Organised players in India are witnessing faster growth post pandemic, as consumers shift towards trusted brands and food deliveries accelerated during the pandemic, according to a report by brokerage firm Motilal Oswal.

While the Indian food services industry is expected to grow 9 per cent annually until 2025, the organised restaurant segment is expected to deliver 15.4 per cent CAGR during this period, the report says.

It notes that factors such as rising income, urbanisation, and nuclearisation of families, besides the growth of online food delivery and food-tech spaces, will fuel the growth of the restaurant industry.

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The contribution of organised restaurant players increased to 38 per cent in FY20 from 29 per cent in FY15, and the share is expected to increase to 50 per cent by FY25E.

Post-Covid prospects

Organised players are witnessing enhanced growth prospects post-Covid, led by various factors including “sustained high delivery levels compared to the past, aided by increased technology adoption by consumers”.

Organised players also made strong gains as unorganised players were hit harder by the pandemic.

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As consumers move towards more trusted brands, with better hygiene standards, restaurant chains, especially in the ‘quick service restaurant’ (QSR) segment, have accelerated their store expansion plans. “Once the impact of the lockdown on the dine-in channel recedes, increased focus on the value segment by the leading quick service restaurants (QSRs) and casual dining restaurants (CDRs) would precipitate faster conversion from smaller and unorganised peers,” the report added.

Even as dine-in was affected by pandemic-induced restrictions, branded players, with a strong delivery presence and supported by investments in technology, were more resilient compared to smaller and unorganised players, as deliveries continue to drive sales.

“With enhanced prospects and recovery in momentum, organised food services players are likely to witness robust earnings growth prospects going forward,” it added.