The country’s food services sector, pegged at more than Rs 4 trillion, grew at 11 per cent in the past three years and is projected to reach close to Rs 6 trillion by 2022. That’s a sunny outlook by a leading industry association, but there are pointers in its 300-page latest report that show Indians are perhaps not spending much on eating out, and even less when it comes to high-end restaurants.            

There are at least five reasons to believe that the country’s food services market could be much more vibrant than it is now. First, take a look at the fine dining numbers. According to the research based on interaction with 3,200 consumers across 24 cities, fine dining has emerged as the least preferred choice with only 2 per cent respondents opting for it, while affordable casual dining restaurants were at the top with 48 per cent. Even premium casual dining restaurants are hardly popular with only 5 per cent making it their preferred destination.    

The National Restaurant Association of India (NRAI) report, that has also taken into account data collected from around 130 restaurant CEOs, shows that fine dining average spend stands at Rs 1,408 per trip, against Rs 719 per trip in the case of affordable casual dining and Rs 1,182 per trip for premium casual dining. While the average number of trips a month for fine dining is at 3.5, that for premium casual is 3.4 and affordable casual at 3.9. Fine dining restaurants at a market size of Rs 2,872 crore makes up for a marginal share of the total pie.

The second reason why Indian eating out has a lot of catching up to do is how much more others like China and Brazil have grown. Against the estimated size of India’s food service market at $61 billion in 2018-19, that in China was $815 billion and Brazil $228 billion.      

The third indicator is the pattern of spend while eating out. The preferred mode of payment when consuming non-home cooked food is cash. The research points at 90 per cent of the respondents paying by cash, while 7 per cent pay by cards, 2 per cent by mobile/digital wallet, and 1 per cent by meal voucher and Sodexo. While digital has been a buzzword in recent years, especially after demonetisation, there’s marginal evidence of technology being used in payments. According to a school of thought, the quality and volume of spend on eating out could improve once the use of cash goes down.

The fourth reason why restaurants need catching up is the rush of investments going into the food tech space with many turning unicorns. In FY19, food tech companies attracted investments worth around $1.5 billion from venture capitalists and private equity players as against $64 million for brick and mortar restaurants. In the previous year, the difference was less with food tech getting $395 million investment and restaurants $104 million. Till FY14, restaurants dominated as tech food firms were yet to storm the market. As real estate is a major headache to deal with for restaurants and consumers preferring to order from home at a cheaper price with a lot more variety, tech food space will only grow.    

The fifth reason is the policy hurdle that restaurants face. In India, you need anything from 12 to 17 licences to run a restaurant, against four each in China and Singapore. In Singapore, you need a food shop licence, liquor licence, importing food licence and halal certificate. In China, you need a sanitation licence, environment licence, fire licence and sales licence.

Check out the long list of permissions needed in India from across central and state agencies. You get the food safety licence from the regulator FSSAI. For health/trade licence, several rounds of the state health department and municipal corporation will have to be made. Then, there’s an eating house licence, which also happens to be the most controversial one, with the industry demanding its removal for a long time. This is mandatory only for Delhi and the issuing authority is the police commissioner-licensing. Weights and measures permission from the Legal Metrology Department and signage licence from the municipal authorities in some states are among the other tricky approvals. In addition, there are clearances from the excise commissioner for liquor licence, approval of restaurants from the department of tourism, music licence from the Copyright Societies, environment nod from the state pollution control board, no-objection from the Fire Department, lift licence from the concerned authorities… and it goes on.

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