Cloud Kitchen Market in

General

And

Catering Market in India

particularly Corporate
Catering
Cloud Kitchens

Market Size and Growth Projection

The rapid growth of Online Food ordering sector creates new business opportunities for
existing & upcoming restaurants to grow their business, one such upcoming trend is the
Cloud Kitchens business model. We live in an era where we order food right from your
mobile and get it delivered to our location. Nowadays all the restaurants you visit collaborate
with online food ordering portals like Zomato, Swiggy, etc,. to ease the ordering process and
expand their business as well.
Dark Kitchens / Ghost Kitchens / Cloud Kitchens / Virtual Kitchens are Fully equipped
kitchens that you can find in most of the restaurants but they don’t have dine-in or takeaway,
they run solely for the online delivery services.

The Cloud Kitchens don’t require much upfront costs when compared to a classic dine-in &
takeaway restaurant and budding restaurateurs can use this as an opportunity to test out their
brand & customer base before opening a premise in a low-risk environment. Thus giving an
opportunity to the chefs to concentrate on one objective, to prepare the best food!
In India, there are many Cloud kitchens namely Faasos, Holachef, Freshmenu, RedBox etc
who run solely depending upon the online orders but few of them have introduced takeaways
due to the increase in demand.
Cloud kitchen does everything for you right from taking orders from the customers, providing
you the information from what to prepare to deliver the food to customers and getting a
feedback immediately. So, this will give an opportunity to get more feedback and exposure to
the customers.
Deliveroo, one such online food ordering portal has introduced their own dark kitchens into
play by naming them as ‘Deliveroo’s editions’ to focus on delivering best food to the
customers on time without any compromise.
With introductions of such dark kitchens by food delivering portals, they create a monopoly
market where the customers get to order from the portal’s very own kitchens and deliver
them with more priority when compared to other restaurants listed out.
In India, Redbox introduced small kiosk in multiple parts of the city aiming to run as a
takeaway & delivery only kitchen. With very less menu options and faster delivering times,
Redbox also became one of the successful kitchens out there. Similarly, Swiggy also
launched cloud kitchen in few cities to accelerate their sales and get involved in cloud kitchen
concept.

Demand Drivers

Why invest in cloud kitchens?

Considering the current scenario in any metro city, getting space for a restaurant is a
challenge. Either the space is too small or it’s too expensive to afford. But profit wise, your
profit is in your hand as most of the costs that occur in a regular restaurant doesn’t occur in
Cloud Kitchens.
Not just that, a cloud kitchen can easily change the type of food they prepare by hiring the
right chef & updating the menu online which is very less investment compared to a classic
restaurant where they have to change everything right from the theme of the restaurant to the
marketing strategy.
With Cloud kitchens, there are N number of opportunities because all it needs is kitchen
space and demand to feed the hungry customers. With minimum risks involved, Cloud
kitchens are one of the safest bid if you are planning to invest into something.
But as mentioned above for a cloud kitchen to survive, lots of efforts & marketing plan is a
must.

Should an existing restaurant invest in Cloud kitchens?

If your restaurant is well established and is running well, investing in cloud kitchens would
increase your overall exposure and add more profits at a less cost.
At any given time, a cloud kitchen would require less investment compared to the classic dine
in restaurant and here’s the breakup :
Kitchen space: Depending upon how big of a kitchen you want, anywhere between 800 sq ft
to 1200 sq ft would be optimal for your kitchen to run. Considering this space in a prime spot
would cost a bit high whereas in a non-prime spot would cost lesser.
Kitchen equipments: For any cloud kitchen or kitchen for that case, investing in durable
kitchen equipment is a must to make the process of cooking easier. These equipment should
cost you the majority of your budget. If you want to spend lesser here, investing in used
equipment would be an alternative option. `
Kitchen staffs: There should not be any compromise in hiring the best staffs since the best
chefs & efficient employees are the pole behind the kitchen.
Other expenses: Other expenses include a POS system to manage your expenses, 25-30% per
order that the online food ordering portals charge, Restaurant licenses & permits and food
packing costs.

*Note : The above mentioned cost is an approximate occurring cost for any cloud kitchen.
You can cut the cost at various places such as rent for the place, equipment, etc

Pros and cons of Cloud kitchen :

Pros:
Low operation cost
High-profit margins
Less risk

Cons:
Online only visibility
Challenging brand building
Less customer interaction
Some of the other leading cloud-based kitchens in India are Fresh Menu, Box8, and Faasos.
While Swiggy and Zomato have also ventured into the segment, they haven’t made much
headway so far.

Competition
Zomato launched cloud kitchen operations under Zomato Infrastructure Services in 2017,
with a target to have 100 locations by end of 2018. However, the vertical did not scale
beyond its pilot in Delhi.

The company then switched to a partnership model, where Zomato invested in Bengaluru-
based Loyal Hospitality earlier this year to expand its cloud kitchen operations. The company
has subsequently wound down its own cloud kitchen to leverage the over 200 kitchens it
accesses through Loyal Hospitality. The company has also set an ambitious target of setting
up 8,000-10,000 more kitchens across India, which will also include extended kitchens of
existing restaurants to areas that are not serviced currently.

On the other hand, Swiggy, which launched its cloud kitchen offering Swiggy Access in
November last year, has brought over 35 restaurants to new pin codes and is targeting to
bring 300 new restaurant partners onboard. Swiggy wants its cloud kitchen to contribute at
least 20% to overall revenue in the next two years

“The ratio of supply to meet the addressable demand in the food-delivery space is low. The
marketplaces are looking at ways to bridge the gap,” Meena said. “Cloud kitchen is a good
way to do that. Swiggy (and) Zomato are also helping existing restaurant brands expand with
satellite kitchens, basically to increase the supply side.”

“These marketplaces are not designed to be a frill-less virtual kitchen,” said Sanchit Vir
Gogia, founder and CEO at Greyhound Research. “Zomato, for example, was a pure
information app. Managing the whole supply chain and the costs involved in it is not an easy
task. The companies will have to invest much more and innovate much more to actually
benefit from the high margin cloud kitchen model.”

Industry Trends & Patterns

Kitchens go online as the model, without a brick and mortar structure, cuts cost and time, and
works best both for the business and customer

Enterprising foodpreneurs are combining a love for cuisine and technology to cater to the
experimental palate of urban Indians, with both regular fare and exotic meals. A meal is no
longer confined to small establishments and expensive fine dining restaurants, but also
arrives at your doorsteps via smartphones.
Food tech start-ups across the country—from the big-ticket ones to the mid-sized and small
ventures—are walking on a cloud to stay in business and beat the competition. Take Cloud
kitchen, a new online restaurant genre without brick and mortar. Unlike a traditional
restaurant that offers dine-in or takeaway facility, it only delivers food.

The dish of choice is just a click or a swipe away, quite literally, as orders are placed via
websites or apps and in some cases with phone calls. These cloud kitchens either have an
online medium to take the orders or accept requests via food delivery start-ups such as
Zomato, Swiggy, etc.

Cloud kitchen restaurants try to maximise the number of orders per day, by decreasing the
production and packaging time, and managing the logistics. With menu options galore in
cloud kitchens, there is always one to suit every palate. “Cloud kitchens are here to stay. It’s
probably the case that the first one through the door gets shot.

Market Size and Growth Projection

Increasingly, the food service industry is moving to adapt to these cultural shifts with the
emergence of cloud kitchens – food preparation facilities designed specifically to fulfill
digital orders, with no seating or service on premise.

For obvious reasons, the elimination of infrastructure costs for dining rooms, wait staff and
related expenses can make the digital kitchen business an attractive venture. Real estate
location decisions and optimized space for kitchen operations can help lower overhead, while
adding profit to the menu.

We all know what happens when the restaurant kitchen is in the weeds on a busy night.
Patrons banking on the added value of exceptional dining experience, lose their patience
when kitchens under fire to get the food out, may get behind in the pacing of courses served.

Friction free dining becomes an objective for consumers.

In a market environment where at-home eating is gaining traction, restaurant operators are
required to up their game on all fronts – creating better on-site experiences that multiply the
value of being in the dining room, while working to pioneer new channels allowing the
business to go home, so to speak.

In India the cloud kitchen business has exploded as consumers there show growing
preference for avoiding the unreal traffic conditions that are becoming routine in many larger
cities. The stated goal: to bring restaurant quality food experiences to the family dining room.

As this story unfolds, here’s what we know:

 Not all foods travel well.

 Not all food-packaging options are conducive to maintaining flavour and temperature
quality during transport.
 Consumers are relentlessly picky about culinary experience these days and quickly judge
the difference from food well crafted and something less.
 The expectation of restaurant quality, chef prepared cuisine is exactly that – higher
quality ingredients and preparations done with greater skill than the home cook. Elevated
food and taste is anticipated.

Transformation In How The Indian Food Industry Operates

The Indian food industry, the sixth largest in the world, has seen unprecedented growth in
terms of size and revenues over the past five years. Retail startups contribute about 70% to
the total sales, while food processing companies account for the balance 30% of the country’s
total food market.

A high-growth sector, the Indian food industry is poised for even greater growth with the use
of tech and estimated to $894.98 Bn in size by 2020, while the food service industry is
expected to reach $78 Bn by 2018.

Do the current market situation, production capabilities, and government policies

support the realisation of this massive business potential?

Falling Agricultural Produce And Rising Taxes: The Challenges And Incentives

The dismal performance of the agricultural sector over the past two years has slowed down
India’s overall economic growth. Given how critical agriculture as a sector has been to the
Indian economy, this is something that needs to be urgently addressed.

The government has taken some welcome and concrete steps to grow the sector. These
include:

 A national e-mandi, to promote transparency in the procurement of agricultural output

 100% Foreign direct investment (FDI) in the marketing of food products
 Various incentives at central and state government level on supply chain
infrastructure.
 In Union Budget 2017-18, the Government of India has set up a dairy processing infra
fund worth $1.2 Bn (INR 8K Cr).
 100% FDI in food product ecommerce through automatic route.

These incentives are a healthy sign of the government’s commitment towards reinvigorating
the country’s agricultural sector and these measures will lead to a slew of international brands
entering the Indian market.

On the other hand, the government hasn’t been as benevolent to restaurants,especially when it
comes to taxation as it withdrew input tax credit for restaurants.

Industry Challenges
The entry of technology and mobile application-based services has led to a massive
transformation in how the food industry, especially the retail sector, operates.

With new consumer demographics comprising young, urban-dwelling working professionals

driving its growth, foodtech has been amongst the most promising sectors within the Indian
startup ecosystem. Segments like grocery delivery, personal chefs, box delivery, and on-
demand meals are becoming increasingly popular, leading to an unprecedented number of
startups joining the race for market share.

To Deliver Or Not To Deliver!

Since this sector was so hyped, it deserves its own heading. According to a Bloomberg
report, more than 400 food delivery apps were operational in India between 2013 and
2016. The online food delivery industry grew by 150% year-on-year, with an estimated
Gross Merchandise Value (GMV) of $300 Mn in 2016.

But this sector has witnessed a lot of consolidation.

While some ventures with a unique idea managed to survive, others succumbed to market
forces simply due to bad timing or lack of funding options. The sector received a mere $78
Mn worth of funding in 2016, in comparison to the $500 Mn in 2015.

Promoters need to realise that the total number of transactions by consumers is quite small,
while the costs of delivery, customer acquisition, and daily operations are quite high. This
makes pure-play food delivery services an expensive proposition for most startups.

With the industry moving towards consolidation to build brand portfolios comprising
multiple services and products, the sustenance of standalone food delivery companies will be
difficult in the long term.

The food aggregation and marketplace model is nearing saturation, leading to startups
exploring emerging business models such as cloud kitchens, ratings, and review etc.

While aggregators like Zomato, Swiggy, and foodpanda are the dominant marketplaces in the
country, startups like FreshMenu, Box8, and Faasos are making waves in the pure-play cloud
kitchen segment.

In addition, B2B foodtech startups like HungerBox, which recently raised $2.5 Mn, are
identifying newer segments to target and are positioning themselves uniquely in the market.

2017 saw Uber launch UberEATS, OLA acquiring Foodpanda, and Amazon launching its
delivery service. These three giants will take this high-profile battle for market share in the
Indian foodtech space to a whole new level, in a completely different industry.

The overall impact of the rising competition in the foodtech space will only help the industry
grow in the next few years. Ventures in the foodtech space need to explore models that offer
multiple monetisation channels.
The food processing sector saw commitments of over $10 Bn in 2017 led by firms like Coke,
Pepsi, ITC and home growth Patanjali. This sector is promising and will continue to see
corporate investments and growth.

On the consumer side, 2018 shall most likely see significant consolidation in segments like
delivery, cloud kitchens, business-to-business and business to business to Consumer catering.

India is a huge market, and we have a soul connection to food. We are a diverse country with
a plethora of regional cuisines. Indian food is gaining global appeal – Marks & Spenser sells
ready-to-serve chicken tikka masala in the UK!

At the same time, our habits are changing, and we are more accepting a global palate –
parathas and lassi at a breakfast are being replaced with muesli and a smoothie! On the
consumer front, high real estate costs, pilferage, staff training, irrational government policies
make it tricky to establish a successful business.

Catering / Corporate Catering

Market Size and Growth Projection

Almost 98 per cent of the unorganised catering industry in India is abstained of the inclusive
growth, despite the fact that Rs one lakh cr wedding industry is growing by 25-30 per cent
every year. Alongside, significant number of growth is happening in commercial and
corporate events.

Considered as an important factor for the success of any event, the catering sector is in grave
need of government intervention with rules and regulations for safe and hygienic practice .
The large sect of unorganised caterers operating in their own geographies and peripheries are
indeed in need of 3600 training, education and information about the rules and regulations.

“There is a need of training, education, information about the government policies, FSSAI
rules, implementation of GST rules, new trends and corporate culture”, said Narendra
Somani, President, Federation of All India Caterers (FAIC) on the sidelines of pre-event
press conference of FAIC Exhibition and Convention 2016 happening between 27th -29th
September, 2016 in Mumbai.

This is a transition period for the industry, which till now was in its protected cocoon and
comfortable in its own world. In the recent past, the sector has adopted fast pace growth,
while serving as engine for inclusive growth. The atomisation is happening quite fast, with
even small caterers too focusing on deploying machines at event venues. Earlier the caterers
use to cook on wooden stoves before moving on to LPG gas and now they have started using
induction to keep the food warm.
The caterers were not upgrading their standards until they started facing the brunch of
technology, labour rules and rules of conduct of service. Also, steadily they have started
understanding the importance of centralised kitchen, while focusing on hygiene.

Licence Concerns

The government has set standard rules for food industry, whether it’s processing, restaurant
or catering that has to be taken care of. . Therefore, the industry has to fight with the
government on policy front for food safety rules as it is very difficult for caterers to adhere to
it.

If we study the food safety rules, many of them are not possible to adhere by the caterers.
There are 35 rules formed by FSSAI, which cannot be possible at the outdoor venue for
caterers to follow. In many cases venues are not decided before two days, like in Roka
ceremony to adhere to the laws.

Unlike average 18 licences needed to be obtained to run a restaurant, the outdoor caters are
forced to have around 25-30 licences for just 12 hour function. There is a compulsion of a
licence, right from using LPG cylinders to using generators, electric works and fire and food
safety by FSSAI. This makes it difficult for the caterers to function in the complex regulatory
scenario.

“FSSAI is now changing. I am representing the organisation ‘Mission Safe Food India’ in
which we are forcing FSSAI to make separate laws for catering industry to make it easy and
educate the caterers. Government has set up separate committee to make separate laws and
encouraging education process, but implementation is going to take some more time”, said G
S Bindra, MD of Pune based Bindra Hospitality Services Pvt Ltd.

Tax Burden

The higher taxation is proving to be the bone of contention for the industry. In addition to 12-
15 per cent VAT in different states, caterers have to apply 15- 25 per cent service tax as well
before securing good earnings.

“Catering is a social work and government shouldn’t put burden of tax on such sectors, so
that people are not wary of spending on events like wedding”, said Kirit Budhdev, Secretary,
Federation of All India Caterers & All Gujarat Catering Association.

The industry is also concerned with the upcoming GST rule, which is said to propose the tax
cap between 18-22 per cent on goods and services.

“GST will be a big problem for us. It is considered that government is keeping 22 per cent of
cap in GST. Government should have nominal below 10 per cent tax for the industry to make
it organised and to encourage people to spend white money on events like wedding. It’s all
because nobody wants to pay 25-30 per cent extra”, added Narendra Somani.

Employment opportunities

While employment is a big issue in India, the sector provides a lot of employment
opportunities to even uneducated class across metros to tier II and IV cities. An individual
can earns Rs 500- Rs 700 to Rs 3000- Rs 4000 a day in catering. There are more than 75 per
cent of vacancies in the industry for employment.

Thus, many hotel management and catering institutes have been mushrooming across many
cities in the country. Students are also taking keen interests in joining the professional
courses to make a career in the sector.

Food

Indians have always had intrinsic fervour for good food. Today, with more Indians travelling
than ever before, they have access to the best global dishes. Hence, their expectations from
catering services have also risen. To meet the ever-increasing demand for new cuisines,
caterers adapt to changing trends by preparing wide range of culinary delights and presenting
it with panache.

“Indian food is richest in the world. You won’t be able to taste even 10 per cent of the recipes
anywhere in the world, what you can taste in India. In international weddings, average
gathering is of 100-150 people and in Indian wedding the average gathering will be of 1000-
5000 people. So, the challenge here is completely different from international level.
Whatever innovations are being introduced, they are starting from catering and then
transferred into restaurants”, said Lalit Jain

The sector has witnessed paradigm shift over the years with state of the art technological
offerings, innovative concepts, growth in Indian regional food, multi cuisine across regions
specialities with global cuisine trends. The Italian, Chinese and Japanese cuisines are also
gaining preferences among food frenzy youths.

With thriving growth in industries and IT/ ITES sector, corporate catering with classic
courses of delectable menu is gaining huge popularity. There has been significant increase in
online search for catering services that is emerging as an important local service category.
Size of the industry

India is a country of festivals and ceremonies being conducted in the form of important
events on social occasions every year. So, the scope of catering in the country is worth taking
a note. It is the fastest growing sector, which has seen surge in the demand across the country.

The estimated cost of wedding in India is no less than between Rs 5lakh - Rs 5cr in India. A
person spends 1/5th of the lifetime accumulated wealth on wedding of his son or daughter.
Half of the Indian population is between the age bracket of 28-29, so, the wedding market is
estimated to boom like never before in the coming 5-10 years. Hence, with this, the catering
industry is set to grow rapidly.

“Catering in India has now become an integral part for the success of various events and
social occasions. It is one of the fastest growing sectors that has seen surge in demand across
the country. The sector, though largely unorganised, is estimated to be dominated by over
two-million caterers primarily in metros, tier 1 and tier 2 cities. Caterers have adapted
innovative flair, while doing their business on grand scale for weddings, social gatherings,
formal events, conferences and parties” said Yogesh Chandarana, Vice President, Federation
of All India Caterers.

Estimated size of the catering industry in India is Rs 15,000-20,000cr and having annual
growth of 25-30 per cent.

Indian Food Services Industry Overview

A decade back eating out had not been a prominent feature in an Indian’s life but over the
years, due to changing consumption pattern, eating out has gained momentum. This changing
pattern has ensured constant growth for the Indian Food Services market.

India’s Food Services market has come a long way from early 1980’s when the number of
organized brands were countable and the market otherwise was dominated by un-organized
players. The revolution in this sector began in 1996 with the opening up of restaurants by
McDonald’s, Pizza Hut, Domino’s followed by Subway, Haldiram’s, Moti Mahal and
Barbeque Nation etc.

1: Evolution of Indian Food Services Market in India

Phase 1:

No clear segmentation based on offerings was witnessed. Most of the Indian brands were
running Multi Cuisine Restaurants and were offering different products under the same roof.
However, with the entry of International brands like McDonald’s, Pizza Hut, KFC and
Domino’s in 1995-96, segmentation based on offerings and service started in India.

Phase 2: Demand for food joints in Tier II cities in the 2000s was powered by increasing
urbanization, rising personal disposable incomes and more economic activities. A huge
untapped population coupled with changing consumer lifestyles gave players an incentive to
expand into Tier II cities. Also, a clear segmentation of formats started to emerge based on
the offerings and service style such as QSR, CDR, FDR etc.

Phase 3: The current decade is overseeing a shift to a larger organized sector. Customer
retention,a higher range and depth of offerings are new goals among organized players. This
phase witnessed a sharper segmentation within the different formats based on consumer
needs and offerings by the brands e.g. within QSRs there is a clear differentiation between
pizza chains and burger chains, within CDRs a further segmentation was observed as
premium and value based CDRs based on attributes like ambiance, service style and cuisines
etc. This phase has also seen the birth of food technology which is estimated to be growing at
almost 15-20% per year.

Market Size & Growth Potential

Market Structure
Food Services Industry is classified in two segments: organized and unorganized based on
following three key parameters: (i) accounting transparency, (ii) organized operations with
quality control and sourcing norms, and (iii) outlet penetration.

The Food Services outlets that do not conform to the above three key parameters would be
categorized under the ‘unorganized’ segments. This segment primarily comprises of dhabas,
roadside small eateries, hawkers and street stalls.

The organized segment conforms to above three parameters and is further classified in
Chained and Standalone formats. Chained formats are domestic and international formats
with more than three outlets present across the country.

The Chained formats are further classified in six sub segments based on price (avg. price per
person), service quality and speed, and product offering. The sub-segments are: Fine Dining,
Casual Dining, Pub Bar Club & Lounge (PBCL), Quick Service Restaurants (QSR), Cafes
and Frozen Desserts. The definition of these sub segments and average price points are given
in table below:
2: Structure of Indian Food Services Market

Key Segments in the Food Services Market Average

Spend per
Person* (INR)

Unorganized Segment – It includes roadside eateries and dhabas which 10-100

have been the most common
eating out
option.
Organized Segment – Consists of:
a) Standalone restaurants across all formats with less than 3 outlets. -
b) Chain format which has 3 or more outlets across all formats.
Chain
Segment
Café Coffee & chai bars as well as parlours and bakeries.
High focus on beverages supported by food items. 50-250
Eg: Starbucks, Café Coffee Day etc.
Quick Focused on speed of service, affordability and convenience.
Service Strong focus on takeaway
Restaurants & delivery with minimal table service. 75-250
(QSRs)
Eg: Haldiram’s, McDonald’s
Frozen Comprises small kiosk formats of ice-cream brands and has
Desserts/ now extended the dine-in
Ice-Cream concept to frozen yogurt brands. 50-150
(FD/IC)
Eg: Baskin-Robbins, Red Mango etc.

Affordable A restaurant serving moderately priced food in an ambience

Casual oriented towards
Dining providing an affordable dining experience, with table service. 250-500
Restaurants The offerings bridge the
(ACDRs) gap between QSRs and premium casual dining restaurants.
Eg: Pind Balluchi, Sagar Ratna etc.
Premium Restaurants bridging the gap between ACDRs and fine dining
Casual restaurants. Full service
Dining restaurants with eclectic high quality interiors and high 500-1000
Restaurants standards of service.
(PCDRs) Eg: Farzi Café, Oh! Calcutta etc.

Fine Dining A full service restaurant with premium interiors, specific

cuisine specialty and high
Restaurants standard of service. They offer a unique ambience and an >1000
(FDRs) upscale service with the
help of highly trained staff.

Eg: Copper Chimney, Olive Bar etc.

Pubs, Bar This format mainly serves alcohol and related beverages and
Café & includes night clubs and
Lounges sports bars. 750-1500
(PBCL)
Eg: Beer Café, Xtreme Sports Bar etc.

The size of the Indian Food Services market in India (organized and unorganized) is
estimated at INR 3,37,500 crore in 2017 and is projected to grow at a CAGR of 10% over the
next 5 years to reach INR 5,52,000 crore by 2022.

3: Indian Food Services Market Size

 The unorganized segment’s share in the Food Services market reduced from 70% in 2013
to 66% in 2016 and is projected to fall to 57% in 2022. This is the case as many
unorganized businesses are moving towards the organized sector.

 The organized market (chain and organized standalone outlets) is estimated at INR
1,15,000 crore in 2017 and is projected to grow, at a CAGR of 16%, to reach INR
2,37,000 crore by 2022 gaining a share of 40% from 31% in 2017.Sodexo India On-Site
Services.

4: Market Share & Growth

Market Market Market Share CAGR CAGR

Share Share
Market Market Share CAGR CAGR
Share Market Share
(2022 P)
(2013) (2017) (2022 P) (2013 – 2017) (2017 – 2022)
Unorganized 70% 66% 57% 6% 7%
Market
Organized 30% 34% 43% 11% 16%
Market

The organized standalone market share in total Food Services market is projected to rise
to 29% in 2022 from 24% in 2017. This is the case as increasing disposable incomes have
encouraged owners and entrepreneurs to open such organized outlets. Moreover, this
segment is projected to grow at a CAGR of 14% from 2017 to 2022. The chain market
share is expected to increase from 7% in 2017 to 11% in 2022. This segment is projected
to grow at a CAGR of 21% from 2017 to 2022.

Organized Standalone Market

 The organized standalone market is the largest organized segment with a market share of
24% in 2017. The segment is expected to grow at a CAGR of 14% from INR 82,000
crore in 2017 to INR 1,60,500 crore by 2022.

Organized Standalone Market Size

The Casual Dining Restaurants at INR 50,000 crore in 2017 formulate around ~61% of
the organized standalone market and is growing at a CAGR of 16% to reach INR
1,05,500 crore (66%) in 2022 followed by QSRs growing at 15% to reach INR 21,500
crore in 2022.

Organized Standalone Format’s Market Share

FormaFORMAT Market Share
(%)
FY FY 2017 FY 2022
2013
Casual Dining Restaurants 60% 61% 66%
Quick Service Restaurants 12% 13% 13%
PBCL 15% 14% 12%
Cafés 8% 7% 6%

Fine Dining Restaurants 3% 2% 1.5%

Frozen Dessert/ Ice Cream 2% 2% 1.5%

Growth Drivers of Indian Food Services Industry

With a prospering economy and a vibrant population of 1.3 billion people, India is today
under the global spotlight for consumption-oriented sectors. Changing cultural dynamics and
family structures have resulted in creation of multiple households. These new households
have spurred the trend of food consumption from alternate avenues (non-home cooked food).
A larger workforce and greater employment generation in the liberalized economy is another
factor which has contributed to higher discretionary spending on eating-out and dining-in.

Thus the interplay of these factors is anticipated to sustain the industry’s growth momentum
in the foreseeable future.

Industry Trends & Patterns

The catering industry in India has been consistently growing in recent years and many players
have realised the segment’s growth potential. Although there are no official figures out on the
size of the industry, it cannot be denied that this industry is here to stay.

The catering segment in India is mainly dominated by unorganised players, many of who run
their business from the comfort of their homes and small establishments. But in recent years,
the scenario has changed. A lot of organised operators comprising international catering
companies and big restaurant chains have also started taking catering seriously. Catering is no
more limited to weddings and birthday parties in the country. Moreover, the imposition of
various kinds of taxes by the government is also resulting in the growth of the catering
business.

According to Vineeta Tikekar, Vice President – Marketing and Communications, Sodexo

India On-Site Services, which operates its catering business in 102 Indian cities, “Our market
is classified into two sections – the total food services market in India, which is about INR
620 bn, and the target food services market in India, which is about INR 91 bn. As per our
estimates, close to 25 percent of our target market is controlled by organised players.”

According to Neha Manekia, Director, Silver Spoon Gourmet – a Mumbai – based catering
company that specialises in gourmet European cuisine — there aren’t any recent figures, but
the catering services industry in India has been consistently growing at the annual growth rate
of 15-20 percent. In 2009, the industry was worth INR 15,000 crore. Deepti Dadlani, Brand
Marketing and Communications Head, deGustibus Hospitality, which runs Moveable Feast
— the catering division of the company — agrees. “It will be very difficult to comment on
the overall market size of the organised catering segment of the country because I don’t think
there is any real figure that is out yet,” she adds.

Growth Factors

In the next five years, Sodexo India On-Site Services expects the organised food retailing
segment to broaden its target market in food services with an approximate 15 percent growth
rate. On the consumer front, increased mobility, exposure, aspirations and availability of a
substantially wider range and products would also contribute to this market shift. In addition,
increased regulation and stress on quality and safety would lead to a preference for organised
players.

With the changing needs and lifestyles of consumers, global as well as Indian food
consumption patterns are rapidly evolving. According to Tikekar, a huge production base,
increasing organised food retailing and growing export opportunities for favourable
regulatory environment are all leading to the growth of the sector. Organisations and
consumers have become more conscious about what they serve and eat. She adds, “The
importance of quality and safety has become the most vital factor when it comes to catering
at corporates. Also, the food offered to employees is widely considered one of the important
aspects for retaining employees. Moreover, the government has strengthened the food safety
norms due to which organisations prefer companies that have very strong health and safety
norms, and this to a large extent is driving the growth,” states Tikekar.

Manekia reasons, “People celebrate a lot of occasions at home now, since due to increased
taxes, dining and drinking outside has become all the more expensive, which is also fuelling
the growth of catering.”
Competition

The corporate catering market is highly fragmented in India, which includes a handful of
international and organised players. “Sodexo is the leader in the segment with more than 10
percent of the market share,” informs Tikekar. Recently, the market has also seen many
consolidations with international companies collaborating with local organisations. This
surge has led to a healthy increase in the competition from international players with many of
them making strategic investments in the country.

“The competition in this particular segment is also high. With more and more companies
these days entering the hospitality sector, the competition has become quite intense. It is
tough, but it is good because increased competition also leads to the development and
expansion of the market as a whole,” believes Tikekar.

Dadlani, on the other hand, believes that competition is not a matter of concern. “What works
to our advantage is that we have a monopoly in catering, especially in weddings and banquets
— something that most players don’t have. Moreover, we cater at least two functions daily,
every single day throughout the year. Nevertheless, the competition is cut throat in this
industry, and so are the challenges.”

“There are very few catering chains in India and most have developed after having an
established restaurant,” adds Manekia. “Business is always tough, you have to be at the top of
your game every single day to waive off the competition and survive another day.”

According to Dadlani, nobody makes a 100 percent payment in advance in the catering
business. “So if you do not deliver the promise and the expectation, you are going to lose
money. Secondly, no one is going to use your services again. Forget that you would even be
recommended,” she states. Big catering companies today also hire a group of quality
checkers for their catering division to conduct a check of each and every part of the function
— be it decor, curtlery or food — to ensure that they do not run to the difficult waters.

Clientele

Moveable Feast has recently started to organise a number of functions outside Mumbai. “We
cater to clients who are are looking for high-quality food and are ready to pay a slight
premium on it,” reveals Dadlani. “We were the catering company for the Filmfare Awards
and the IPL. We do catering for a lot of gymkhanas, high net worth individuals and a lot of
middle class functions too. We do corporate events on a daily basis,” she adds.

“Being a niche gourmet company, our food is enjoyed by a wide variety of clients. The
biggest companies in Mumbai from Mahindra to Ceat, Godrej to Rolls Royce are part of our
esteemed client pool,” says Manekia of Silver Spoon Gourmet. The company also caters to
home-based parties but specialises in gourmet European food only.
Sodexo, whose services extend nationwide, sees potential growth in the healthcare and
education sectors, although these are at quite a nascent stage. As per their estimates, they
expect substantial rise in the services provided to high-end hospitals, educational institutes,
etc.

Food Inflation

According to the global rating agency Moody’s, India’s high food inflation is credit negative
for the country as it hurts government finances and curtails the ability of the RBI to deal with
monetary issues. The country has been facing the problem of food inflation for quite a long
time now, which has greatly affected the food service industry.

Claiming that the company has a very clear-cut policy of profit, Dadlani says: “Our whole
process is standardised. As far as possible, we try to absorb the cost of inflation within our
company. We have been doing it for a long time now. Many a times, customers are not aware
of the economics of the food industry, and they are not ready to listen. But yes, sometimes
when you cannot absorb more, you have to increase the prices.”

Sodexo India follows a much evolved and globally successful template for food cost
management called ‘Five Star’. This has produced results in all major Sodexo countries over
the last eight years, says Tikekar, and involves many steps such as optimisation of
specifications, item rationalisation, vendor rationalisation, efficient distribution, logistics cost
optimisation, and source buying to deliver better inflation control.

Success Mantra

For every business to be successful, there are some golden rules to follow and there are some
major dont’s that need to be kept in mind. Manekia suggests not to underestimate the time
taken and the costs associated with setting up the food business. “It will always take double
the money and time you ideally expect it to take,” she says.

Dadlani, on the other hand, feels that catering companies should always be transparent and
never cheat. “Deliver your promise because once you lose the trust of your end user, you are
never going to get it back. Don’t take your position in the market for granted and always be
updated on new trends. And, last but not the least, offer value for money to your customer,”
she suggests

Tikekar informs: “Every day, Sodexo India On-site Services touches the lives of 8,00,000
consumers, all of whom rely on our safety systems. Maintaining a healthy and safe
environment has always been a priority for Sodexo. We place high emphasis on achieving a
world class health and safety culture at our client sites and were delighted to receive the
prestigious ‘International Safety Award 2013’ with Merit from the British Safety Council,
this year as a recognition of our efforts. Our other prime focus is on promoting healthier
lifestyle choices, and we do this by offering varied and balanced food options with a reduced
intake of sugar, salt and fats at our client sites with the help of an in-house dietitian, menu
development chefs, etc.”

Emergence of MNCs

The emersion of MNCs is leading to an increased focus on health and safety. These
companies stress on stringent safety norms in their own day-to-day businesses and expect the
same from their outsourced food partners as well. This is leading to a preference for global
companies who have a high focus on standards. “As far as direct competition is concerned,
MNCs don’t pose a risk but will help in increased clientele definitely. It will be good for us,”
concludes Manekia.

It is quite clear that the catering scenario in India is only getting competitive, riding on
various factors that is propelling its growth. And this spells good news for the end consumer
who is going to get good quality hygienic food at a very well structured price. But it is yet to
be seen, how this industry shapes itself in the coming future .

Competitors

Sodexo India On-Site Services

Sodexo’s comprehensive, integrated solutions cover a wide range of services from
construction to reception, sterilization of medical equipment, cleaning, foodservices and
technical services.

Profile Details
Competitor Name Sodexo On-site Services
City (Head Quarter) Gurugram, Haryana
Founded in Year 1997
Cities of Operation 1,000
Number of Employees 43,000+
Orders or Meals per day 5,00,000+
Types of cuisine served All types
Do they have their own kitchen or outsource it? Outsource
-Staff restaurants
-Executive dining
-Vending machines
Any other highlights or USP of their product / -Take away
services offered -Luncheon meal trays
-Patient, staff and visitor dining
-Student and faculty dining
-Special events
Pricing Charged Data not available
Any Awards / Recognition Yes
Revenue 1.4%
Growth Rate 12.50% per year [ 5 yrs ]
Profitability 5.7%
Investor Funding received Data not available
-- Grow and deliver solutions to
clients across segments of
remote site, healthcare,
education, corporate services
Future Plans (can get this from founder interviews
and sports and leisure.
etc)
--working with many clients to
design solutions to improve the
'Quality of Daily Life'

Silver Spoon Gourmet

Silver spoon Gourmet is a gourmet company specializing in gourmet European cuisine and
gourmet gifting.

Profile Details
Competitor Name Silver Spoon Gourmet
City (Head Quarter) Mumbai, Maharashtra
Founded in Year 2012
Cities of Operation Mumbai
Number of Employees 2-8
Orders or Meals per day 50+
Types of cuisine served European cuisine
Do they have their own kitchen or outsource it? Yes they have their own kitchen
-Cocktail/ Buffet Parties
-Multi-Course
Any other highlights or USP of their product /
-Corporate Catering
services offered
-Special Services
-Gourmet Gifting
Pricing Charged 800 rupees per person
Any Awards / Recognition Data not available
Revenue Data not available
Growth Rate Data not available
Profitability Data not available
Investor Funding received Data not available
Future Plans (can get this from founder interviews --currently busy with our central
etc) kitchen and party orders.
Crystal Gourmet

Krystal Gourmet Pvt. Ltd. namely: KGPL came in to existence in the year 2009. its corporate
veg and non-veg catering service with a full fledged centralized Kitchen at Kalina, to dish out
and serve well thought out menus, prepared in hygienic conditions by experienced Chefs,
delivered & served at these Corporate cafeterias in a well organized manner, through
structured annual contracts.

KGPL is a subsidiary of one of the leading facility management companies in India, Krystal
Integrated Services Pvt. Ltd namely: KISPL the only facility management company which
has a wide range of facility management services in its portfolio and the competency to
integrate all of these to offer a ‘single window’ solution to its valuable customer.

Profile Details

Competitor Name Krystal Gourmet

City (Head Quarter) Mumbai

Founded in Year 2009
Cities of Operation Maharashtra
Number of Employees -
Orders or Meals per day Data not available
Types of cuisine served All types
Do they have their own kitchen or outsource it? centralized Kitchen
-Corporate Catering
-Boardroom Lunches Services
- Loafers our Onsite Bakery
Counter
- Events and theme parties for
Any other highlights or USP of their product /
corporate
services offered
- Food Festival for corporate
- Specified bakery services for
B2B retail
- Kitchen designing

Pricing Charged Data not available

Any Awards / Recognition Data not available
Revenue Data not available
Growth Rate Data not available
Profitability Data not available
Investor Funding received Data not available

--To offer variety in

preparations, quality services at
Future Plans (can get this from founder interviews
the right time and under
etc)
hygienic conditions.
Saanvi Foods (Hospitality)
Saanvi Star Hospitality Pvt. Ltd is a group of Star Caterers; From the year 1999,we have been serving
hospitality services in corporate, industrial and other commercial sectors. having central kitchens at
Marol, Andheri & Airoli(Digha), Navi Mumbai. It’s exquisite & innovative food, spectacular
presentation & unfailing service have enabled with experience and served more than 100 corporate,
industrial and other commercial canteens. Our long associated and satisfied clients are the testimony
of our quality services.

Profile Details
Competitor Name Saanvi Foods (Hospitality)
City (Head Quarter) Mumbai
Founded in Year 1999
Marol, Andheri & Airoli(Digha),
Cities of Operation
Navi Mumbai
Number of Employees Data not available
Orders or Meals per day
Punjabi, Moghlai, Chinese,
Continental, Maharashtrian,
Types of cuisine served
South Indian and other Indian
cuisine
Do they have their own kitchen or outsource it? Central Kitchen
-Mass Corporate Catering
-Mass Industrial Catering
Central Kitchen Concept
-On Site Kitchen Concept
-Providing different counters
like Juices, Sandwiches, Bakery,
Any other highlights or USP of their product /
Cakes & Pastries and MRP
services offered
Products.
-Guest House Management
Operation
-Family Restaurants & Hotels
Operation
-Outdoor Parties
Pricing Charged Data not available
Any Awards / Recognition Yes
Revenue Data not available
Growth Rate Data not available
Profitability Data not available
Investor Funding received Data not available
--To become no.1 caterers in
hospitality services.

--To cater food service to all

segments which focus on
Future Plans (can get this from founder interviews
Hygiene, Taste, Quality and
etc)
Nutrition.
--To provide quality food in
sufficient quantity with high
standard hygiene at reasonable
price .