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growth 2013-05-24

Food Services Industry: B2C Opportunities in India

Companies can expect to be a part of the Indian food services growth through B2C opportunities.

By Deputy Features Editor
Food Services Industry: B2C Opportunities in India

Due to the favourable consumer dynamics, the Indian food services market has been on an exponential growth trajectory for the past few years. The following are the opportunities in the B2C or the front-end segment:

·         Home-grown concepts - QSR and Casual Dine: The change in eating habits of Indian consumers has encouraged Indian entrepreneurs to foray into food services business. Most of these players are concentrated in specific regions and have posted consistent, high growth having a strong business model. However, geographical limitations have ensured the persistence of a gap in terms of creating the right brand pull which is reflected by the total footfalls at these outlets. Scaling operations will allow players a wide exposure to larger markets, and help them attain economies of scale. The segment stands to gain significant traction and is lucrative area for PE/VC funds.

·         Online food portals: The exponential surge in the number of Internet users, in tandem with this population’s growing need for convenience (35% consumers order food 3-4 times a month) has fostered the development of online food service portals. Currently, such portals primarily provide restaurant listings and reviews, and also enable restaurant reservations and placement of food orders. Some portals providing these services include Zomato,, Burrp, etc.

The review and listing portals require limited investment but give high returns. Concurrent to this is the possibility for players to get into consumer analytics by making the optimum use of available restaurant data. Mobile applications can also be developed to facilitate consume ease.

·         Hybrid model - Food services and Food Merchandise:  A model with a combination of food services and food merchandise retailing, promises increased footfalls and sales at outlets. The sale of food-related merchandise offers an additional revenue generating opportunity with minimal additional investment.

Presently at a nascent stage in India, the model is expected to gain a strong market foothold in the years to come. Some pioneers to adopt the model include Cafe Coffee Day that retails coffee beans and cookies and Nirula’s offering a variety of syrups and sauces.

·         Space Sharing: In India, it is vital to rationalize the costs for an outlet given the high rentals. The adoption of a space-sharing model, i.e. two brands sharing the same space can help in optimising operating costs, which have a strong bearing on outlet profitability. Additionally, this can also help attract higher footfalls via catering to the needs of a wider set of consumers. It is a model prevalent in the US and has begun finding acceptance in India, e.g. Subway and Yogen Fruz sharing spaces in Kolkata, and Pizza Corner with Creme n Fudge in Bangalore and Hyderabad.


Front-end Investments- Indian Food Services Market


Year Invested Investor Company Brands Owned Deal Amount (USD mn)
Casual Dine
2012 Helion Venture Partners & Footprint Ventures   Spring Leaf Retail Private Limited Mast Kalandar     6.5
2012 New Silk Route Vasudev Adiga’s Fast Food Ltd Adigas 38
2012 SAIF Partners TMA Hospitality Services Ammi’s Biryani 7
2011 Indian Equity Partners Sagar Ratna Sagar Ratna 35
2010 KKR Coffee Day Holdings Cafe Coffee Day 75
2012 Indian Angel Network Poncho Poncho N/A
Fine Dine
2011 Everstone Capital JS Hospitality Services Pind Balluchi 20
Combined Segments
2012 Premji Invest JSM Corp Hard Rock Cafe, California Pizza Kitchen, Shiro Lounge 25


(Source: India Food Services Report, 2013, NRAI)

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