One industry which has grown leaps and bounds leveraging the economic boom over the last

couple of decades and hasnt been impacted much by the recurring down turns is the food service industry in India. The growth has been consistently in double digits. With the growth, there has been an increase in segmentation into different formats. From a totally unorganised industry, the food service industry has transformed into an organised industry. The role played by international chains, their entry and rapid expansion, was a game-changer in this respect. Majority of these chains were Quick Service Restaurant (QSR) or Casual Dining formats. The brands that stand out today in terms of brand presence in the market include McDonalds, Dominos Pizza, CCD, US Pizza, Jumbo King, Pizza Hut, Papa Johns, KFC, etc. That need for an occasion is something those children, now adults, are probably nostalgic about. For eating out is slowly becoming a matter of routine and not occasion. Families in Tier I cities will spend Rs. 6,000 per year,in Tier II cities, Indian households spend Rs. 1,500 per year on eating out which is likely to go up to Rs. 3,000 per year in about three years. Also, total spends on quick service restaurants (QSR) amount to Rs. 2,550 crore in Tier I cities and Rs. 510 crore in Tier II cities. According to a research report from CRISIL from earlier this year, the QSR industry has grown by leaps and bounds and is expected to go from a Rs. 3,400 crore industry in 2012-13 to a Rs. 7,000 crore industry in the next three years. CRISIL Research estimates the market size of the consumer foods industry in India at Rs 780 billion in 2012-13. CRISIL believes that this industry will continue to grow at a healthy pace over the medium term, driven by a number of macroeconomic, demographic and social factors. The snack foods segment, which is the second-largest segment in the Indian consumer foods industry, is expected to grow at a strong pace over the next few years. Within the snack foods segment, we believe that the branded market will dominate, with its share increasing over the medium term. In this section, CRISIL Research has estimated the market size of segments such as ready-to-eat (RTE) foods, noodles,sauces and spreads. Of this, we believe that the RTE foods segment is expected to register the fastest growth among all the segments in the consumer foods industry. McDonalds was having 160 franchised outlets in India in the year 2008, which took the double jump and reached to 339 In the year 2013. Indian QSRs make up only 37 percent of this market we are talking about. Sixty-seven percent of the QSR industry in India is dominated by international brands like Dominos and McDonalds. Money is the easy part. Maintaining the consistency of the experience, finding qualified people and retaining them at a reasonable cost, getting the right location, are some of the bigger challenges.

Dominos has over 630 outlets across India. Other international brands that also have strong presence include Subway (390 outlets), McDonalds (330), KFC (240) and Papa Johns (30).

Growth Drivers rapid urbanization burgeoning young and aspiring population with higher propensity to spend on comfort and luxury who love to eat out on a regular basis transformation of Indian consumers

Opportunities & Challenges

At present, almost 80 per cent of the QSR businesses are restricted to metro, mini-metro, and Tier I cities in the country. India with its 1.3 billion population base, and strong domestic economy, is undoubtedly a market for any business. The rapid urbanisation that is happening in India will effect a demographic change in the next decade. It is expected that almost 35 per cent of Indian population will be living in urban areas by 2022. Improving connectivity and accessibility will definitely throw up new opportunities for organised players. The Tier 2 citiies have malls that create an ambience of modernity and youthful exuberance that have become preferred venues for families to spend an entire off-day in, this will generate greater demand for QSR Brands in these environments, it all started in the same way for Tier 1 and Metro cities too. Who wants to eat a branded food product if they cant be seen having it?? There are always going to be logistical hurdles in order to grow brands in Tier II and III cities, but the brands that invest there will continue to have growth away from the clutter in Metro cities.

Challanges Price point, menu selection to get the right staff logistics, cold chain, supply chain, to change the mentality of the people in smaller towns spend a limited amount of money on eating out