Indian food services sector to grow by 8.1% from 2024 to 2028: Report

Indian food services sector is expected to grow at a CAGR (compounded annual growth rate) of 8.1 per cent between 2024 and 2028 on the back of rapid urbanisation, robust GDP growth, a rising younger population, and greater exposure among consumers, said a new report.

The India Food Services Report-2024, brought out by the National Restaurants Association of India (NRAI), states that the sector contributes 1.9 per cent to India's GDP and is projected to grow to Rs 7.76 trillion by 2028 from Rs 5.69 trillion currently.

“Despite the setbacks during the Covid-19 pandemic, the food services industry in India is experiencing rapid growth and contributes Rs 33,809 crore to the Indian exchequer.

"The post-Covid recovery highlights the resilience of the industry, underlining 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 of NRAI and co-founder and director, Azure Hospitality, which operates restaurants like Mamagoto and Dhaba.

Valued at Rs 4.23 trillion in 2020, the industry had shrunk to Rs 2 trillion in 2021.

While the organised segment is expected to grow at a CAGR of 13.2 per cent to achieve a market share of 52.9 per cent by 2028, the share of the unorganised segment is expected to drop to 47.1 per cent by 2028 from its current share of 56.2 per cent.

Among the organised sector, casual dining restaurants are the fastest-growing, with a 48 per cent market share, followed by quick-service restaurants (QSRs) at 27 per cent.

“By FY28, it is anticipated that QSRs will gain market share by approximately 4-5 percentage points at the expense of casual dining restaurants,” the report added.

The sector is the second-biggest employer, with 8.5 million employees at present.

This is expected to increase by over 20 per cent to 10.3 million by 2028.

Talking about the changing face of the sector, the report stated that the online food delivery market in India is growing rapidly, with an estimated 6.6 crore food delivery platform users among the urban population.

This number has seen a mid-single-digit growth in the last two years, it added.

“Convenience is changing consumption patterns, which are changing because of food and beverages.

"Cooking at home is reducing, which is propelling both dine-in and delivery occasions,” said Nitin Saluja, chairman, report steering committee, NRAI, and founder, Chaayos.

The average monthly eating out frequency has seen a 20 per cent increase to 7.9 times in 2023-24 from 6.6 times in 2018-19, the report said.

Among its key suggestions and recommendations to the government, the sector is demanding a dedicated food services ministry along with industry status, which will give further fillip to the burgeoning sector and encourage entrepreneurship in the field.

The sector has also sought a dual GST regime, allowing for input tax credit and longer operating hours across the country and not limited to specific geographies.