FOOD AND BEVERAGE SPECIAL........... Eating out: Indians cook up $48bn food biz

Eating out: Indians cook up $48bn food biz

Mumbai: Despite big budgets, bigwigs and blockbuster hits, the Indian film industry is just about two billion dollars. The hot and sizzling food services business, on the other hand, with its high turnover and fragmented players, is surprisingly larger than the Indian telecom sector. The rise of ‘eating out’ economy has propelled the restaurant industry to $48 billion, according to a report by the National Restaurant Association of India.
    Urbanizing double-income households, changing lifestyles and food preferences are spurring the organized market within the sector, which is now estimated to be $13 billion but expected to reach $28 billion in five years. Casual dining and quick service restaurants (QSRs) account for 70% of the organized segment, while pubs, bars, clubs and lounges (PBCL) form 12%, cafes take 8% share leaving the rest with fine-dining and frozen dessert outlets.
    “Eating out has evolved from an occasion-driven activity to an occasion in itself,” said Riyaaz Amlani of Impresario Entertainment & Hospitality, which runs a host of eating joints like Café Mocha, Salt Water Grill and delItalia, adding, “It has become a form of entertainment for consumers today.”
    The market potential is encouraging home-grown and existing players to expand their foot print, while new European and US brands are charting India entry plans. London’s dim sum eatery Ping Pong will make its debut next month in Mumbai, while other global brands like Nobu, Carluccios and Zuma are preparing strategies for the second largest food services market in Asia-Pacific. China is far ahead, leading the pack with a $510-billion industry.
    Global food and beverage (F&B) brands have revved up India action after Starbucks’s high-profile entry late last year.
    The fact that New York-listed Yum Brands, which operates KFC and Pizza Hut among others, and McDonald’s have talked up the Indian potential has sustained international interest despite the recent domestic economic woes. Investors track companies like Yum as proxies for robust consumption stories worldwide.
    New locations, unique formats, innovative menus and exciting themes are influencing increased consumption. “We are investing a few hundred crores to expand our food & beverage business by acquiring stakes in brands with unique selling propositions and that are scalable,” said Gaurav Goenka of Mirah Hospitality. The Mumbai-based company runs Rajdhani, Manchester United Café Bar, Mad over Donuts and Café Mangii.
    Private equity investors like New Silk Route and Everstone Capital have chased F&B-specific deals to build a specialized asset platform in the sector. Other investors like Sequoia and TVS Capital Funds have fuelled entrepreneurial ambitions where real estate cost is the biggest deterrent in scaling up business models.
    “The current decade will see the industry in a consolidation phase with players focusing on customer retention and enhancing the range and depth of their offerings,” said Saloni Nangia of consultancy firm Technopak, which collaborated with the National Restaurant Association of India on the report.

Reeba Zachariah TNN TOI130529