India’s restaurant industry set to grow: Report

Business India

Experts attribute the growth of the restaurant industry in the country to the increase in people’s preference for eating out and favourable government policies.

From cosy cafes to buzzing bars, catering to diverse preferences, and experiencing a growing demand, India’s hotel and hospitality industry is witnessing a surge, with food stalls, cafes, and bars mushrooming across its bustling streets.

According to a report by Mordor Intelligence, a market research and consulting firm, the estimated size of India’s cafes and bars market in 2024 is $17.54 billion. The industry is expected to grow at a compound annual growth rate (CAGR) of 8.33 percent during the forecast period (2024-2029) to reach $26.17 billion by 2029. This marks an increase from the 7.31 percent CAGR recorded from 2017 to 2023.

Faisal, who owns Pachu Rolls, a food joint in Church Street, said that the food industry has grown over the years and will continue to do so in the future. “With 14 years of experience in the hotel industry, both in the Middle East and India, I have learnt that people crave tasty and affordable food, and if you provide that, your business will succeed,” he said.

Regarding some restaurants and cafes coming up with themes and attractions to draw in customers, he said he does not believe in the need for these attractions. “If you are serving quality food in a hygienic environment, it is enough to bring in customers and keep them coming back,” he said.

He added that his store opening three outlets in the last four years, with another one set to open soon, is a testament to the growth of the industry and its future.

Experts say that social media also plays an important role in influencing people’s choices of what and where to eat.

The trend of remote working or freelancing has also propelled the rise in cafes in India, the report pointed out. This shift has resulted in an increased demand for comfortable and functional workspaces, which also offer food and beverages, leading to the emergence of co-working cafes. In 2020, flexible workspace leasing in India accounted for over 5.4 million sq. ft of space, representing a 43 percent increase from 2019. The ambiance and atmosphere of restaurants have also become crucial aspects of their appeal with cafes now offering unique themes and decor and providing live music or entertainment to attract customers. As a result, cafes in India are expected to be the fastest-growing sector in the restaurant industry during the forecast period, registering a CAGR of 17.06 percent.

Sonalini, a working professional, said that she prefers eating spaces that allow her to work as well. “Due to my busy schedule, I mostly end up working while eating, especially when I’m outside. So, I prefer to eat at a place that would allow me to work peacefully and enjoy good food. Although some food chains allow this, they are not always affordable,” she said. She added that more eateries in the city should become work-friendly to cater to the needs of people like her.

However, most restaurants in the city do not allow customers to work while eating to avoid rush during peak hours and serve more people. According to reports, the Bruhat Bangalore Hotels Association (BBHA) was planning to put up boards in their restaurants asking people to vacate the space after having their meal to accommodate other customers during peak hours.

Abdul, the owner of Kannur Cocktail, a juice shop in Anchepalya said that the support of the government and authorities concerned is playing a crucial role in the growth of the hotel industry. “Although the ease of getting permission to start a business varies across the country, I did not face any issue while setting up multiple franchises of my cafe in Bangalore,” he said. The growth of the industry is driven by students and youngsters who prefer to grab a quick bite at an affordable price or spend some quality time with friends outside their homes, he added.

Hiba, a student, said that while she enjoys eating out she sees it as more than just a way to satisfy her hunger. “For me, eating out is an opportunity to spend quality time in a cafe or pub, and therefore I prefer places that offer more than just good food. Themed cafes, restaurants with live music, cafes with books and board games, or those with various activities are my preferred choices,” she said. She added that cafes in Bangalore offer a variety of options in terms of both prices and attractions.

Speciality shops are taking advantage of India’s rich tea and coffee culture by offering unique and premium blends of these beverages. As a result, it is expected that specialist coffee and tea shops will grow at a CAGR of 6.95 percent during the forecast period, the report pointed out.

In 2022, cafes and bars held a significant 22.52 percent share of the market. With over 800 bars and clubs that serve alcohol, the younger generation’s increased disposable income has led to a growing demand for India’s pub and bar culture. Although the average order value for cafes and bars is low, the number of daily orders has a significant impact on this segment’s market value in India.

Experts credit remote working for the rise in co-working cafes in India.

Mark Diaz, who previously worked in the restaurant industry said that the restaurant industry in the country is predicted to continue its growth despite the pandemic having slowed down the pace at which the industry had been expanding. “There is an increasing demand for new cafes, restaurants, and bars and the industry can cater to people who are looking for budget-friendly options as well as those who desire a luxury experience,” he said. While there is a clear demand for big chain restaurants and cafes, it is the smaller cafes and restaurants that are experiencing good growth, he said. He added that the liquor industry and bars will always perform well.

Subramanya Hola, Vice President of the Bruhat Bangalore Hotels Association (BBHA), said that there has been a surge in the number of new cafes, restaurants, and bars opening in the city. However, he also expressed concern about non-traditional hoteliers who enter the business without adequate background or understanding of the industry. “Such individuals could potentially harm the image of the industry,” he said.

He attributed the growth of the industry to changing food preferences and the desire for new experiences among the public, as well as social media. “Food-related content dominates around 30 percent of social media feeds, influencing people’s choices of what and where to eat. People are willing to travel long distances or pay higher prices to dine at a restaurant that offers both good food and experience, a trend the hoteliers have understood,” he said.

He added that the hotel industry has always been doing good, and will continue to offer something new to both newcomers in the industry and the public.

The coffee culture in India dates back to 1876 when the first Indian-run coffee shop, Indian Coffee House, was established in Calcutta. Over time, this coffee shop chain grew and became a network of over 400 coffee houses across the country, providing inclusive spaces for all Indians to enjoy coffee and engage in conversations.

The introduction of Café Coffee Day (CCD) in India in 1996, marked a new period in India’s coffee history. The café founded by V.G. Siddhartha made its debut in India with the opening of its first cafe in Brigade Road, Bangalore, thus offering a place for people to meet up over coffee.

Correction: In the earlier version of the report, the designation of Mark Diaz was misstated as “Direct Sales Representative for Bacardi, Mumbai” which has now been changed to “who previously worked in the restaurant industry”. The error had occurred due to miscommunication between the reporter and the source. The reporter apologises for the mistake.