Quick Service Restaurants (QSRs), as the name suggests, focus on serving food quickly. Dining out is no longer limited to special occasions, it has become an integral part of urban culture, particularly among millennials and Gen Z. The entry of global brands like Domino’s and McDonald’s in the mid-1990s not only introduced the QSR format to India but also kick-started the growth of the organised food services sector, which was virtually non-existent at the time.
In this article, let’s take a deeper look into India’s QSR industry and explore whether it presents promising investment opportunities.
Current State of the QSR Market in India
India’s food service market is among the fastest-growing in the world. It includes everything from restaurants and cafes to food delivery apps. The market is expected to nearly double from the current Rs 5.5 lakh crore to Rs 10 lakh crore by 2030, driven by rising incomes, urbanisation, a young population, and a growing preference for dining out or ordering in.
India’s QSR segment, in particular, is entering a new phase of rapid growth. It is estimated to grow by 10% to 12% to reach $27.8 billion by 2025, with store count rising by 13% to 15%. By 2030, the segment is projected to hit $43.5 billion.
Interestingly, while tier 1 cities have been the main growth drivers so far, the focus is now shifting towards tier 2 and tier 3 cities. These smaller cities are becoming key engines of growth, driven by rising earnings and increasing disposable income.
Major Players in the Indian QSR Industry
There are five major players dominating India’s QSR market. Here’s a look at their market shares based on FY25 earnings:
Jubilant FoodWorks, the master franchisee for Domino’s Pizza in India, holds a significant share of the QSR market.
Key Growth Drivers for the Indian QSR Industry
The Indian QSR segment is set for robust growth. Here are the major factors propelling this upward trend:
Rising Per Capita Income and Consumption: India is projected to record the highest global growth in per capita income at 5.4% annually between 2024 and 2033. This will directly boost consumer spending, including on QSRs.
Rapid Urbanisation: Over 40% of India’s population is expected to live in urban areas by 2030, up from 31.1% in 2011. Urban lifestyles demand faster, more accessible food options, making QSRs a natural choice.
Digital Penetration and Food Delivery Boom: Internet and smartphone adoption has transformed food consumption habits. In 2024, Swiggy and Zomato handled 83 million biryani orders. With over 6.6 crore urban users on food delivery platforms, this convenience-driven demand is significantly fuelling QSR expansion.
Tax Relief Measures: Increasing the tax exemption limit to Rs 12 lakh per year has resulted in higher disposable income among the middle class, encouraging more spending on dining out and delivery services.
Demographic Advantage: India’s young, working population prefers fast and easy meal options. QSRs align perfectly with their busy lifestyles.
Challenges in the Indian QSR Industry
Despite strong tailwinds, the Indian QSR market faces several challenges:
Rising Operational Costs: Increased costs related to raw materials, wages, and rentals are putting pressure on margins, particularly for smaller players.
Changing Consumer Preferences: The post-pandemic era has brought lasting shifts in behaviour, with many preferring takeout and delivery over dine-in, pushing QSRs to adapt their service models.
Intensified Competition: The entry of numerous domestic and global players has saturated the market, making customer retention and differentiation more difficult.
Supply Chain Disruptions: Raw material shortages, labour constraints, and logistical bottlenecks continue to disrupt operations.
Regulatory Compliance: Food safety, labour laws, and licensing regulations demand significant attention. Non-compliance can result in both legal and reputational risks.
Stocks to Add to Your Watchlist
Future Prospects
According to consulting firm 1Lattice, by 2028 nearly one in every three food outlets in India will be a QSR. The segment’s share is projected to rise from 19% in 2018 to 29%.
The QSR industry is clearly entering a high-growth phase. While tier 1 cities continue to provide a solid foundation, real momentum is expected to come from tier 2 and tier 3 cities. Furthermore, 100% FDI under the automatic route in single-brand retail is encouraging long-term investments in the space.
In addition to major listed players, a wave of new-age QSR brands, such as Wow Momo, Biggies Burger, Curefoods, Samosa Singh, and Burger Singh, is aggressively expanding across the country.
As QSRs cater to a diverse audience, from Gen Z to millennials, the industry is also embracing innovation, from drone deliveries and robotic kitchens to hyper-local marketing strategies, all aimed at keeping pace with the evolving Indian consumer.
*The companies mentioned in the article are for information purposes only. This is not investment advice.
*Disclaimer: Teji Mandi Disclaimer
