Restaurant Industry

Market SizeRs. 75,000 Crores in CY12

Organized SegmentRs. 10,500 Crores in CY12

Expected Annual Growth RateOverall: 7% AnnualOrganized: 16% AnnualQSR: 21% Annual

Eating outlet1.5 Million

Average Eating OutIndia: 2 times a monthSingapore: 40 times a month

Indian Restaurant Industry | What’s On Your Menu?The Indian restaurant industry is worth Rs.75,000 crores and is growing at an annual rate of 7%.

The industry is highly fragmented with 1.5 million eating outlets, of which a little more than 3,000 outlets form the organized segment. However, the organized segment is rapidly growing at an annual rate of 16%. Quick service segment is the clear winner in the eating out market with a growth rate of 21%.Organized Segment is expected to reach Rs.22,000 crore by 2017, driven by:

Rising disposable incomeNuclear family structureIncreasing working populationIncreased private equity interest

Brands By SegmentsQuick Service Restaurants (QSR): Domino's, KFC, McDonaldsCasual dining restaurants: Pizza Hut, Yo! China, Sagar RatnaCafes: Cafe Coffee Day, Barista Lavazza, Costa Coffee

Fine Dining Restaurants: Mainland China, Sahib Sindh Sultan, Copper ChimneyPubs, bars, clubs, lounges: Hard Rock Cafe, Xtreme Sports Bar, TGIF

Key Private Equity (PE) & Venture Capital (VC) Firms which have invested in the Restaurant IndustryNSR: Coffee day (360cr), Adiga’s (200cr), Ohri’s (200cr)India Equity Partners : Sagar Ratna (180cr)SAIF Partners: Specialty Rest. (120cr), Ammi’s Biryani (40cr)Everstone Capital: Pind Balluchi (110cr)ICICI Venture: Devyani Intrnl–Pizza Hut, KFC, Costa (250cr)Aditya Birla PE: Olive Bar (54cr)Premji Invest: JSM Corp-HRC, Shiro, CPK (130cr)TVS Capital: Om Pizza (50cr), Indian Cookery-Yellow ChiliHelion Venture: Mast Kalandar (33cr), Booster Juice (16cr)Sequoia Capital: Faaso’s (28cr)VenturEast: Goli Vadapav (26cr)IncuCapital: Steammo (40lakhs)Matrix India: Yo! China (27cr)

Accel Partners : Kaati Zone

For a 30-40% stake, a typical PE investment is Rs.150-200 crores and a typical VC investment is Rs.20-30crores. Funds are used for brand building, to open new outlets, standardize, and to expand to othergeographic locations

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The gourmet revolution in India

The market is expected to grow at a compound annual growth rate (CAGR) of 20 per cent to touch US$ 2.8 billion by 2015, up from the current levels of US$ 1.3 billion.

Indian gourmet food industry, which is pegged at $ 1,300 million is growing at 20% annually and could double by 2015.

The gourmet food industry is being fuelled by young urban Indians who spend as much as 40% of their income of food and keep upgrading the quality of their food consumption"

While names like Godrej Nature's Basket, Le Marche and Future Group's FoodHall have been working in this space for quite some time now, US based The Counter and Japan's Royce are the recent entrants in the gourmet food market in India

gourmet food connoisseurs are being fed with imported supplies of gourmet cheeses like Haloumi, Parmigiano, Regganio, Stilton, Provolone, Feta, Gouda and counting till about 60 varieties. First press olive oils from brands like Leonardo, Cola Vita, Bertolli, Fragata are all available

The pasta market, for instance, is growing at 20-30 per cent annually and pastas like Barilla, De Cecco and San Remo are increasingly becoming a part of the consumer's choice.

plan an all-Italian dinners. Chances are you will find sundried tomatoes, rosemary and zucchini much more readily available than jhinga, tori and parwal.

Washington apples, Australian kiwifruit, artichokes and dragon fruit can be spotted more easily than Indian fruits. Gourmands pour over the meat sections to get good portions of Australian lamb, Norwegian, seasoned bacon, chicken and ham

If market researchers are to be believed, sourcing broccoli could get easier than the desi gobi, and sprinkling your meals with rosemary could become more common than dhaniya in the years to come. This means all the olive oils, cheeses, meats, spices and herbs that are used by top chefs over the world, could be available at a store next door

India's fast-food industry

Fast Food chains also known as QSR (Quick Service Restaurants) are estimatedto grow at 30% CAGR by 2015 as compared to 10% growth estimated for foodservice sector in India.

McDonald's entered India in 1996, against the backdrop of a marketthat was hesitant to try fast food and was still dependent on the "tiffin"lunch boxes many lug to work.

Two decades later, things have changed. India's fast-food industry isexpected to double in size between 2013 and 2016, to $1.12 billion

According to the National Restaurant Association of India, 50% of the Indianpopulation is eating out at least once in every three months and eight times inevery month in bustling metros as compared to US (14 times), Brazil (11 times),Thailand (10 times) and China (9 times). (courtesy: ASSOCHAM)

Mc Donald’s and Subway are increasing their veg menus every year incorporatingmany traditional flavours. Mc Donald’s Masala grill, Maharaja Mac burgers,Paneer wraps, Mc spicy burgers are some of their India-only offerings. EvenMayonnaise in Indian Mc Donald outlets is free from eggs!

Foreign QSRs are slowly entering India to cash onthe huge adolescent population, for example Krispy Kreme, Burger King,Starbucks and Dunkin’ Donuts debuted the QSR landscape recently.QSR food price ranging from Rs.100 to Rs.500 are light on pocket and QSR’slarge sized outlets, music and western food seem to lure youngsters. But whatgoes into the food and the nutritional value have been thrown outside thewindow!

Also Indian traditional fast snacks like Samosas, Vada Pav, Gol Gappas,Dabelis, Chaats, Paav bhaji whose taste is unquestionably delicious don’t haveglorified outlets

McDonald's tweaked about 70 percent of its menu for the Indianmarket, according to Euromonitor. That meant staying away from beefin a country where cows have religious significance, and appealing to apopulation that tends to enjoy spicy food with options like McSpicyPaneer and Chicken Maharaja Mac. They've also opened some 100percent vegetarian restaurants. (That said, contrary to perceptions,nearly 70 percent of India's population is non-vegetarian.)

The country has 356 million people between the ages of 10 and 24,

giving it the world's largest youth population, according to a UnitedNations report. With more young people entering the workforce daily,growth in the economy, a rising female work force, and increasedmobility among consumers, the traditionally difficult Indian market hasbecome hungry for a more diverse menu

Domino's now generates more than 17.2 billion rupees ($277 million)in revenue, compared with $222 million for McDonald's. Domino's,which is valued at $1.6 billion in India, has tried expanding its businessby getting Indian consumers to view pizza as a meal replacement, andnot just a snack

Dunkin Donuts entered the food market, offering fast-food sandwiches—the onlycountry where the chain does so."What's important for an American brand to understand is that the Indian terrain is atypical—consumers are clearly most demanding, and there is too much focus on food,"

food delivery and food tech segment

The food delivery market holds a great chunk of profit. In 2013, Takeout and delivery held an 18% market share of the fast food industry, which is increasing since then. Theorganized food business in India is worth $48 billion, or Rs 3 lakh crore, of which food delivery is valued at $15 billion (Rs 94,755 crore). Online food delivery niche grew 40% inthe last 12 months, which makes it the fastest growing segment of the Indian eCommerce market.

If 2014 was the year of transport startups like Uber and Ola,2015 promises to be the year food delivery startups come of age in India. Across major cities, entrepreneurs areexperimenting with a variety of new business models to cater to the surging numbers of people who have little time to cook food at home.

Food in India is a big deal,The food delivery market in India is worth $1.6 billion, growing at 30 per cent a year. But less than two per cent of the orders are placed online. 430 million citizens out of India’s 1.2 billion population are between ages 10 and 29, a ripe market for e-commerce growth. The average order size is Rs. 400, and the top six cities of India account for 40% of the market. 

Late working hours and chaotic traffic is driving sales of home deliveries. In addition, people attending late night parties and ordering food when they get home are driving sales of 100% home delivery/takeaway.Home delivery also works well for food operators. This type of outlet requires a smaller space, which translates into lower and cheaper rentals and consequently,lower capital investment (rental deposit, interiors, furniture). In addition, ongoing operational costs (staffing, utilities, etc) are also lower.

many consumers are too busy or too lazy to cook. Home delivery is therefore growing fast, and faster even than going out for fine dining. Consumers prefer ‘clean and well-packaged’ food for office orders, but don’t mind ‘messy food in plastic bags

Today, smartphones + maps + cloud + innovation are making various logistics heavy businesses feasible for the first time. Today, online ordering and food apps open up new methods for realtime consumer research.

why Bengaluru and Gurgaon are attracting food-delivery activity: "Both places have a robust migrant population that is young and has high disposable incomes. Mumbai too might have a similar demographic but compared to Gurgaon, it has better and more localized options of eating such as vada pao carts

“Getting the restaurant technology right was harder than cracking IIT JEE,. What works best now is a GPRS box in the restaurant for printing orders.

“Forget tablets, they just need a stone with green and red buttons,” he said. Rosy visions of ERP systems for restaurants to track supplies and cash flow do not make sense when many prefer to operate only in cash, and function in the black market

The food ordering industry is also subject to wild price fluctuations due to volatility in fuel and agri markets. “The average menu in India has 300 items – and the prices change every 15 days,” foodpanda actively does menu updates itself, and does not leave it to the establishment to update and display prices

Large players like IBM are exploring new opportunities by using artificial intelligence to suggest novel recipes and spice combinations for the Institute of Culinary Education (ICE), opening up new domains in fusion foods. 

Charging for delivery of prepared food is one kind of business model. Another model is to send trained cooks along with groceries to prepare meals in homes – which is what CookAss.in will be launching this month in Bangalore, says founder Sameep. “We charge Rs. 30 per mouth as cooking service charge

Brands in FOOD Delivery

Tinyowl: Launched in March 2014 by five IIT Bombay alumni, Tinyowl operates amobile app on the Android and iOS that lets users order food from restaurants aroundthem. They raised an angel round from Deap Ubhi and Sandeep Tandon in April 2014, a $3 million Series A round from Sequoia Capital and Nexus Venture Partners in December 2014 and the latest round of INR 100 crores from Matrix Partners, Sequoia Capital and Nexus Venture Partners. Their app already has more than 100k downloads in Mumbai,and they deliver 2000 orders a day on average, more in peak hours. TinyOwl’s aim is to have a very personal connection between people and their food. Food delivery is a crucial part and the technology play is over it where the app wants to help people make all their food related decision.

Foodpanda: Foodpanda (in Asia and Europe) and Hellofood (in Africa, Latin Americaand the Middle East), is a global online food delivery

marketplace headquartered in Berlin, Germany, and operating in more than 40 countries across four continents. Launched in March 2012, The service allows users to select from local restaurants and place orders via the website or mobile application. Users of foodpanda/hellofood order cuisines from more than 35,000 restaurants worldwide. The startup is supported by Rocket Internet, the largest e-commerce incubator in the world. It raised $20 million in funding from AB Kinnevik, Phenomen Ventures and Rocket Internet in April 2013, $8 Million in September 2013, $20 million from a group of investors, including Phenomen Ventures in Feb 2014, and another USD 60 Million in financing from a group of investors in August 2014.

Tastykhana: A Pune based online food ordering delivery service startup, TastyKhana was founded in 2007 by Shachin Bhardwaj and Sheldon and has been steadily growing over past 7 years. Their growth accelerated over past couple of years, after infusion of investment. In November 2011, Delivery Hero, a global firm of food ordering services, invested Rs 84 lakh in the company, which helped Tasty-Khana launch in Mumbai in April 2012, followed by Bangalore and Delhi. Tastykhana currently boasts of turnover of over Rs. 10 crore and has close to 10,000 restaurant menus across 160 Indian cities.Tastykhana has witnessed 4X growth over last year. It was acquired by Foodpanda in 2014.

JustEat: Jesper Buch founded Just Eat in Denmark in 2000 and launched the service in August 2001. Just Eat is an online service acting as a web based intermediary between independent takeaway food outlets and customers. It is headquartered in the UK and operates in 13 countries around the globe. Their latest investment includes $64 million in Series C funding from Vitruvian Partners, Greylock partners and Redpoint Ventures

DeliveryChef: Delivery Chef is the fastest way to browse through restaurant menus,order food on your mobile and get quick home delivery without any hassle. Delivery Chef brings you yummy food and incredible flavors from the best of restaurants in Mumbai,Navi Mumbai, Pune, Bangalore, and Delhi NCR. It was launched in 2010 by Ankita Tandon and Aditi Talreja. Today DeliveryChef is present in seven Indian cities with over 500 restaurants in its system. They raised over INR 1 crore back in 2012.

While most offer free delivery, owing to their respective USPs they differ in minimum order and order placement time, have a look at the table below foronline food startups.

Startup Operations in

Order

Placement

Delivery

Time

Payment

Mode Other Features

iTiffin Bangalore

Online,

Phone

Advance

Booking

Online,

Cheque,

cash -

Bhojanshal

a Pune Website

30-50

mins COD

Daily/Weekly/ Monthly Meal

Packages, Bulk orders, Party

orders, Corporate orders.

TinyOwl Mumbai Mobile App 45 mins

Online,

COD -

Holachef Parts of Mumbai

Website,

Mobile App

Advance

Booking

Online,

COD -

Yumist

Gurgaon,

Bangalore Mobile App

30 mins or

less COD -

Eatonomist Gurgaon

Website,

Phone 45 mins

Online,

COD

Meal Planner- 10 day menu

available, Nutritionist advice

for people following a diet

plan

Snackosaur Pan India Website 1-3 days Online

Introduced a fortnightly

snack subscription plan

Faasos

Mumbai, Pune,

Bangalore,

Chennai,

Ahmedabad,

Baroda Mobile App

15-45

mins

Online,

Faasos

wallet -