5 Compliance Challenges Threatening Indian QSR Growth

India's Quick Service Restaurant (QSR) sector is poised to soar to USD 38.71 billion by 2029, driven by expansive growth nationwide. However, compliance has emerged as a pressing concern. TeamLease Services Limited stresses the urgency for industry players to promptly address compliance issues, given the potential legal, reputational, and operational risks associated with non-compliance. The Food Safety and Standards Authority of India (FSSAI) is actively promoting regulatory adherence through education and mandates, such as displaying food safety boards and employing trained supervisors. Yet, only 20% of the 2.5 million Food Business Operators (FBOs) in India possess an FSSAI license. To nurture a thriving QSR landscape, concerted efforts are required to enhance compliance through robust training, streamlined licensing processes, stringent quality control, innovative menus, and sustainability practices. Recent crackdowns on certain big brands highlight the urgency for the industry to reassess its operations amidst a growing economy.

TeamLease Services' released a whitepaper that identifies key vulnerabilities in the QSR sector, including:

Address Subpar Compensation: With 12% of the QSR workforce earning below the minimum wage threshold, QSRs must reassess their compensation policies to ensure compliance with statutory requirements and fair compensation levels, reducing attrition driven by dissatisfaction over pay.

Ensure Statutory Benefits Compliance: Concerning 21% of QSRs are non-compliant regarding minimum wage requirements, and 30% neglect to provide statutory bonuses. Ensuring adherence to statutory benefits not only fosters employee satisfaction but also mitigates legal risks, contributing to reduced attrition rates.

Prioritize Employee Well-being: Non-compliance with the Employee's State Insurance Corporation (ESIC) provision in 23% of QSRs jeopardizes employee health and reveals a disregard for regulatory obligations. Prioritizing employee well-being by adhering to such provisions is crucial for fostering a compliant and sustainable workforce.

Gratuity Provision Improvement: While 58% of QSR chains extend gratuity benefits to employees with 5-year tenures, the low proportion of eligible employees due to high attrition rates underscores the need for QSRs to review and possibly revise their gratuity policies to enhance retention and compliance.

Enhance Leave Policies: With 24% of surveyed QSRs not providing leaves beyond standard weekly offs, addressing leave policies is imperative. Offering adequate leave benefits can mitigate employee burnout, increase job satisfaction, and contribute to compliance with labor regulations, thereby reducing attrition rates.

Conclusion

In the rapidly expanding Indian food services market, Quick Service Restaurants (QSRs) must prioritize regulatory compliance to ensure smooth operations. From managing salaries and benefits to adhering to labor laws, compliance is essential for long-term success. By utilizing compliance platforms and partnering with experienced staffing firms, QSRs can enhance operational efficiency and minimize risks. Prioritizing compliance not only ensures a safer environment for both customers and employees but also contributes to the sustained growth and development of the QSR sector in India.