5 Reasons That’s Pushing the Growth of QSR Industry in India

QSRs have been one of the fastest-growing segments of the restaurant industry in India and worldwide. According to a report by Researches and Markets, the QSR market in India was projected to grow at a compound annual growth rate (CAGR) of over 18% during 2021-2025. In 2023, the QSR industry in India witnessed a robust growth of around 30-35% in terms of revenue, driven by various factors such as:

1. Increasing urbanization, disposable income, and working population, which created a higher demand for convenient, affordable, and quality food options.

2. Rapid expansion of food delivery services, which enabled QSRs to reach more customers and increase their sales volume and frequency.

3. Changing consumer preferences and dining patterns, influenced by the ongoing pandemic, health awareness, and Western culinary influences. Customers preferred contactless and hygienic meal options, online ordering, delivery, and takeout over dining in at QSR locations.

4. Effective cost management strategies, such as optimizing menu pricing, reducing wastage, exploring cost-sharing opportunities, and leveraging new technologies, such as IoT and analytics, to improve operational efficiencies and profitability.

5. Aggressive store expansion plans, especially in Tier 2 and 3 cities, where QSRs faced less competition and more untapped potential. The QSR industry was estimated to add approximately 2,300 stores between FY2023 and FY2025, with an estimated capital expenditure of around Rs 5,800 crore.

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QSRs have also been adapting to the changing market dynamics and customer expectations by offering more variety, customization, and innovation in their menus, services, and formats. Some of the trends that emerged or gained popularity in the QSR industry in 2023 were:

1. Cloud kitchens, which are delivery-only kitchens that operate without a physical storefront or dine-in facility. Cloud kitchens allowed QSRs to reduce their operational costs, expand their reach, and experiment with different cuisines and concepts.

2. Healthy and sustainable food options, such as salads, wraps, bowls, vegan, organic, and locally sourced ingredients, which catered to health-conscious and environmentally aware customers.

3. Indian homegrown QSR brands, which offer authentic and regional flavors, such as biryanis, chaats, dosas, and parathas, and compete with the global QSR giants.

4. Co-branding and cross-selling, which involves partnering with other brands, such as beverage, snack, or dessert brands, to offer complementary products and services, and increase the average order value and customer loyalty.

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Conclusion

The QSR industry in India has shown remarkable resilience and growth in the face of the challenges and uncertainties posed by the pandemic and the economic slowdown. QSRs have proven to be the future of the restaurant industry, as they offer a value proposition that appeals to the masses: fast, convenient, affordable, and quality food. With the continued support of technology, innovation, and customer-centricity, QSRs are expected to maintain their momentum and dominate the food service market in the coming years.