Exploring India’s Booming Restaurant Industry

India’s restaurant industry is in the midst of a significant transformation driven by changing demographics and evolving consumer preferences. The consumer base is expanding with a diverse array of dining options ranging from cozy cafés to vibrant bars. The emergence of cafés in the Indian restaurant landscape has created a buzz among millennials and Gen Z, who seek quality food in an ideal working environment. As the trend of working from home continues to evolve, there is growing demand for cozy cafés that blend work and play, leading to the rise of co-working spaces. The bar scenario has also come alive with over 65 thousand bars now catering to a young crowd in sync with India’s evolving pub culture. Higher disposable incomes have made dining out a much-anticipated social activity rather than just a necessity. As per Mordor Intelligence’s projections, the café and bar market is estimated to be worth a notable US$ 17.54 billion in India in 2024, expanding at a CAGR of 7.3% between 2017 and 2023. The report further states that the café and bar market will continue to witness strong momentum and expect it to clock a CAGR of 8.33% through 2024 to 2029.

The evolution of India’s restaurant landscape

The Indian restaurant industry has evolved over the years from conventional hospitality to the current innovative and diversified sector. Globalisation and urbanisation have dramatically influenced eating preferences, leading to a varied culinary landscape that accommodates diverse tastes and lifestyles.

• Four ways the Indian restaurant business has evolved
  
  • Digital transformation and contactless dining
    

  COVID-19 accelerated the adoption of digital solutions in the global restaurant sector. In 2024, technology remains central to operations, with restaurants utilising mobile apps, QR code menus and online ordering platforms. This digital shift enhances guest experiences and streamlines operations, revolutionising how restaurants engage with customers.

  • Sustainable practices and conscious dining

  As environmental concerns rise, Indian restaurants are increasingly prioritising sustainability. From sourcing locally produced ingredients to implementing waste reduction measures, eco-friendly practices are becoming core values. In 2024, sustainability is not just a trend – it is a commitment that resonates with eco-conscious diners.

  • Rise of cloud kitchens and delivery-first models

  The emergence of cloud kitchens and delivery-centric models has reshaped the restaurant landscape, particularly in urban areas. These virtual brands and cloud kitchens cater to the growing demand for convenience, allowing restaurants to reach customers efficiently through third-party delivery platforms.

  • Focus on health and wellness

  With health and wellness taking centre stage, Indian restaurants are re-imagining traditional recipes to meet the demands of health-conscious consumers. In 2024, there is a heightened focus on nutrient-rich ingredients and transparent labelling, with options like gluten-free and plant-based dishes gaining popularity.

The rise of cafés and bar culture in India

The Indian restaurant scenario is rapidly evolving with the hospitality sector fostering a multitude of cafés and bars. This change is led by consumer preference, especially of millennials and the Gen-Z population, who desire new social experiences and unique dining options.

• Cafés: A new social hub

Cafés are an emerging trend within the restaurant industry, reflecting a growing popularity among consumers. These cafés are today not just meant for eating – people want to build them up as landmarks in the local community where they can work, gather or relax. The shift towards remote working has spurred demand for more convenient, flexible venues equipped with food and beverage services, thus providing a boost to co-working cafés. The market for cafés and bars will reach a value of US$ 26.17 billion by 2029, with a projected CAGR of 8.33% in the period 2024-2029, according to Mordor Intelligence.

New and unique thematic cafés have made inroads into the market that caters to diversified interests: pet-friendly cafés, book cafés, live music, or interactive cafés where one can get much more than just food. In addition, the increase of tea culture in India shows growth in branded tea chains like Chaayos and many others offering the same products at a relatively low price. For example, masala chai is offered at less than US$ 1, which makes such outlets an attractive destination for the young, price-sensitive consumer looking for alternatives to the usual coffee chain. According to Mordor Intelligence, the growing demand for a relaxed atmosphere and social interaction among young consumers, along with a focus on quality and unique experiences, is driving the growth of cafés.

• Bar culture: Evolving preferences

At the same time, India’s bar scene is expanding with over 65 thousand bars and clubs serving an ever-growing base of consumers. Increased disposable income among the youth has placed a premium on social-drinking experiences. Innovative cocktail bars have come up with a few regional favourites that specialise in bespoke concoctions reflecting local flavours. Health consciousness has also been driving changes in bar menus, with many establishments adding low-calorie drinks, mocktails and various other non-alcoholic offerings to their menus. In 2020, over 40% of consumers stated their preference for more health-conscious drinking options – a trend that is touching every aspect of the Indian dining experience.

• A fusion of experiences

Cafés and bars are increasingly investing in good atmospherics to enable socialisation. Attracting crowds, the designs of these places have made them apt for social mingling and unwinding. The inclusion of various food and beverage choices and the quality aspect further ensure these spaces meet the changing tastes of the modern consumer.

As the café and bar market in India expands, it represents a greater trend of customised dining and community. With over 35% of India’s population consisting of millennials, their need for unique, low-cost and healthy food choices will be the main factor in changing the dimension of the country’s hospitality sector. Besides, consumer trends enhance the fabric of social interlacing in the kaleidoscope of modern Indian cuisine.

Source- Mordor Intelligence

Economic impact of the restaurant industry in India

The restaurant business is one of the important pillars of the Indian economy. It contributes significantly to employment generation and the national revenue. By 2028, the sector is expected to employ close to 10.3 million directly, up from 8.5 million in 2024. This makes the restaurant industry one of the largest employers in India, providing more employment than many other sectors. The industry is the third biggest in India and not just contributes large amounts of direct and indirect taxes for the government but is also responsible for stimulating other ancillary industries. This in turn helps economic growth at different levels. The restaurant and its ancillary industries thus act as catalysts for tourism and directly add value to local agriculture.

As India positions itself to become the world’s third-largest food services market by 2028, overtaking Japan, the National Restaurant Association of India (NRAI) emphasises the importance of supportive policies to harness this potential. The industry plays a crucial role, contributing approximately 1.4% to national GST collections, highlighting its significance to the national treasury. Growth is to be nurtured and further accelerated by addressing existing challenges such as the unwieldy regulatory regime and the operational nuisances caused by a lot of licenses required for conducting business. Simplification in this regard would enhance the ease of doing business and help garner more investments in this segment. Additionally, resolving taxation issues, such as restoring ITC, is likely to improve margins and support expansion plans. If these economic factors are focused on and strategically reformed, the restaurant industry in India will continue to be a rewarding sector in terms of employment, stimulation of local economies, and overall economic development of the country.

Source- National Restaurant Association of India (NRAI)

The road ahead: Future trends in India’s restaurant industry

The restaurant industry in India is on the cusp of yet more significant transformation, driven by technological advancements, sustainability and evolving consumer preferences. Key trends shaping this evolution include the increasing integration of technology for seamless dining experiences, such as online ordering, mobile payments and AI-powered customer service tools. The rise of cloud kitchens – establishments that focus exclusively on fulfilling delivery orders – caters to the booming demand for food delivery while minimising overhead costs. Additionally, there is growing emphasis on sustainability, with restaurants prioritising eco-friendly practices and ethically sourced ingredients to attract environmentally conscious consumers. Personalisation through data analytics is becoming essential as diners increasingly seek tailored experiences that cater to their individual preferences. Moreover, the potential for growth in tier-2 and tier-3 cities presents exciting opportunities for expansion as urbanisation and rising disposable incomes create new consumer bases eager for diverse dining options.

As the industry adapts to these trends, it not only enhances the overall dining experience but also contributes significantly to economic growth, inviting patrons to explore and support the vibrant local culinary scene across the country. By embracing these changes, the restaurant industry in India can build a resilient future that meets the needs of a dynamic and evolving market.