3 Trends to Know Before Starting a Restaurant
You're reading Entrepreneur India, an international franchise of Entrepreneur Media.
Each of one us some point in time must have thought of quitting our 9-5 boring jobs and start our entrepreneurial journey by starting a café or a restaurant, haven’t we?
While if you are among the few who are planning to follow your dreams in the near future, well then let’s understand the what does the curve of the restaurant industry looks like?
According to FICCI report, Indian Food Services market in India (organized and unorganized) is estimated at INR 3,37,500 crore in 2017 and is projected to grow at a CAGR of 10 per cent over the next 5 years to reach INR 5,52,000 crore by 2022.
In other words, there is bright future to start a business in the restaurant industry and hence, Entrepreneur India notes key trends in the segment for entrepreneurs to follow the industries growth curve.
Setting things up
According to Krishna Vinjamuri, Principal, LightBox, the industry in India, respective of the quick service restaurants (QSRs) or casual dining restaurant (CDRs), is getting organized.
“The organized portion of the restaurant industry was about 33 per cent last year, which is now up to 41 per cent. Though we love our street food, people are now looking to consume food from organized players,” he shared.
While on the side, Sriranjan Seshadri, Founder, Last Mile Ventures expects greater organization within the restaurant partners such as supply chain and food processing companies to cater to this trend and the industry’s growth story.
Change in Business Model
This trend is the most obvious one – the role of aggregators like Zomato and Swiggy-like players.
A big chunk of the population is very young and they have limited time but double income where convenience matters which has given the wind beneath to wings to the whole industry.
Vinjamuri shares, “There is a change in business models wherein instead of doing a dine-out and people are doing a dine-in. Players like Zomato, Swiggy, Food Panda etc are aggregating restaurants and creating a great experience for dining indoors and this will continue.”
IPO market will be very receptive
This is one sector where the growth thus far has been restricted to top three cities – which is Delhi NCR, Mumbai, Bangalore. But if one looks at the retail development, including malls, which is beyond these cities, Seshadri sees secular growth happening in places like Luckn ow or even Hubli which is the right kind of infrastructure of the industry
“Restaurants today are following malls as they are not setting up their own place and I think that’s way going forward. And if I add all that up, then there is at least a 10-year industry growth of about 15+ per cent. To go public, investors are no more concerned with hyper-growth for only 2 -3 years,” Seshadri noted.
Most of the retail investors these days are eyeing secular consumer growth of over 10-years. If you look at the restaurant industry, which is one of the largest consumer business in the country and it's highly, surprising that there are not too many success stories to march.
“If the market holds up, I expect the situation to correct itself creating opportunities for retail investors to be part of the success stories,” he added.