Future of Indian Food and Beverage Industry Post-Pandemic

Overview

The food and beverages industry accounts for ~3% of India’s GDP and is the single largest employer in the country, with more than 7.3 million workforce. The nationwide lockdown set this industry on a downward spiral with some predictions suggesting that nearly a quarter of all restaurants may shut down by the end of 2020. India’s US$50 billion restaurant industry is set to lose an ~US$9 billion in 2020 according to the National Restaurant Association of India (NRAI).

To offset these challenges and regain profitability, the industry has been adapting and innovating since the lockdown was lifted. New service offerings and COVID hygiene protocols are emerging in the sector to gain customer confidence and lift revenues.

Hygiene Standards

With restaurants slowly opening their doors for business and operating for limited hours in certain states, the question of safety with regards to ordering and dining in remains for the consumer. To beat this sentiment, all major food delivery apps have begun explicitly mentioning the hygiene standards of restaurants on their platforms. Food aggregators have observed that restaurants with good hygiene ratings have fared 20% better than those without. Also, food safety and hygiene in India has seen unprecedented growth in recent times. Temperature control, frequent sanitation, use of masks and safe packing mechanisms are the new norms in the food and beverages industry. 

In addition to this, health and safety audit agencies are increasingly being employed to ensure standards and build consumer confidence. Such audits, at present, are not mandatory in India; however, the Food Safety and Standards Authority of India (FSSAI) has launched a 48-point checklist on hygiene ratings for restaurants to comply with; plans to set stringent hygiene standards and safety auditing protocols in the future.

Contactless Solutions

Contactless solutions will be leveraged, along with self-service stations with an eye on health, safety and security norms. Some of the trending contactless solutions are delivery robots, digital menus and in-app ordering. The hospitality sector is employing technologies such as facial recognition and contactless biometric to enable guests to self-check-in and check-out, unlock rooms and activate elevators through facial scans.

The industry has used this downtime during the pandemic to invest in technologies, which are customer-centric to regain business traction. Contactless guest engagement has become a priority for the industry to facilitate automated conversational interaction between customers and service staff. Touchless solutions based on AI and digital payment options are likely to be the new normal for the hospitality sector and will change the industry standards for the post-COVID era.

At Home Experiences

The implementation of physical distancing measures and risk of contracting COVID-19 have severely impacted the customer’s desire to select in-dining experiences. Despite restaurants adopting all safety measures with 50% reduced capacity, the attendance remains low in urban and semi-urban areas. More and more food and beverages brands have started offering set or curated ‘At Home’ experiences to appeal customers. This trend was earlier being explored by a select few players as a niche offering, but since the pandemic, these experiences are becoming a mainstream service segment within the sector. It is estimated that a large segment of the population will opt for this service even after the pandemic is over to deal with the fear of another outbreak. Most hospitality brands will provide private catering services with the option of ‘cooking at home’ ingredient packages. This will fill the gap for consumers looking for indulgent gourmet experiences in the comfort of their homes.

Gourmet Street Food Brands

India and its people are known for their love of street food—the sheer variety of options and flavours at reasonable prices. However, with cleanliness becoming the prime area of concern since the outbreak, street food has quickly declined to among the least preferred choices for eating out since the re-opening. This trend is likely to impact the industry for months even after the pandemic is over. The industry is forecasted to see a rise in gourmet street food brands in the organised sectors that can fill customer expectations of taste, hygiene and convenience of delivery.

Vegan and Healthy Food Brands

Consumer preferences witnessed a strong shift towards vegan and organic food in 2019. In late 2019 and early 2020, many businesses launched with a focus on healthy, farm-to-table vegan menus. But with COVID-19 taking the world by storm, this trend is likely to become a lifestyle for many in the coming years.

Various health and immunity boosting factors of an organic, vegan diet is becoming increasingly popular considering the rising coronavirus caseload in the country. . Consequently, the market is expected to see a rise in ‘vegan only’ restaurants and brands promoting plant-based products. Given that the Indian diet is largely vegan-friendly, consumer transition and adoption is likely to be quick and fairly easy for most consumers.  

Chef-driven Delivery Restaurants

Most fine dining restaurants have shifted gears from focusing on in-dining experiences to delivery services. In long term, this will completely alter the landscape of delivery businesses in the country. Curating a better experience right from hygiene and safety to packing and customer-centric content will put forward a new wave of doing business in the food delivery sector.

Traditionally, customers have always connected better with brands with a consistent story that have been transparent about the team and chefs that work behind the scene to make their food. Transparency will be emphasised on and brand value of chefs will be leveraged during this transition.

Cloud Kitchens

Owing to the decline in customer footfalls in the QSR sector, most businesses have started transitioning to a cloud kitchen model, which provides significant savings in infrastructure costs. This model is serviced by tie-ups with food aggregators offering online ordering and delivery options for customer convenience. However, the main challenge for operators in this segment is that they are solely dependent on promotions by food aggregators for getting customers aboard. According to a leading good aggregator, “In India, takeaway and drive-through contributed ~1% of the overall revenue of the restaurant industry as compared to 15-20% in the US and Europe during pre-COVID times. However, given the current trends in India, it is expected to go up to 15% over the next 6 months.”

Conclusion

The industry is headed for a transformation with digitisation at its core. Services will grow to become more personalised and customer-centric, creative service offerings will be launched, health and safety will be standardised, operations will become less labour intensive and balance sheets will become leaner. All these changes will elevate customer experience and set new standards for the industry in the post-COVID era.