Indian Economy News

India's restaurant industry shows signs of recovery; International brands will have edge: Report

  • IBEF
  • January 16, 2025

The Indian restaurant industry is experiencing steady recovery and growth momentum, with December marking a notable acceleration in activity, as per a report by Macquarie Equity Research. This growth is attributed to rising discretionary spending, evolving demographics, and increased female workforce participation. Key factors such as higher per capita incomes, smaller household sizes, and a declining dependency ratio foster a favourable environment for the sector. The report highlights the importance of value offerings and cost control, which have stabilised same-store sales growth (SSSg) and boosted profitability across the industry.

International brands are gaining an edge due to their broader appeal and ability to operate in lower-rent locations, improving their unit economics compared to regional players, especially in high-rent zones like high streets. Macquarie anticipates further support from the upcoming Union Budget, expecting potential personal income tax cuts for lower- and middle-income groups, which could boost discretionary income and accelerate SSSg recovery. It emphasises evaluating brands' ability to expand while maintaining operational efficiency and minimising the impact of new stores on margins. The report remains optimistic about international brands, noting their capacity to expand into less-saturated areas, pass on input costs, and retain customer loyalty, ensuring long-term sustainable growth.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.

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