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As the voice of the Indian restaurant industry, we represent the interests of 500000+ restaurants & an industry valued @ USD 4 billion. Whether a chain or independent restaurant, the NRAI is here to help every step of the way. Join us!


Seeking richer flavours


Seeking richer flavours

The restaurant sector faces multiple challenges
It’s one of the most visible sectors of the Indian economy, with ample visibility and employing millions, but is beset by numerous challenges which, if removed, could provide a spurt not just to the sector but also the Indian economy. That is the message that emanates from a report by the National Restaurant Association of India (NRAI).

The report also points out that the total food services market is worth 13,09,110 crore and has grown at 7.7 per cent since 2013, when the previous NRAI report was released. According to it, the Indian restaurant sector will create direct employment for 5.8 million people and contribute 122,400 crore as taxes to the Indian economy this year.

The report also estimates that the restaurant sector is worth $48 billion (about 128,800 crore) in terms of overall market size and is expected to contribute 2.1 per cent to the GDP of India by 2021. The sector is still largely unorganised, the size of the organised restaurant sector being worth just 1101,475 crore and expected to grow at a CAGR of 15 per cent to reach 2204,180 crore by 2021, says the NRAI India Food Services Report 2016.

Compiled by Technopak, the report is ambitious in scale and the most comprehensive trade report on the Indian food services sector to date. It has feedback from 2,000 people across 20 cities, including 50 industry CEOs. The report covers PE/vc funding in the industry and digital/social media marketing and brings out market comparisons and policies in nine other countries.


2016 2021
Chain market 20,400 50,950
Standalone market 72,255 1,39,660
Standalone hotels 8,820 13,570
Unorganised market 2,07,635 2,93,950
Total market 3,09,110 4,98,130

Economic impact
Leading restaurateurs however have long felt that the dice is heavily loaded against them, and point to the high turnover rate of restaurants in the country. “Restaurants are lucky to get into double digit EB1DTA margins,” points out Riyaaz Amlani, pr.6sident, NRAI, as also CEO & MD, Impresario. Overregulation of the, industry, the complex maze of approvals and licences required and high tax brackets are the banes the industry faces, he ‘adds. “It is about time that our industry’s socio-economic impact is recognised by the government. It should initiate imme-diate steps to unlock the true potential of this behemoth”. Among the other challenges fleshed out in the report are high real estate and manpower costs, poor infrastructure and supply chains, and lack of financing. The sector does not fall under any one ministry, resulting in regulatory chaos, and is currently fighting to have the ‘right rate’ for GST. Another huge challenge is manpower.

Samir Kuckreja, former presi-dent & trustee, NRAI, points out that the sector was working actively to augment skills for many unemployed youth. “We IFSR 2016 skilled 100,000 people last Launch year at the entry level. The idea is to look at the entry level first and then look at the mid level.”

“The government needs to do a lot to make things simple,” said Amitabh Kant, CEO, NITI Aayog, while launching the report. India needed to grow at 9-10 per cent over the next few decades which, he said, would require smart urbanisation, including employment creation, to achieve. He expects the sector to play a major role.

The report estimates that the top 75 cities in India have 150,000-175,000 restaurants in the organised segment. The unorganised segment has been dominant, though its scare too has been declining from 70 per cent in 2013 to 67 per cent in 2016 and is expected to be 59 per cent in 2017. Delhi and Mumbai contribute about 11 per cent each to the total food services market.

The top priority of the day is doing business and moving from licence raj to registration, stresses Amlani. Indi-ans are still spending much less than their counterparts on eating out, the report highlights. The per capita expenditure on eating out in urban India is $110, compared to Brazil’s $745, China’s $750 and US’ $1,870. Significant potential indeed, if the state and the sector can get their acts together, to decide if restaurants are indulgence or infrastructure.

Source :Business India

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