At a time when the economy is experiencing a slowdown and many sectors are struggling to grow, one sector that has bucked the trend and grown rapidly is organized fast food outlets (quick service restaurants or QSR).
CRISIL Research estimates that the QSR market will double to around Rs 70 billion in 2015-16 from Rs 34 billion in 2012-13, driven largely by new store additions. However, during this period, same-store-sales growth is expected to decline considerably due to intensifying competition in tier I cities, coupled with the economic slowdown.
''In tier I cities, we expect the annual QSR spend per middle class household to surge by over 1.5 times to around Rs 6,000 by 2015-16 from about Rs 3,700 in 2012-13. In tier II cities, currently the QSR spend is around Rs 1,500, which is less than half that in tier I cities. However, growth is expected to be much higher in tier II cities, at about 2.5 times to Rs 3,700 by 2015-16. This quantum jump in QSR spend in urban areas will be propelled by the increase in nuclear families and working women, steady growth in incomes, changing lifestyle and eating patterns and, importantly, greater accessibility of QSR outlets,'' said Prasad Koparkar, senior director, industry & customized research.
''In value terms, pizzas, burgers and sandwiches still account for 83 per cent of the domestic QSR market. Players have found it relatively difficult to adapt Indian food into an assembly line production model. On the other hand, foreign cuisine can be served quickly, and is more amenable to the cold storage format and a centralised kitchen. McDonalds and Domino's Pizza have shown over the years that the Indian consumer is comfortable with western fast food,'' said Ajay D'souza, director, industry research.
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