There is no doubt that the food consumption habits of Indians are changing. Indians are going to eat out more often or they are ordering the take away food as their disposable incomes increase and due to the change in the lifestyle. An increase in the working population, urbanization and consumerism are some other factors for growth in the food service industry. The revolution in the restaurant industry began in the nineties when McDonald’s, Pizza Hut, Domino’s Pizza, Subway and Yo! China entered the country and since then there has been no looking back. The industry is continuing to evolve according to the needs of the consumers which is again leading to its growth.
Consumers in India are once again changing their preferences and have begun to experiment with various world cuisines and this is a growing trend in all metros. The food service industry has taken note of these changing trends have begun to cater to these demands by serving a variety of foods from across the world like Italian, Mexican, Japanese, Middle Eastern and European, African besides the popular Chinese and Thai and American fast foods. All these trends have led to the massive growth in the restaurant industry which now has a market size of Rs 247,680 crore and the predicted growth by 2018 is expected to reach Rs 408,040 crore.
Another noticeable trend today is that consumers have begun to use technology in a big way to research restaurants online before making a decision about where they would like to eat. They consult sites like Zomato, TripAdvisor, Justdial, Food Panda, and Groupon to see eating out options and many base their decision on the reviews that other customers have given about restaurants on social media or in comments on these sites. As lifestyles improve customers expect not only a good location and ambience but factor in the health quotient and the calorie intake also as deciders in food choices.
The largest segments of customers who eat out are the 21 to 30 year olds and this group makes up 40% of the customer profile followed by 31 to 40 year olds. These are obviously professionals and 30 % of their monthly consumption expenditure goes into foods and beverages. A good 73% of customers consider price to be the biggest decider when eating out. These consumers eat out when there are offers, discounts or loyalty memberships and are different from customers who’s eating out is need based rather than an eating out experience.
The market segment of the food service industry that is right on top are the Quick Service Restaurants with 43% market share followed by and casual dine-in at 31% while cafe chains. Frozen desserts and ice-creams form 6% of the share followed by fine dining at 4% and the rest of the market is shared by pubs, bars, clubs and lounges. QSR and casual dine -in are popular with the working professionals while fine dining is family and occasion oriented.
Food Service Associations
The Food Service Sector contributes approximately 2.3 percent of the total GDP and it has a number of associations to ensure that the industry continues to progress. These food service associations also represent the restaurant owners and advocate for them so that they can function with more efficiency.
The National Restaurant Association of India (NRAI) which consists of independent and chain restaurants owners and operators in India is headquartered in Delhi but this association has a pan India presence.
The FHRAI or the Federation of Hotel & Restaurant Associations of India works for the interests of the hospitality industry by interacting on their behalf with the political leadership, academics, international associations and all stake holders. They keep a look out on policies that could affect the industry and work towards the progress of the industry.
Regional Associations like Hotel and Restaurant Association of North India (HRANI) has come a long way in serving the cause of the hospitality industry in North India. Similarly there is the Hotel and Restaurant Association of Western India that admits and assists members operating in Maharashtra, Gujarat, Goa, Madhya Pradesh and their adjoining Union Territory. Hotel & Restaurant Association of Eastern India renders professional assistance from time to time and promotes development of the sector in the eastern states of West Bengal, Assam, Manipur, Nagaland, Meghalaya, Sikkim, Arunachal Pradesh, Tripura, Bihar, Jharkhand, Odisha Andaman and Nicobar Island.
Despite the phenomenal growth that the restaurant industry is seeing it is also facing a number of challenges that serve as hiccups in the smooth running of the industry. The growing price of food, shortage of trained manpower and high attrition rates as well as the load of taxes and levies are some of the difficulties they are facing. While the industry recognizes the need to have licenses the key concerns are the elaborate licensing procedures as they need to get clearances from a lot of departments which they feel is a hindrance to their efficient functioning.
More than 70% of the food services industry comprises of the unorganised sector as compared to the 20% licensed restaurant market. It is this segment that will probably transform and to obtain the food license as the growth continues. The Food Safety & Standards Act, 2006 is in place and all food businesses were to have been registered or licensed according to Regulation 2.1 of Food safety and Standards (Licensing and Registration of Food Businesses) Regulations, 2011. Food Businesses which are registered/licensed under the previous Acts/Orders need to convert their exiting licensing under the FSS Act, 2006 before August 4, 2015. One can apply online for the food license.
A restaurant with a turnover of less than Rs.12 lakhs per annum is required to have a Registration Certificate from FSSAI. Those who have the turnover of more than Rs.12 lakhs and up to Rs.20 crores need to get a State License and a Central License if the turnover is more than Rs.20 crore.
There is no doubt that the food service industry is fulfilling a need of the consumer. Besides this they also provide multiple job opportunities and are also bringing growth to other sectors of the economy like real estate, logistics, food processing and kitchen equipment.