India’s food service market set to reach a staggering $78.8 billion by 2026

According to Wazir Advisors, India’s food service industry, currently 47% organized, is projected to expand from $57.2 billion to $78.8 billion by 2026, with organized players holding a 53% market share. In 2023, the organized foodservice market generated $27.1 billion, with $5.9 billion from organized chains and the remainder from independent establishments. Pakhi Saxena, Practice Head – Retail & Consumer Products at Wazir Advisors, predicts that by 2026, organized food service revenue will reach $42.7 billion, with organized chains contributing $9.8 billion.

The growth in this sector is attributed to widespread internet access, particularly through smartphones, facilitating mobile wallet transactions and one-tap payments. Speaking at the India Food Forum in Mumbai, Saxena highlighted the impact of disruptions in the industry, citing cloud kitchens as a significant force, responsible for one in every five orders.

Saxena emphasized that cloud kitchens are reshaping the food service landscape in many Indian cities due to advantages such as low initial investment, operational cost efficiency, higher profit margins, and easier geographic expansion. Notably, she mentioned that Rebel Foods achieved unicorn status in 2021, reflecting the substantial investments flowing into the cloud kitchen sector.

The transformation in food service consumption patterns is influenced by the fast-paced lifestyles of consumers, the growing number of women in the workforce with increased disposable incomes, and time constraints. However, challenges such as seasonal shortages, economic downturns, and rising fuel prices contribute to fluctuations in raw material costs, including eggs, meat, fish, and vegetables. This scenario squeezes profit margins, prompting operators to adjust menu prices, presenting a retention challenge with value-conscious customers.

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