Indian QSR market likely to scale $4.1 billion by 2020

Indian QSR market likely to scale $4.1 billion by 2020

Author | Ronald Menezes | Tuesday, May 24,2016 8:08 AM

Indian QSR market likely to scale $4.1 billion by 2020

The organised food sector today is growing at a pace like never before. MNC’s and Indian players are competing for greater market share. The Indian middle class is driving consumption and causing new innovations to rise in the sector.  Zomato, Swiggy, Foopanda and other food delivery and restaurant based apps are playing an important role by helping Quick Service Restaurants (QSR) segment grow further.

Market Size

According to a report by CyberMedia Research (CMR), the market for organized food service industry in India will reach US$33 billion by 2020, with Quick Service Restaurants likely to touch US$ 4.1 billion. Currently the entire $50 billion Indian food service industry is dominated by the unorganised sector. The organised food service industry, however, stands at $15 billion and is expected to grow at a CAGR of 17 percent to reach $33 billion, capturing 36 percent of the total market share.

Within the organised food sector the Quick Service Restaurant segment is fast growing. This is a price sensitive segment and caters mostly to the youth. The factors that contribute to the growth of the QSR include increasing disposable incomes and the shift in consumer preferences about eating out.

The QSR segment in India is marked by the presence of 90 to 100 brands, with around 3000 outlets spread across India. To withstand competition, most of the players are tailoring their offerings in terms of flavours, pricing, services etc., to lure Indian consumers.  In terms of menu, Indian QSRs like Haldiram’s, Bikanervala etc., bend towards vegetarian food in contrast to which international players like McDonalds, Dominos, KFC and Subway etc., offer a mix of both vegetarian and non-vegetarian offerings.

Impact of digitization

Today, digitalization is impacting all aspects of the food service industry. Apps like Holachef, iChef, Fresh Menu and TinyOwl offer food prepared by amateur cooks. The new digital trend is not only helping the QSR segment grow, but is also providing a platform for new cuisines to enter the market. Moreover, technology is influencing every aspect of the food business like check-ins and on-demand delivery.

We look at a few QSR chains and food apps to see how they are targeting consumers:


Like most online food players, Holachef gives consumers a chance to earn points worth Rs 150 for every friend referred and the one signing up can earn points up to Rs 200.

Holachef also organised a buy one get one weekend sale for its users in a bid to push sales.

KFC & McDonald’s

On their websites, KFC and McDonald’s offer various discounts to entice customers and this formula seems to be working well for these international players.


Foodpanda on its website offers 40 per cent flat discounts on the first order placed and a 15 per cent cash back when paid through the Paytm wallet. The food delivery company also guarantees money back 45 minutes delivery scheme on its website.

Challenges and road ahead

The Indian restaurant industry is burdened with multiple taxes like VAT, excise, and service tax, besides different state taxes, which add up to 20- 25% of the bill value. The heavy taxation policy in turn limits the growth potential of the segment and many players have already started feeling the heat.

Today, QSR’s and app based restaurant or food services are not limited to physical stores alone. Now, there are number of pure online players in this category to offer top quality customer service. Many of these companies also have mobile apps through which consumers can order food or check restaurants and food options online. Moreover, new payment options are giving better impetus to mobile wallet companies like Paytm and Mobikwik to help them grow.

As far as the road ahead is concerned, online food start-ups will continue to grow organically. While food trucks are now in fashion, this segment is expected to witness a churn as FSSAI plans to introduce some new measures. The market for QSR will increase as new non-traditional market avenues open up due to government investments in road infrastructure and air connectivity, however, the pie will remain very niche.

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