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Foodtech key to tapping into growing Indian foodservice market

A new report from TechSci Research shows that over the next five years, India may be one of the most promising markets for food service investment, But you must be a leading-edge system for both online ordering and meal delivery.

July 26, 2016 by S.A. Whitehead — Food Editor, Net World Media Group

With nearly 18 percent of the world's population, it's clear to see why most major food service brands are already well-represented in the world's second most populous country of India. A  new report from TechSci Research, however, shows that over the next five years, any brand that wants to seriously play there must also have powerful systems for both online ordering and meal delivery ready to roll. 

How big is the market now?
India's food service market amounted to more than $400 billion n 2015, according to TechSci, and the research firm's latest report, India Foodtech Market Forecast and Opportunities, 2021, shows that this number is bound to grow at a skyrocketing rate over the next five years due to numerous factors. The country's ever-expanding internet and smartphone penetration, however, are key elements to success there. 

In fact, the study shows that major investments in food delivery and online ordering systems in India is helping grow this market at record rates, which makes it a lucrative region for food service investment, according to a news release.

Other factors contributing to this favorable outlook, according to the report, include: 

• Surging disposable income.
• Increasing numbers of families with two incomes, yet no children.
• Massive growth in internet use (27 percent of population last year).
• Rapid growth in smartphones sales. 
• Convenience of online ordering and delivery. 
• Prevalence of money-saving deals and rewards online.
• Preference for alternate online payment methods. 
• Far lower operational costs for online ordering-only model of food service (half of traditional restaurant operational costs).
• Key demand generation from growing number of college students, working couples and office-goers. 

Indian foodtech: Two key players

The research separates the key players in this growth industry — collectively referred to as foodtech — into two groups: Online restaurant based-companies and food aggregator companies.

Online restaurant-based players dominate this booming market with a revenue share of more than 70 percent last year, according to the report. That dominance should continue for the next five years, according to research findings, which named  McDonalds, Zomato, Domino's Pizza (a franchisee brand of Jubilant FoodWorks) and Pizza Hut (a licensed brand of Yum! Foods) as its key players. All are expected to maintain their dominance over the next five years, according to the study. 

The research also indicates that southern and western India generate the most demand for food service, followed by northern areas of the country. But the research indicates that by 2018, the northern section of India will surpass the demand in the western region, moving northern India to second place for demand generation nationwide.  

"Foodtech companies are eyeing towards expanding their footprints in tier II and tier III cities across India," said TechSci Research Consultant Ruchit Mahendru, in a news release about the study. "Further, the number of companies entering into the market every year is increasing at a rapid pace. With growing competition, online food ordering and delivery companies are also focusing on faster delivery in major hot-spots in the market to increase their customer base."

About S.A. Whitehead

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Pizza Marketplace and QSRweb editor Shelly Whitehead is a former newspaper and TV reporter with an affinity for telling stories about the people and innovative thinking behind great brands.