It’s Boom Time For Fast Food Industry In India

By Author: Food Dialer
Total Articles: 11
Comment this article

Eating out at special occasions like Birthdays, Anniversaries, Marriages etc. has changed to everyday thing. There are various reasons for the same – increase in income levels (both partner are earning), rising nuclear families and restaurants including the multinationals introducing Indian versions.

McDonald’s mayonnaise used in India is free from eggs. KFC, Pizza Hut, Dominos, McDonalds all keep on bringing dishes that are tweaked or freshly inspired from Indian cuisine. This is perhaps to target the older generation and create a strong foothold for them. With this trend passing on to tier II and even tier III cities, fast food companies are fast expanding to these areas with value for money offers and other lucrative discounts.

Acc. to experts, there is one more reason. Indian populations has more than 60% young people those who are lesser than 30 years of age. They are into experimenting with different types of foods and thus are an inspiration for the international brands. With so much of international brands, and Indian food companies, still the Indian food service sector is 80% unorganized leaving ...
... much scope for growth.

This fact has not gone unnoticed as the fast food companies are in mode of fast expansion and are planning to open restaurants and other food chains all across the country. CRISIL reports that 63% of share of the Indian QSR is the stronghold of the multinationals. However, local players are also gearing up and planning expansion in the coming two years.

Both multinational and local players are now targeting smaller cities as they offer lower rentals, reduced or no competition and even manpower cost is less. Crisil is of the view that in the coming two years much of the growth in food service industry will come from smaller cities and new stores opening in this area will grow by 16 to 18% a year.

The Challenges for the fast food industry

The whole picture is not as rosy as it looks. There is a long list of challenges as well. The rising cost of land is a challenge than the others are high inflation due to which raw material prices are rising. Fuel cost is rising. The biggest challenge amidst all this is to face all these challenges and still offer the best price to the customer. Acc. to Crisil, many companies are not increasing prices with the fear of losing the customer base and are forced to focus on better cost management.

There are many companies who are running two to three businesses are sharing manpower and warehousing cost to keep the operational costs under control. However, still the biggest challenge of today for all the companies in food business is intensifying competition between the old and the new players and to meet up with all the challenges amongst the fight to stand strong. However, the sector is promising and big enough to let all ply and have their share.