The Indian restaurant industry is witnessing a robust recovery, with growth momentum gaining pace in December, as highlighted by a report from Macquarie Equity Research. Rising discretionary income, evolving demographics, and an increasing number of women in the workforce are fueling this resurgence. International brands, leveraging their broad appeal and efficient operations, are positioned to thrive, while potential tax cuts in the Union Budget may further boost the sector’s outlook.
The Indian restaurant industry is experiencing steady recovery and growth, with December showing a significant acceleration, according to Macquarie Equity Research. This revival stems from rising discretionary spending, evolving demographics, and increased workforce participation by women. Key factors like higher per capita incomes, smaller households, and a declining dependency ratio contribute to the sector’s expansion.
Value-driven offerings and cost control have stabilized same-store sales and improved profitability. International brands hold a competitive edge due to their broader appeal and effective operations in lower-rent areas like secondary streets, enhancing their unit economics compared to regional players in high-rent zones such as high streets.
Macquarie notes, “The nascent consumer adoption of eating out gives international brands a strong advantage, as their appeal attracts consumers to stores even outside high street areas.” However, elevated rental costs and the regional nature of food services create challenges for replicating success across micro-markets and cities.
The upcoming Union Budget may further support the industry. A potential reduction in personal income tax rates for lower- and middle-income households could boost discretionary income, accelerating same-store sales growth (SSSg).
Macquarie emphasizes the importance of brands’ ability to expand store networks at a healthy pace without compromising operational performance or margins. International brands, with their capacity to penetrate less-saturated markets and maintain strong operations, are well-positioned for sustained growth. Their resilience in managing input cost pressures and retaining customer loyalty further strengthens their long-term potential in India.
Overall, the report underscores tailwinds for continued growth in the Indian restaurant sector, driven by favorable demographics, increased consumer spending, and the strategic advantages of international brands.
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