India’s food service industry is a vibrant and dynamic sector, deeply rooted in the country’s rich and diverse cultural heritage. This diversity, coupled with the influence of festivals and ceremonies, shapes food preferences and provides unique opportunities for businesses to cater to regional tastes. According to NRAI’s recent report, India’s food service industry, valued at US$ 67.89 billion in 2024, is expected to grow to US$ 92.43 billion by 2028, making it the third-largest in the world, driven by urbanization, rising incomes, and the increasing frequency of dining out.
Key growth areas include quick-service restaurants, cafes, and cloud kitchens, all of which are benefiting from technological advancements like food delivery apps and streamlined point-of-sale systems. However, the sector is not without challenges. Issues such as high attrition rates, labour problems, and the unorganised nature of the industry, with 50-60% of outlets being single-unit establishments, pose significant obstacles. Despite these challenges, the future of India’s food service industry appears promising.
Image Credit: Freepik
India is home to several states, each with its own distinct culinary traditions, local ingredients, and cooking techniques. From the spicy curries of the south to the rich, creamy dishes of the north, regional variations can drastically alter the dining landscape. The cultural diversity of India is perhaps the leading factor shaping its food service industry.
Festivities and ceremonies play an essential role in influencing food preferences, and special dishes are often prepared to celebrate various occasions. For instance, during Diwali, sweets and snacks are integral, while Eid brings forth rich biryanis and kebabs. These celebrations not only highlight traditional foods but also provide food service businesses with unique marketing opportunities.
Moreover, the increasing globalisation of culinary practices has resulted in a delightful fusion scene where traditional Indian flavours are paired with international cuisines, capturing the interest of adventurous eaters.
The global food service market was valued at US$ 5.46 trillion in 2022 and is expected to grow to US$ 6.79 trillion by 2030, with a CAGR of 2.82% from 2023 to 2030. Similarly, India’s food services sector, which is the third-largest industry valued at US$ 67.89 billion in 2024, is projected to grow at a CAGR of 8.1%, reaching US$ 92.43 billion by 2028, according to a report by the National Restaurant Association of India (NRAI).
Source: NRAI, Swiggy, and Bain & Company
India’s food services market will exceed Japan’s by 2028, trailing only the United States and China, according to the NRAI. It will also be the second-fastest-growing market after Brazil, with 10.3 million jobs by 2028. The market currently employs 8.5 million people, with the organised segment valued at US$ 29 billion and the unorganised segment estimated at US$ 38 billion. From 2024 to 2028, the organised category will rise at a CAGR of 13.2%.
This growth will be driven by an increase in eating out, which includes both dining out and ordering in. Today’s average eating out frequency is 7.9 times per month, up from 6.6 in 2019. The average person dines out 3.7 times per month and orders 4.2 times per month, the report adds.
While the NRAI report cites changing lifestyles, urbanisation, and increased convenience as key reasons, it also states that the organised food services market’s share will increase to 52.8% by 2028 from 43.8% currently. In contrast, the unorganised portion would fall from 56.2% to 47.2% over the same period.
The report cites that the top nine cities in India account for around 59% of total revenue in the food services business. Cafes, quick-service restaurants, and dessert and ice cream parlours will be among the fastest-growing segments, rising at rates of 18.6%, 17.5%, and 15%, respectively, between 2024 and 2028. From 2019 to 2024, these three segments grew at a CAGR of 15-20%.
Casual dining, fine dining, pubs, bars, and lounges are predicted to increase by 9.3%, 12.9%, and 8%, respectively, between 2024 and 2028. Cloud kitchens, on the other hand, are expected to be the fastest-growing segment, with a CAGR of 35.2%, thanks to the thriving online delivery business, the survey notes.
In recent years, technology has revolutionised the food service industry in India, enhancing operational efficiencies and improving customer experiences. Point-of-sale (POS) systems have streamlined order processing and inventory management, allowing businesses to operate more smoothly. These systems enable restaurants to track sales metrics and customer preferences, making it easier to adapt offerings to meet demand.
The rise of food delivery apps like Zomato, Swiggy, and Dunzo has transformed how consumers engage with food service providers. Offering convenience and a vast variety of food choices at the touch of a button, these platforms have become essential for many urban consumers.
Moreover, cloud kitchens—commercial cooking spaces that facilitate food delivery—have gained traction, minimising overhead costs associated with operating a traditional restaurant while meeting the burgeoning demand for online food delivery.
Despite its growth potential, the food service industry in India faces numerous challenges. The report also points to rising input costs, limited hours of operation, regulatory compliance, and delivery dynamics as challenges faced by food service operators.
Regulatory compliance: Compliance with health and safety regulations, labour laws, and licensing requirements can be overwhelming, particularly for SME’s. This often leads to delays in establishing operations or increased costs.
Operational challenges: Factors such as supply chain disruptions and fluctuating food prices. Businesses must continually adapt to ever-changing market conditions and consumer behaviours.
Staffing issues: The industry often grapples with high turnover rates. Recruiting and retaining skilled staff in kitchens and service roles can be challenging, thereby impacting service quality.
According to Chetan Patil, CEO of Go Self Serve, “the food and beverage services sector in India faces significant challenges due to its largely unorganised nature, with a high attrition rate and labour issues being particularly problematic. Communication barriers and a lack of a trained workforce further complicate operations. Additionally, with 50-60% of outlets being single-unit establishments, standardising practices and improving service quality across the industry remains a daunting task.”
“Many businesses struggle to maintain consistent service quality, which is essential for the industry’s long-term growth and customer satisfaction,” he further adds.
India’s food service industry stands as one of the most dynamic and diverse sectors globally, contributing significantly to the nation’s economy. Thus, the future outlook of India’s food service sector appears highly promising, driven by various factors that indicate robust growth. Urbanisation continues to play a critical role, as an expanding middle class and increasing disposable incomes are pushing consumers towards dining out and exploring diverse culinary options. The trend towards health-conscious eating is also gaining traction, prompting restaurants to incorporate organic and nutritious ingredients into their menus.
Additionally, the rise of digital technology, particularly in the areas of food delivery and online ordering, is reshaping consumer behaviours, with more people opting for convenience and variety. Cloud kitchens are emerging as a significant segment, allowing businesses to operate with lower overhead costs and better adapt to consumer demands.
As sustainability becomes a focal point, many establishments are adopting eco-friendly practices, such as sourcing local ingredients and minimising food waste. These factors, combined with a rich cultural tapestry that encourages culinary experimentation, position India’s food service sector for continued innovation and development in the coming years. As businesses continue to innovate and adapt to consumer demands, the industry is set to thrive, offering a rich and evolving culinary landscape that caters to a diverse and growing market.
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