The Indian food service industry has undergone a transformative shift, evolving from local, family-run establishments to a global stage characterized by diverse business strategies. A recent report from consulting firm Wazir Advisors highlights the industry’s high fragmentation and competitiveness, attributable to the substantial presence of numerous global and local brands.
According to the report, renowned international brands such as Domino’s, Pizza Hut, KFC, McDonald’s, and Subway have successfully secured a significant market share by employing strategic measures like product innovation, mergers and acquisitions, partnerships, and geographic expansion.
Independent restaurants, both small and large, pose formidable competition to major players by leveraging aggregator platforms like Zomato and Swiggy to expand their customer reach and significantly boost order volumes.
Despite facing unprecedented challenges, including pandemic-induced lockdowns and dine-in restrictions leading to a 38.2% contraction in 2021, the Indian food service market swiftly rebounded in 2022 with the easing of restrictions and a return to normal consumer behaviour.
Pakhi Saxena, Retail CPG Head at Wazir Advisors, projects a robust growth trajectory for the Indian food service market, expecting it to reach US$78.8 billion by 2026 with a compound annual growth rate (CAGR) of 11.3% between 2023 and 26. In 2023, the market was valued at US$57.2 billion.
Saxena notes that while the unorganized segment currently commands a significant share, the organized segment, particularly Quick Service Restaurants (QSR) and Cloud Kitchen formats, is experiencing rapid expansion, collectively accounting for over 70% of the organized segment.
The report predicts that the organized segment will outpace the unorganized one, growing at a 15% CAGR during 2023–26. As a result, it is anticipated that the organized segment will surpass the unorganized segment, securing the majority share in the Indian food service market by 2025–26.