Why QSRs will change the Eating Out market in 2018

In today’s world, everyone is struggling to save some time even when stopping by to have a bite to eat. People have always shown an interest towards eating at a Quick Service Restaurant. Looking at the opportunity in the Indian economy, food chains from many countries have set up operations in the country, majorly focusing on metro cities. Resulting in what? Cannibalization, that is eating each-others market share as many of these brands have similar product offering like pizzas, burgers. All these brands are trying to attract the same audience, who are likely to get bored of eating the same food over and over again.

There are a few successful players in each category as McDonald’s, Burger King in the burger segment, Domino’s and Pizza Hut in pizza and Subway in salads & sandwiches. Apart from these few success stories all the other brands offering similar food options are struggling to gain some market share from the market leaders, much to their failure. Also many outlets of successful brands are closing down. The reasons are unthoughtful expansion in the same places, high cost of real estate rentals, along with increased options to eat from, thanks to food-tech startups like Zomato, Swiggy etc.

But there is no wonder more and more businesses are setting up in the QSR space looking at the CAGR of 22 percent over the next 5 years, reaching Rs. 24,665 crore in 2021 from Rs. 9125 crore in 2016.

Investment in Indian QSR

Multiple investments have happened in this segment in the recent past; a few prominent ones are listed here. Wow! Momo, a QSR chain based in Kolkata raised funding of Rs. 7.9 crore from Bandhan Bank in July 2016. Again, this year the brand received Rs. 44 crore in a series B funding round led by Lighthouse Funds. The company was valued at Rs. 230 crore thereafter. Another quick food-delivering app based company Faasos have received total equity funding of $60.4, the latest one was the Series C funding worth $6.4 million from Sequoia and Lightbox.

QSRs serving Indian delicacies are being invested into, as Gurgaon bases Biryani Blues raised Series A from Carpediem Capital, a private equity fund, the amount remained undisclosed. Another similar venture, Charcoal Biryani raised seed funding in February 2016 amounting to $150,000 from Lion Ventures and Coverfox.

Another segment is of multi cuisine quick restaurants, Box8 a Mumbai based kitchen, which prepares and delivers Indian meals along with salads, sandwiches etc. has received Rs. 50 crore in a Series B funding from IIFL seed ventures fund and Mayfield. Food startup 48East serving gourmet Asian food at a decent price received a Pre-Series A funding from a family from UAE, Al Dhaheri. The Bangalore based startup serves delicacies from 48 different Asian countries in their weekly changing menu. Yet another fast Indian food chain Hello Curry raised $ 2 million in two funding rounds venture and seed from Sashi Reddy and SRI International.

Looking at the opportunity in the segment Vatika Group plans to invest Rs. 100 Crore in setting up an Indian street food serving chain Nukkadwala, “Inspired by a billion foodies” as they say.

Acquisitions

Many acquisitions were alone seen in the recent year within the segment which are worth the attention, Hello Curry in April 2016 acquired The First Meal, an online breakfast and health foods subscription platform based out of Hyderabad, in a cash-and-stock deal. An year before the firm had acquired another online food ordering and delivery service Paratha Post in a similar deal, the amount for both the deals was undisclosed.

Dosa Place by Adhya Restaurant, a Hyderabadi startup acquired another Hyderabad based food Company ‘ChennaiChef’ for an undisclosed sum last year.

Even in the international markets, people are developing a taste for Indian food, Curry Up Now having operations in San Mateo, Palo Alto, San Francisco, San Jose and Oakland etc. has acquired the fast-casual Indian chain, Tava Kitchen. This was a strategic move to expand faster while providing an authentic Indian food variety to the customers.

Conclusion

The QSR space is not just about having a big brand name and supplying standard food but it is more about coming up with a unique idea and delivering a complete customer experience in terms of ambience, food variety and quality, value of money and service. People are looking for newer cuisines, varied taste and overall experience when dining out and investor can leverage on the same.