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Food and Beverage 2018-01-08

Five Reasons Why QSR is an Evergreen Business

By 2020 it is expected that 35% of India's population will be in urban areas by 2020 totaling to 52 crores compared to the current urban population of 34 crores.

By Senior Sub-editor
Five Reasons Why QSR is an Evergreen Business

 

Fast food is one thing, which has everyone’s heart tucked in one string. We all have same cravings as we see Quick Service Restaurant (QSR)’s posters or hoardings, which is in a way giving the boost to keep this business running.

According to an analysis by apex industry body Associated Chambers of Commerce and Industry of India (ASSOCHAM), the quick service restaurants (QSR) sector in India is currently growing at a compounded annual growth rate (CAGR) of 25%, and is likely to touch the Rs 25,000-crore mark by 2020 from the current level of Rs 8,500.

By 2020 it is expected that 35% of India's population will be in urban areas by 2020 totaling to 52 crores compared to the current urban population of 34 crores.

Here are a few points to back the statement that QSR is an evergreen business:

Affordable:

People tend to incline towards something which fits their pocket at the same time fills their tummy. Moreover QSR provides equal options for both vegetarian and non-vegetarian eaters in affordable prices.

QSR serve food which is affordable for most of the population. Moreover it serves food which holds the capacity to satiate customers of all ages and the cost fits everyone’s pocket.

Recession Free:

QSR is considered as recession free business as the cost difference does not look that evident as it looks on the CSR or fine-dine restaurants’ menu.

Demonetisation and GST shook the base of almost all businesses but QSR business seems to have bounced back with new energy.

"Even after demonetisation, which sucked liquidity out of the system, we reported positive same-store sales growth at 5.1 per cent in the first quarter of FY17-18," says Amit Jatia, vice-chairman of Westlife Development.

Active Crowd:

“Around 15 years back when multinational QSR formats like, KFC, Dominos, Mc Donalds etc entered into Indian food industry they were more of aspirational brands to India. They have never seen those brands and also there was an increase in income at that time so people started liking sitting there and enjoy. Now these aspirational brands have become commodity brands because they are more known for a quick bite and they are less expensive. Delivery and take away are becoming new trend in QSRs as 80per cent business in QSR belongs to delivery and take away only,” says Sandeep Singh, CEO at Papa Johns.

Constant Improvement:

For any company or business to grow there should be constant improvements done in the project, which gives the business the required boost because stagnant is boring. A little innovation in food or arranging the menu or adding a couple of new dishes in the menu is all that keeps customer to look forward to eat at your QSR.

As Amit Jatia says, “Innovation in menu, brand extensions and launch of value-for-money products such as Happy Price Combo and Chatpata Naan are the key factors driving growth.”

Low Investment:

In QSR business model, there are no unnecessary investments in making interior decorations, sitting arrangements or parking space. The business entirely focuses on the quality of food and serving the customers. Getting staff is also cheap and easy, as the chef does not have to be an H-school graduate or well trained.

Unlike other businesses, QSR requires low investment in the initial stages, as it grows with time, the profit as well as investment also grows, which is one of the reasons why it is an evergreen business.

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