Food services market expected to reach Rs 7.76 tn by 2028

A report released on Tuesday by the National Restaurant Association of India (NRAI) indicates that India’s food services market, currently valued at Rs 5.7 trillion, is projected to grow at a CAGR of 8.1%, reaching Rs 7.76 trillion in four years.

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India’s food services market, currently valued at Rs 5.7 trillion, is set for robust growth. According to a recent report by the National Restaurant Association of India (NRAI), the market is projected to reach Rs 7.76 trillion in four years, growing at a compounded annual growth rate (CAGR) of 8.1%. The organised segment is expected to expand at a CAGR of 13.2% between 2024 and 2028.

By 2028, India’s food services market will surpass Japan, trailing only the US and China, making it the second-fastest growing market globally after Brazil. Employment in the sector is projected to rise from 8.5 million to 10.3 million people by 2028. The market comprises an organised segment valued at Rs 2.49 trillion and an unorganised segment valued at Rs 3.19 trillion.

Growth in the food services market will be driven by an increased frequency of eating out. The average frequency of dining out and ordering in has risen to 7.9 times per month from 6.6 times in 2019. Dining out occurs 3.7 times per month on average, while ordering in is at 4.2 times per month. A report by Swiggy and Bain & Company predicts this frequency will increase to 7-8 times per month by 2030, doubling the market value to Rs 9-10 trillion by 2030, with an annual growth rate of 10-12%.

The addressable customer base is expected to expand by 110 million, from the current 320-340 million to approximately 430-450 million by 2030. This surge is attributed to rapid urbanisation and rising affluence.

The NRAI report also highlights a shift towards the organised sector, which is projected to grow to 52.8% of the market by 2028 from 43.8% currently. Conversely, the unorganised segment will shrink to 47.2% from 56.2%. Major contributors to the market revenue are the top nine cities in India, accounting for approximately 59% of total revenue.

Among the fastest-growing segments are cafes, quick-service restaurants, and dessert and ice-cream parlours, with growth rates of 18.6%, 17.5%, and 15%, respectively. Casual dining, fine dining, pubs, bars, and lounges are also expected to grow, along with cloud kitchens, which are projected to be the fastest-growing segment with a CAGR of 35.2%.

Challenges such as rising input costs, limited operational hours, regulatory compliance, and delivery dynamics persist. Industry players recommend government measures like industry status, a separate food services ministry, unified norms, and extended operating hours to support growth.

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