president, Avendus Capital says.

He says the relative ease of setting up a QSR operation vis-a-vis a fine-dining restaurant, besides scalability of the business model have all ensured that this segment is today emerging as a big chunk within the overall chained restaurant market in the country.

Kadoo’s obervations are corroborated by a recent report of the National Restaurant Association of India (NRAI), an apex body of restaurant majors in the country. The body says that the domestic chained restaurant market would nearly double to $8 billion in the next five years as lifestyle and eating habits undergo a dramatic change. QSRs and affordable casual dining restaurants will drive this growth, the report says, as consumer preference for these formats steadily gains steam.

“While the larger cities such as Mumbai and Delhi-NCR will continue to drive consumption for QSRs because the propensity to spend is larger there, one can’t completely deny the potential of smaller markets. QSRs will have to eventually venture there in their quest for growth,” Arvind Singhal, chairman, Technopak said.

Domino’s recently said that it proposed to open 150 stores every year over the next two to three years as it aimed to consolidate its position in India, its largest outside the US. The brand, the largest in the domestic pizza space, has crossed the 1,000-mark in terms of stores in India.

Amit Jatia, vice-chairman, Westlife Development, the franchisee of McDonald’s in the west and south, says that the burger brand, the largest in its category in the country, will add around 30-50 stores every year over the next few years to take its store count to 500 from 236 now.

Other QSR majors are also expected to ramp up their operations in the next few years with an eye on growth.

Source: Business Standard

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