Food services industry to grow at 8% CAGR to ₹7.76-lakh crore by 2028, dining-out growing rapidly: NRAI

The Indian food services industry is expected to grow at a CAGR of 8.1 per cent to grow to ₹7.76-lakh crore by 2028 from the current ₹5.69-lakh crore, as per a report released by the National Restaurant Association of India (NRAI).

The industry body noted that this will make India the third largest food services market globally overtaking Japan and also the second fastest growing market.

Infact, organised segment is expected to grow at a faster clip of 13.2 per cent and will overtake unorganised segment over the next 3-4 years to touch ₹4.10-lakh crore increasing its contribution to 52.9 per cent, from the current 43.8 per cent.

Kabir Suri, President, NRAI and Co-Founder and Director, Azure Hospitality, “Despite the setbacks seen during the Covid-19 pandemic when the food services sector was severely impacted, it has shown amazing resilience and is now experiencing rapid growth. The growth is being driven by rising incomes, growing demand from tier-2 and tier-3 markets , rapid urbanisation and a young population, among others factors.”

• Also read: Online food delivery to grow at 18 per cent y-o-y to ₹2-lakh crore segment by 2030

He added that the industry now directly employs 85.5 lakh people, expected to grow by 20 per cent by 2028 and contributes ₹33,809 crore to the Indian exchequer.

Urbanisation

Infact, rising incomes and urbanisation is leading to significant increase of dining-out among Indian consumers. As per NRAI estimates, average frequency of eating out increased to about 8 times per month in FY24 from about 6.6 times per month in 2018-19. It further added that out of 8 times per month, consumers tend to order on an average about 4.2 times per month and dine out 3.7 times per month.

Nitin Saluja, Founder, Chaayos and Chairman, Report Steering Committee, NRAI said, “Contrary to some beliefs, dining-out is not shrinking just because there has been a rise in adoption of food delivery services by consumers. Delivery is largely replacing those consumption use cases which were earlier sufficed by home-cooking. With rapid urbanisation and busier lifestyles, the number of times consumers are cooking at home is coming down. Our research indicates consumers like to opt for dining out for a get-together with the family, celebrating social occasions, national holidays or for trying out new cuisines among others.”

Asked about the outlook for FY25, Saluja said that the industry is expected to continue to clock 8 per cent CAGR growth with the top cities expected to contribute a large chunk of growth.

The organised segment is dominated by casual dining restaurants, which has been the fastest growing format with 48 per cent share, followed by Quick service restaurants. Cloud kitchens (35 per cent), Cafes (18.6 per cent) and QSR (17.5 per cent) are projected to be the fastest growing formats in 2024-28 time period.

NRAI has urged the government to grant industry status to the food-services sector, simplified and standardised licensing regime across the country and permission to operate for longer hours. The industry body has also urged the government to offer two options for GST slab, which is at 12 per cent with input tax credit and at 5 per cent without input tax credits.

It has also stated that an equitable and fair e-commerce policy is required including imposing reasonable caps on commissions charged to restaurants by aggregators among others.