food services sector: Food services sector may grow at 8% CAGR in 2024-28: NRAI report

The food services sector is expected to grow at a compounded annual growth rate (CAGR) of 8.1% during 2024-2028, according to a report by the National Restaurant Association of India (NRAI).According to the NRAI Indian Food Services Industry report, the industry is estimated to be Rs 5.7 lakh crore in size as of FY24, with projections indicating growth to Rs 7.8 lakh crore by FY28.

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The average frequency of eating out has increased from 6.6 times per month in 2018-2019 to 7.9 times per month in 2023-2024. According to the report, of these 7.9 occasions, consumers dine out an average of 3.7 times per month and order food 4.2 times per month.

The food industry, the second-largest employer with 85.5 lakh jobs this year, is expected to grow by over 20% by 2028.

“The sector directly employs 85.5 lakh people and contributes Rs 33,809 crore to the Indian exchequer. The post-Covid recovery highlights the resilience of the industry, highlighting the need for the government to recognise its socio-economic impact and take immediate steps to unlock the sector’s full potential,” said Kabir Suri, president, NRAI, and cofounder and director, Azure Hospitality.

Nitin Saluja, chairman, report steering committee, NRAI, and founder, Chaayos, pointed out that food delivery is substituting home-cooked meals rather than dining out.

“Over the past five years, the food services industry has undergone significant changes, with food delivery increasingly replacing home-cooked meals,” said Saluja.

“Rising incomes, urbanisation and changing lifestyle patterns have led to a significant increase in the frequency of dining out,” the fifth edition of the report said.

The report also noted that Zomato and Swiggy’s duopoly in the industry leads to issues like high commissions, anti-competitive practices, and inflexible service bundling.

The restaurant industry has earlier locked horns with aggregators such as Zomato and Swiggy over these issues.

Lately, several other internet platforms such as Ola and Paytm have also entered the food delivery play through the government’s Open Network for Digital Commerce (ONDC) initiative.

According to a joint report by Bain & Company and Swiggy released on July 3, India’s food delivery segment is expected to cross Rs 2 lakh crore by 2030, growing at a CAGR of 18%.

The NRAI report also said that among the sub-segments of the restaurant industry, cafes, quick service restaurants (QSRs), and desserts and ice creams are the fastest growing, expected to clock growth of 15-20% by 2028.

It added that the organised segment in the industry, which is currently 43.8% of the overall sector, is expected to become 52.9% by 2028.

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