The document summarizes research on the impact of COVID-19 on the Indian food service market. It discusses how the market was growing pre-COVID but faced major setbacks due to lockdowns. Survey results found consumers plan to reduce eating out and order smaller portions in the "new normal". Restaurants face financial difficulties from lost revenue and high fixed costs. To adapt, restaurants must prioritize tasks like marketing, operations optimization and alternative revenue models.
2. Our aim is to understand…
• The state of Indian Food Service Market before the waves of COVID 19 hit the country.
• The blows in the industry due to lockdowns.
• Identify the changing trends on the demand side.
• How this sector can adapt to the new normal post lockdown.
Research type Sample size Data Collection
Analysis
technique
Quantitative
880
Focus group: 720
Online survey Cluster analysis
Age: 18 – 26,
27 -35
Behavioral
correlation: 98%
Online articles,
journals
Correlation analysis
3. The Indian Food Service market was looking promising…
[Source: NRAI]
[Source: NRAI]
[Source: FICCI, PWC]
[Source: NRAI]
• NRAI had estimated the
sector to grow at a CAGR of
9% by 2022 – 23.
• The organized sector that
accounted for 35% was
forecasted to take 42% of
the industry.
• The food service industry
has a direct impact on
employment at 7.3mn in
2019 with organized players
contributing to 51% of the
workforce.
• The sector had witnessed
investment worth USD 2.4
bn in a period of six years.
4. … as India entered into the phase of 37 - year demographic dividend
• The median age of India
stands at around 27 years,
making India one of the
youngest, compared to 36
years in China, 37 years in
US and 46 years in Japan.
• With rising income the
propensity to spend has
also been observed in Tier
II & Tier III apart from
metros.
• A good number of tech-
savvy, independent
millennial have higher
spending capacity. The
average frequency of
eating non-home foods of
this group is above 5 times
per month.
• The food service spend per
capita has thus observed a
CAGR of 7%.
[Source: FICCI, PWC] [Source: Aaron Allen & Associates]
[Source: Statista, Technopak]
[Source: Trading Economics]
5. Internet accessibility was set to cater to the burgeoning demand…
[Source: BCG, Digital Influence study] [Source: Nielsen Smartphone Panel]
[Source: TRAI] [Source: TRAI]
• The high growth in the
internet penetration rate
has been characterized
by high demand in terms
of online ordering/table
reservation giving rise to
delivery aggregators,
reservation aggregators,
vendor partner
aggregators.
• Deals, discounts and
convenience have been
the key triggers.
• The rising internet users
have also led to an
increased usage of
credit/debit cards, e-
wallets, UPI payment
methods.
6. … but then, the Coronavirus hit the Indian economy hard
• The food service sector
has made a loss of INR
35,000 crores as per
NRAI, which is second
highest among other
industries.
• The sector being a big
employer could be
responsible for the rising
unemployment trend.
• The consumer
confidence dip might
take time to improve but
hygiene and food quality
are expected to be of
utmost priority as per our
survey.
[Source: IMF]
[Source: Statista]
[Source: CMIE]
[Source: Trading Economics]
8. …left the restaurateurs feeling the heat
…“It is no longer reasonable to
expect a fixed rent or a revenue-
share model.”
Riyaaz Amlani
(CEO, Impresario
Entertainment & Hospitality)
Manu Chandra
(Chef Partner, Olive Group)
“Being unable to claim input tax credits
takes away an additional 5% - 6% of the
bottom-line.”
“The organised sector has seen a
90 per cent reduction in sales since
the lockdown.”
Rahul Prithiani
(Director, Crisil Research)
Karan Tanna
(Founder, Ghost Kitchens)
“Restaurant industry is one of those
industries that will show no optimism for
next 8-12 months...”
Anurag Katriar
(President, NRAI)
…“as an industry, our business model is such that
the proportion of fixed operating expenses is very
high, which is a very high-risk model.”
9. …as the underlying financial problems were exposed due to declining revenue
[Source: Crisil Quantix, 25 companies]
[Source: Crisil Quantix, 25 companies]
[Source: Crisil Quantix, 25 companies]
[Source: Crisil Quantix, 25 companies]
• More than half of the players have
negative net-worth.
• ICR level below two times for 30%
of the players. Also, low gearing
ratio along with minimal asset
ownership could force these
players to shutdown. As per ET
reports, around 4 out of 10
restaurants in Bangalore might
never open again.
• Also, the transformation costs
would have to be taken care of, so
as to operate post lockdown with
limited seating, & lesser work
hours. The fixed operational costs
due to high rents also need a
separate model for optimization.
10. On the other hand, COVID 19 has influenced both, sentiments and buying decisions…
• 47% of the people who
used to consume non-
home food before
COVID 19 had said that
they are going to avoid
non-home food when
lockdown is lifted.
• 50% of Delhites have
reversed their opinion on
having non-home food
post lockdown.
• But consumers in
Bangalore and Kolkata
were seemingly
optimistic.
• According to our
estimate, this behavior
might result in the loss of
revenue by around 45%
of pre-COVID revenue
11. … resulting in a shrinkage of bill size in the period of ‘new normal’
• A strong negative
correlation of 98%
between frequent orders
and big group size
suggests that people
who order frequently
order mostly for
themselves.
• Also, an increasing bill
size trend was observed
with increase in age.
• 42% of the billing
happen in the range of
INR 200 to INR 350.
• Another interesting fact,
discounts were most
preferable amongst the
ones ordering less than
INR 199 and showed a
decreasing trend with
increase in bill size
12. We have witnessed the rise of discerning customers in terms of online ordering
• Ratings followed by
hygiene, dominated the
preference in the pre-
covid days, while app
interface influenced the
least.
• Only 38% of the
respondents (billed >
INR 500) check for
available discounts.
• 65% of the people who
look for discounts
generally order on
weekends.
• Surprisingly, 83% of the
people whose trigger
was discount said that
‘hygiene’ would be the
trigger post lockdown
and also demanded
health reports of delivery
executives.
13. Also, the customers seem to be sticky in terms of app choice
• The increasing trend of
mobile based payments
will keep thriving as 68%
of the respondents opted
for e-wallets and UPI
based payments.
• Dineout is clearly
outplaying EazyDiner as
the choice for online
table reservation.
• The interesting thing to
watch would be if
restaurants are willing to
pay the 25% to 30%
commission charges to
delivery aggregators.
14. The case of ‘Eating Out’ has also been treated in a similar style…
• Menu and ambience were
the major triggers pre lock
down, but open kitchen got
only 5% preference even
then.
• The Occasional visitor put
relatively more weightage
on recommendations
compared to others.
• 73% of the respondents who
valued ambience said that
they won’t visit after
lockdown is lifted.
• Social distancing protocols
along with health check
dashboards emerged as two
new factors and also the
leading factors.
• Interestingly, on comparing
the ordering and eating out
factors, the importance of
discounts dropped by 46
ppts while hygiene shot up
by 19 ppts.
[Note: Casual Visitor: 2-4 times/m, Occasional visitor: 4-5 times/yr,
Frequent visitor: >4 times/m, Nominal visitor: 1/m]
15. But, structuring and prioritizing is the key to survive…
Drop a message on Whatsapp at 8017020083 to identify the ‘what, why, when, where & how’ of the KPIs that you must focus on post
lockdown.
16. …thus, prioritizing tasks must be the need of the hour to optimize post lockdown operations
Drop a message on Whatsapp at 8017020083 for the detailed road-map to tackle Post Lockdown operation scenarios
17. … and, how can we help you navigate in these tough times?
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(PhD, IIT Guwahati)
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(Manager Finance, Michelin)
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(Affiliate Partner, Semcostyle Institute India)
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(PGDM, SRCC)
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(CS, CA (Fin), PGDM, SRCC)
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