India’s food services market, currently valued at Rs 5.7 trillion, is projected to grow at a compounded annual growth rate (CAGR) of 8.1%, reaching Rs 7.76 trillion in four years, according to a report by the National Restaurant Association of India (NRAI) released on Tuesday. The organised segment will grow at a CAGR of 13.2% between 2024 and 2028.
By 2028, India’s food services market will surpass Japan, trailing only the US and China, NRAI said. It will also be the second-fastest growing market after Brazil, employing 10.3 million people by 2028. The market, which includes the organised segment valued at Rs 2.49 trillion and the unorganised segment valued at Rs 3.19 trillion, currently employs 8.5 million people.
The growth will be driven by an increased frequency of eating out, which includes dining out and ordering in, the NRAI report said. The average eating out frequency today is 7.9 times per month, up from 6.6 times in 2019. The average dine-out frequency is 3.7 times per month, while ordering in is at 4.2 times per month.
Last week, a report by Swiggy and Bain & Company indicated that the frequency of eating out would increase from an average of 5 times per month currently to 7-8 times by 2030. The report also projected robust growth for the food services market in India, predicting it would double by 2030 to Rs 9-10 trillion from Rs 5.5 trillion now, growing at 10-12% annually.
The Swiggy-Bain report had said the addressable customer base for the Indian food services market would expand by 110 million, growing from the current 320-340 million to approximately 430-450 million by 2030. This surge would be supported by macroeconomic factors, including rapid urbanisation and a rise in affluence.
While the NRAI report also highlights changing lifestyles, urbanisation and growing convenience as growth factors, it notes that the share of the organised food services market will grow to 52.8% by 2028 from 43.8% now. The unorganised segment, on the other hand, would shrink to 47.2% from 56.2% over the same period.
According to the NRAI report, the top nine cities in India contribute approximately 59% to the total revenue of the food services market. Cafes, quick-service restaurants and dessert and ice-cream parlours will be among the fastest-growing segments, with growth rates of 18.6%, 17.5%, and 15%, respectively, between 2024 and 2028. Between 2019 and 2024, these three segments had grown at a CAGR of 15-20%.
Casual dining, fine dining, pubs, bars and lounges are expected to grow at 9.3%, 12.9% and 8%, respectively, between 2024 and 2028. Cloud kitchens, on the other hand, are projected to be the fastest growing segment, with a CAGR of 35.2%, driven by the booming online delivery market, the report states.
The report also points to rising input costs, limited hours of operation, regulatory compliance and delivery dynamics as challenges faced by food service operators. Industry players have suggested recommendations to the government, including industry status, a separate food services ministry, one nation, one norm, and longer operating hours.
