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Quick-service restaurant (QSR) segment is expected to clock the highest growth in the food services space over the next 4-5 years, according to a report by Edelweiss Securities.
Led by international brands such as Domino’s Pizza, McDonald’s and Burger King, the QSR chain segment will grow at a CAGR of 23 per cent over FY20-FY25, the report by the brokerage firm stated.
Factors such as younger demographics, value-priced offerings and the surge in online food ordering due to the emergence of food aggregators are expected to be the key growth drivers.
While the Covid-19 pandemic hit the restaurant industry hard, QSR chains were the first to recover trends. Organised QSR chains had the infrastructure and delivery services in place long before the Covid-19 crisis and this aided them to swiftly adapt to government restrictions. So despite dine-in services being impacted, QSR players were able to maintain growth and revenues by doubling down on their delivery services.
“Hence, while the entire food service market plunged 82 per cent year-on-year in the first half of FY21, organised QSRs (Domino’s, Burger King, McDonald’s – West & South) contraction was restricted to 45 per cent and by September, recovery was already at 85 per cent,” the report by Edelweiss Securities noted.
‘Will dominate scene’
Stating that India’s appetite for QSRs seems insatiable as even after more than two decades of the segment’s presence in the country, the report added that the QSR chains will continue to dominate the entire food service market as they deepen penetration in tier-2 and tier-3 markets.
The organised food service market consists of standalone and chain restaurants and the chain restaurants market is currently dominated by the QSR sub-segment.
Citing estimates by Technopak, the report noted that the size of the organised QSR sub-segment is estimated to be at ₹348 billion.
International players
International brands dominate this space as players such as Domino’s Pizza, McDonald’s, Burger King, KFC and Subway, cumulatively accounted for about 52 per cent of the chain QSR market in India.
“Over FY20-25, the QSR chain market is expected to be the highest growing sub-segment of not just the chain market, but also the entire food service market,” the report by Edelweiss Securities stated.
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