Assignment Of

Business
Organisation &
System

SubMitted To:Dr. Amit Jain

SubMitted By:Dheeraj Malhotra

2014BCMBA002

 Snacks Market:- India

September-2014

 OPPORTUNITIES IN THE INDIAN FOOD

SERVICE
MARKET

QSR, CASUAL DINING, FINE DINING,

VENDING

SUMMARY

The Indian Food Service Industry is worth $41.3 bn

and growing at a
CAGR of 11%. It is expected to reach $68 bn by 2018.
The size of Organized Indian QSR market is $0.62 bn,
growing at a healthy CAGR of 20% and is expected to
reach $1.1 bn by 2017-18.
Delivery segment is a integral part not only of the
Indian Food Service segment, but is also common for
Grocery stores, Liquor stores, vegetable vendors etc.
Consumers are highly price sensitive.

Age Group Profile of Those Who Eat Out

Snacks

11%

18%
18 To 20 Years
21 To 30 Years

31 To 40 Years
41 And Above

31%
40%

25% OF OUR YOUTH PREFER HANGING OUT WITH THEIR

FRIENDS OVER OTHER OUTDOOR ENTERTAINMENT ACTIVITIES
Favourite outdoor entertainment activity
Projected base

13-18 years

19-24 years

Gen Next(all youth)

93,18,951

129,923,462

223,142,413

Movies at Cinema hall

13.90%

16.60%

15.50%

Go dancing at discos

0.40%

1.40%

1.00%

1.20%

1.60%

1.50%

9.70%

10.40%

10.10%

4.80%

5.90%

5.40%

Shopping/Window Shopping

4.70%

5.20%

5.00%

Spiritul sessions/satsangs

5.80%

8.90%

7.60%

4.40%

4.10%

4.20%

27.00%

23.80%

25.10%

Go for long walks

4.60%

6.80%

5.90%

Read in libraries

4.70%

4.20%

4.40%

Go on long drives

0.90%

2.30%

1.70%

Play favourite sports

8.10%

6.20%

7.00%

Going Out/picnic with family

7.20%

8.00%

7.70%

Visit Relatives/neighbours

15.70%

16.60%

16.20%

40.40%

37.30%

38.60%

Pubbing/drinking with friends/family

Eating Out
Entertainment Parks

Watch art & culture performance/events

Generally hangout with friends

None

73% OF THE YOUTH CONSIDER PRICE THE MOST

IMPORTANT
CONSIDERATION WHILE MAKING PURCHASES
Buying Orientation
Projected Base
Brand Image
Price
Performance quality
Premium/advance features
Design And Looks
Ease of Usage
Shopping Experience
Reputation of the Company making the
product/service
Ease of payment/payment option available
What most people around you are buying/using
Recommendation by shopkeeper/dealer
Recommendation by friends/relatives/colleagues
The celebrity endorsing the brand
Possibility of buying online

13-18 years

19-24 years

Gen Next(all
youth)

93,218,951

129,923,462

223,142,413

64.00%

61.20%

62.40%

73.00%

72.70%

72.80%

36.50%

37.40%

37.00%

13.80%

16.40%

15.30%

30.10%

23.90%

26.50%

25.00%

27.90%

26.70%

15.70%

17.00%

16.50%

12.00%

11.70%

11.80%

9.60%

9.70%

9.70%

7.10%

9.60%

8.50%

5.10%

5.60%

5.40%

4.80%

4.30%

4.50%

2.50%

2.10%

2.30%

0.80%

0.50%

0.60%

'GOING OUT' OF INDIAN YOUTH HABITS

Indian consumers, at least

those who
can afford it, are increasingly
dining
out, particularly in urban areas.
Eating out has evolved from an
occasion driven activity to an

occasion in itself. It has

become a form of
entertainment for consumers
today.
Urbanizing double-income
households, changing lifestyles
and food preferences are
spurring the organized market
within the dining out sector.

Casual Dining And QSR Dominates

the Organized Indian Food Service
Market 70%
Pubs,Bars,Clubs And Lounges 12%
Fine Dining And Frozen Deserts
10%
Cafes 8%
Total Indian Food Service Market
100%

FOOD HABITS OF INDIAN YOUTH

31% of Indians are vegetarians for religious and cultural reasons while the
rest of the population eat fish and meat
Hindus, the dominant element of the population,
strictly abstain from eating beef
Consumption of pork is also limited to
a relatively small base
Dining out is popular amongst many Indian consumers, particularly in
urban areas, facilitated by busier lifestyles
and higher levels of disposable income. Indeed, value sales at fullservice restaurants have increased steadily in
recent years, with consumers largely preferring independent rather than
chained venues.
Since a dip in 2009, demand for home delivery/takeaway meals has
been increasing steadily, with value sales reaching nearly Rs2.2 billion
in 2013.
Fast food has become highly palatable to the teens and consumers in
their early twenties, with international fast
food chains like KFC and McDonalds, Subway, Dominos Dunkin Donuts
particularly popular.
The menus in Indian outlets tend to differ from those in other countries
with high consumption of beef. There is also high demand for indigenous
meals from independent fast food venues
Many consumers purchase snacks and other food items from the
numerous street stalls and kiosks. Street food like pav bhaji, dosas, pani
puri etc are very popular in India.
It is also becoming more common for some consumers to order food for
takeaway to eat at home during the week and then to dine out in
restaurants

INDIAN FOOD SERVICE MARKET

TIMELINE:
KEY PLAYERS
Franchisee
Model
emerged in
mid1990s

1970s
and
1980s

Nirulas

Haldiram

Pre1950

Honest
Restaurant
Saravana
Bhavan
Wimpy

KFC
McDonalds
Pizza Hut
Dominos
Caf Coffee
Day
1990
s

20002010

Subway
CPK
Papa
Johns
Jumbo King
Goli Vada
Pav

Dunkin
Donuts
Starbucks
Taco Bell
Pizza
Express
Sbarro
2014 present

GREAT INDIAN ETHNIC CUISINE

MEDLEY

CHALLENGES IN INDIAS FOOD SERVICE MARKET

Food price inflation
A key factor affecting the consumer food services market, it is impacted by
delayed monsoons, the economic slowdown, and unfavourable demandsupply conditions. It keeps fluctuating and reached a peak of 18% in 2010.
Fragmented Market
The QSR market has many small and mid-size unorganized players
competing with large chain players. This fragmented market reflects a number
of challenges, including unclear format segmentation, varied consumer
options for eating out, and the lack of best practices for food services outlets.
Real Estate Cost
High real estate cost tend to impact store profitability.
Labour Acquisition and Cost
Manpower is a big challenge in the food services market, with an attrition
rate of 25-30% and high cost of labour
Fragmented Supply Chain and Sourcing
The industrys supply chain is fragmented in nature and marked by the
presence of multiple intermediaries. The lack of appropriate infrastructure,
inadequate technologies, and the non-integration of the food value chain are
factors key to the wastage of nearly 30-40% of prepared food across the
supply chain.
Red Tapism
In India, obtaining the requisite licenses, e.g. health license, food safety
license, police license, No Objection Certificate (or NOC, from the fire
department and the state pollution control board), etc. is a major obstacle
hindering the smooth operation of a restaurant. The process is not centralized
as yet and requires filing applications with individual stakeholders, which
involves a lot of paperwork and is a time-consuming activity.
Multiple Level of Taxes
The Indian restaurant industry is burdened with multiple taxes like VAT,
excise, and service tax, besides different state taxes

WHAT IS A QSR (Quick Service Restaurant)

A quick service restaurant (QSR) is characterised by fast food
cuisine, minimal table service and a fixed menu.
The food (or ingredients) is prepared in bulk in advance and is
packaged to order
QSRs are usually part of a restaurant chain or a franchise operation,
which provisions
standardised ingredients and/or partially prepared foods and supplies
them to each restaurant through controlled channels. It is different from
fine dining, as the latter usually targets rich and upper middle class
consumers
Fine dining restaurants also offer a unique ambience and
upscale service
Although fine dining restaurants do not compete directly with QSR, a
moderate casual dining restaurant could be a competitor. It is pertinent
to note that while QSRs typically target customers within the age group
of 16-35 years, a casual dining restaurant would target people across
age groups
QSRs are able to compete with casual dining restaurants on the basis
of factors such as consistency in quality and speed of delivery.

KEY QSRs IN INDAIN

Cafes
Pizzas
International Fast Food (NonPizzas)
Ice-Creams
Indian Fast Food (Key players)
Confectionaries

10
%

6
%

2
%

44
%

Outlets of Key Players

(Nos. )
Confectionari
es

132

Indian Fast
Foods

419

IceCreams

645

International
Fast Foods
(Non-Pizzas)

15
%

1001

1515

Pizza
Chains

23
%

Cafe
s

2,939

50
0

1,00
0

1,50
0

2,00
0

2,50
0

3,00
0

3,50
0

PACKAGING OPPORTUNITIES IN INDIAN FOOD

SERVICE MARKET
Indian Packaging Industry is valued at USD 19 Bn in 2014 and it is growing
at 12% per
annum
The food and beverage occupy the largest share of about 85% in packaging
industry, a figure
that is estimated to rise

Sustainability and bio degradable

packaging missing
Light Weighing, easily transportable
packaging missing
Only 600-700 packaging machine manufacturers of which 95% are in small
and medium
sectors and located all over the country , so there is huge gap in demand and
supply of food packaging professionals

LOGISTICS SECTOR OPPORTUNITIES IN INDIAN FOOD

SERVICE MARKET
Warehousing :
Majority of operators are small to mid-sized entrepreneurs with limited capacity
Main players are government agencies like central and state
warehousing corporations
The existing warehouses are of poor quality and are present in limited numbers
without adequate
capacity

Cold Chain Storage :

About 40% of fruits and vegetables grown in India gets wasted, so the sector
Needs to grow at much faster rate to meet the needs.
With the poor electricity condition in the country the cost of operating such
facilities is very high
So it provides an immense opportunity to organized players who can setup the
infrastructure and
are able to provide the service through out the nation

SUGGESTIONS
DISCOUNT AND COUPON AGGREGATOR
WEBSITES
Indian customers actively seek out discount offers. Makes
discount aggregator websites
lucrative opportunities.
Currently, there are 150 websites which are actively involved in coupon
business. On a conservative estimate, these sites generate a combined 6-7
million page views per month.
Around 4.6 million Internet users in India aged 15 and older accessed the
coupons category which is 10.4 % of the entire online population.
Estimated to grow in the next 2-3 years because of the growth in ecommerce purchases.