How many times have you ordered a Pizza from Dominos or stopped by at Starbucks for your searing hot, no foam latte? Too many times to count. What’s great about these eateries is that you can quickly pick-up your order without the fuss of getting proper seating, using tablecloths and cutlery, or paying for an exorbitant bill. This is what the concept of a QSR is all about. 

What is the QSR Sector in the Food Industry?

The QSR Sector is a part of the Restaurant and Food Services Industry. QSR or Quick Service Restaurants churn out food quickly and efficiently. It is synonymous with fast-food restaurants. These restaurants generally do not provide table service, although they cook food exceptionally fast compared to a fine dine or a gourmet restaurant. 

3 Key Reasons why it’s a Massive Market

Targets age demographic that will elevate sales 

The QSR Market in India is a potentially massive market because the target demographic of the sector mainly comprises Millennials with an optimal age-group demographic between 15-35 years. This age demographic will elevate sales since India’s median age is much lower at 26.7 years in comparison with countries like the United States or China. 

Restaurant food consumption boom 

The per capita income is rapidly increasing in India with Millennials fuelling the country’s consumption boom. Also, Millennials have higher disposable incomes which they are spending heavily on outside food every month. 

Pan-India Internet Penetration

The Internet Penetration is deeply seeping into Tier II, III cities as well as villages. The market is slowly expanding to encompass a pan-India presence. As such, the market opportunity is massive in QSR. 

Why is it attracting Investors’ Interest?

Owing to the pandemic-friendly business model, QSR chains have tremendous opportunities to engage with big companies, especially in the fine dining sector. The Indian QSR sector is also being looked at as a hotbed of opportunities by Private Equity (PE) funds and Venture Capitalists (VCs). QSRs with well-established online and take away models have a chance of being chosen by big companies. 

The two key factors attracting interest from large PE funds and VC’s are:

Cheaper, versatile menus

Food churned out by QSRs is much more affordable when compared to fine dine restaurants. It is age, diet, and budget inclusive which will obviously attract a larger consumer base. 

Low investments

QSRs require low investments since the interior set-up costs are eliminated. Since they are mainly focused on delivering food at top speed, sophisticated high-paid staff and expensive infrastructure investments are not needed. Thus, the business model looks profitable for investors. 

Industry Forecasts and Expectations by 2025

The Indian QSR Market is estimated to be valued at INR 51000 Cr by the end of this year. It is projected to grow at a CAGR (compound annual growth rate) of over 18% between 2021-25. The Restaurant and Food Service Industry will record a rise in CAGR by about 10.4% in 5 years between 2018-2022. The QSR sector in particular will achieve significant growth while the industry as a whole is forecasted to be worth INR 5.5 Tn by 2022. 

The Growth of QSR Start-up Charcoal Eats

Charcoal Eats, a QSR start-up recently raised INR 1 Cr in Growth Capital from GetVantage, a Revenue Based Financing Lender. It’s a food tech brand that has completed over 2 Mn orders since its inception owing to its high-growth phase business model and high-speed execution in delivery of food. Charcoal Eats’ success is attributed to the fact that they are a digital-first food tech brand that’s steadily serving more plates across the country. 

You decided to make a chicken dinner on a Sunday afternoon. How do you acquire fresh meat without stepping out of the house and risking hygiene and safety at an overcrowded butcher’s shop? Besides, most local meat shops remain closed due to frequent lockdowns. Without much thought, you can easily order fresh meat on a home delivery app like Licious or BigBasket. This is India’s online meat market. 

How this unorganised sector is undergoing a transformation

The online meat delivery market has stayed nascent valued at just INR 700 Cr. In 2019, the broader meat market has also remained largely unorganised. But with the faster emergence of online players, it is slowly transforming. Start-ups like Licious, FreshToHome, ZappFresh, BigBasket have seen 3X growth ever since the pandemic broke out. 

Key Forecasts of the Industry

India’s overall meat market is set to grow to more than INR 460,000 Cr by 2024 in Gross Merchandise Value (GMV). It has a large growth runway ahead and is also welcoming of disruption by branded players. The online meat market in India has huge headroom for growth. The demand is only surging, and the sales of online meat players are seeing a significant rise. This trend will further intensify, and India’s online meat market will be very interesting soon. 

What are the consumer pain points?

Purchasing meat from local butchers

The Covid-19 scare forced people to stop going to their friendly neighbourhood meat shops, which has helped online players to a great extent. Super verticals in online grocery and food delivery like Licious, FreshToHome, and BigBasket turned out to be safe and convenient options to acquire fresh meat directly to the doorstep. Covid-19  transformed the fish and meat purchasing behaviour of consumers dramatically. 

Due to safety concerns, consumers moved to e-commerce and online demand shot up for most of the companies. Covid-related apprehensions in purchasing from local/offline butchers led to offline players effectively communicating their superior quality and hygiene practices which boosted customer confidence.

Hygiene issues

As we are aware, the local butcher shops chop meat in roadside stalls which are most often open, teeming with fleas, and are surrounded by unhygienic conditions like open sewers, garbage dumps, stray animals, traffic, and pollution. Online meat companies slice, chop, store, and pack their meat in interiors at controlled temperatures against hygienic, conducive settings for the meat to remain fresh as long as it makes its way to the consumer’s table. The meat provided by online players is clean, without any stain of blood, and has negligible odour. 

Start-ups like Licious adopted industry-first and global standard food safety, and quality management systems right from the beginning of their journey to always ensure hygiene. The success of online meat providers is attributed to vertically integrated supply chains with high bars on quality. Licious is a INR 1000 Cr ARR (annual recurring rate) meat brand. 

Less options

With the local butcher, you can’t place too many demands or requests on the specific cut of meat you want, whether you want your shrimp deveined on both sides, or not. They are mostly overburdened with too many orders and are mostly unable to accommodate too many requests. Also, local butchers usually store 1 or few kinds of options in terms of tenderness of the meat or even in terms of the variety of meat and seafood available. 

Online meat marketplaces like FreshToHome offer a myriad of options including fish  and seafood, poultry, mutton, steaks and fillet, and even Ready To Cook pre-marinated meats, gravies, and curries. The pieces that are provided by online meat marketplaces are of high quality, rich in nutritional benefits, and ideal for young, working consumers. 

The players have innovated to provide consumers a wide set of offerings and attracted them through highly relevant and contextual marketing. FreshToHome enables its marketplace sellers to source and sell high-quality meat and fish directly from livestock farmers and fishermen. They receive close to 15 Mn orders per month and $85 Mn in annualised sales run rate. 

Longer wait times

Butcher shops are overcrowded with people placing orders. They are also short-staffed, and orders get vastly delayed. However, in online meat delivery, you can choose the delivery slots which are mostly not one or two hours later than the delivery time. The customer’s order will be delivered, packed, sealed, and fresh, right at the doorstep. 

Dairy packaging technologies and materials involved in the process makes the products more attractive and eye-catching. Innovation in dairy packaging is not only being driven by the need for sustainability but also because dairy products are highly perishable. 

Ban on single-use plastic

There have been numerous proposals in the pipeline for the ban of single-use plastics across consumer-facing sectors in the packaging industry. The Union Ministry of Environment, Forest and Climate Change announced the Plastic Waste Management Amendment Rules on August 12, 2021. It prohibits 20 identified single-use items by 2022. 

The packing industry has demanded uniform state level implementation for the same. Also, since alternate packaging for single-use plastic like wood is not feasible for manufacturers, this may give rise to new trends. 

Technology-led packaging trends and solutions

Controlled and modified atmosphere packaging

Modified atmosphere packaging is a system in which the atmosphere within the dairy package is initially altered and is eventually allowed to change during storage. Through this technology, the shelf life of the dairy product can be increased through microbiological and sensory indicators. 

Active packaging

Active packaging is a technology-led solution that’s referred to by names like ‘intelligent packaging’, ‘smart packaging’, and ‘connected packaging’. In this packaging methodology, ethylene, oxygen, and moisture absorbent packs are used to maintain the freshness and consistency of the dairy product. 

RFID Tags

Radio Frequency Indicator Tags use electromagnetic fields to auto-identify and track packages. In dairy packaging, these tags are used to track and inform customers about the quality of the dairy products. 

Intelligent Biosensor packaging

Intelligent biosensor packaging technology is the use of biosensors on dairy product packs. These biosensors will communicate the deterioration of the product through colour changes or indicators. This will ensure the health and safety of the dairy product consumer.

QR code embedding

QR code embedding technology, as the name suggests will track the dairy product packages wirelessly. This technology will also create an interactive experience for the consumer. It’s a connected packaging technology. Manufacturers using the technology can enable the QR code to prompt better readability on digital gadgets like smartphones and tablets. The QR codes can be connected to social media and other brand touchpoints. 

Shopping groceries online which earlier looked like a luxury has become a necessity, now as people seek convenience and want to go contactless while shopping. With this, lies the onus of online grocery platforms to deliver best services which in turn have further increased a shopper’s expectations. With conglomerates and e-commerce majors jostling to dominate the online grocery space, Indians are spoilt for choices. Those online grocery startups will emerge as winners, that other than offering deep discounts can offer seamless shopping processes and faster deliveries. 

Much to the likes of online pharma platforms the online grocery startups are ramping up their operations to deliver instant deliveries and want to replicate the similar ‘instant-ness’ of offline shopping. Faster deliveries, also prevent grocery startups from frequent stock-outs. According to RedSeer consulting, quick commerce is expected to grow 10-15 times in the coming five years to become a $5 billion opportunity by 2025.

How will this 10 min grocery delivery model work? 

Here is a simplified process of how this 10 min delivery will work:

• The customer places an order of groceries on the app.
• After the platform receives the order, the hub nearest to the shopper’s residence is alerted of the orders, which picks and packs them.
• The app assigns a delivery partner
• Delivery executive reaches the hub to collect the order.
• The order is delivered to the customer. 

Dependence on dark stores to develop faster delivery models

Online grocery platforms are shifting from the marketplace model to build dark stores or hubs in proximity to consumer’s residences as in the former model the delivery speed slows down. A dark store is a large warehouse or a network of warehouses that stocks inventory to sell directly to its consumers. Grocery startups Milkbasket and BigBasket have implemented this model. 

Distribution from dark stores will help startups gain control more on quality and experience fewer stock-out scenarios.

With the click and collect model involved in dark stores, the startups get a clearer picture of stock levels and therefore have better product availability than a marketplace model. Here, the company does not need to spend on retail experience or store beautification. As a result, the cost is saved to stock more variety of items for less inventory. It improves distribution accuracy, avoids mix-ups, and solves perishability challenges, which are usual hurdles in online grocery delivery.

The ‘eating-out’ habit underwent a massive change in the ongoing pandemic, as people became wary of eating outside due to hygiene and cleanliness concerns. The pandemic also forced people to relook at their food palette and diet as in such times consuming nutritious and immunity-boosting foods becomes paramount. The intermittent lockdowns and curfews imposed by state and central government have painted a grim picture for the QSR (Quick Service Restaurant) chains with the culture of dine-in fading and limited business hours. 

According to a report from Edelweiss Securities, the organised QSR market shrunk by 23 percent in 2021 compared to 2020. Mounting rental costs caused many QSR chains to shut their shops. However, amid losses, QSRs are responding to altered consumer behaviour and bringing changes in their business processes to pull themselves back.

It is rare to find a tea sipper without holding a pack of biscuits, or a house not having the bread as the breakfast option. As disposable incomes improved and more women joined the workforce, the mothers began looking for tiffin and snack options that can be made in no time or hardly involve cooking. Bread and biscuits, initially brought to our country by the British, soon began to rule the Indian breakfast tables and tea-time. In the future, India’s biscuit market, according to the Market Outlook report, is estimated to reach $7.25 billion by 2022 at a compound annual growth rate of 11.27 percent. 

Moreover, the advent of fast-food chains in burgers, sandwiches, and pizza boosted the demand for bread. 

80 percent of the Indian bakery market is dominated by bread and biscuits. As per a report titled, ‘Indian Bakery Market: Industry Trends, Share, Size, Growth, Opportunity and Forecast 2020-2025’ by the IMARC Group, the Indian bakery market is estimated to be worth $13.3 billion by 2025, expanding at an annual compound rate of 9.1 percent. 

But over time, sedentary lifestyles are giving birth to diabetes, high blood pressure, and obesity. Amid emerging lifestyle diseases, the bread, and biscuit industry will witness new consumer preferences and in future will cater to the new behaviour. 

New Emerging Trends in India’s bread and biscuit industry

Caught in a fast-paced life and lifestyle diseases catching young individuals, Indians are demanding food options that are quick to make while providing wholesome nutrition as well, which is mushrooming new trends in the bread and biscuit industry. 

• • No use of refined flour:  Refined flour is an essential element for biscuits and bread, but its regular consumption poses health risks such as -diabetes, obesity, and type 2 diabetes. People are considering consuming foods containing fibrous content such as brown bread and biscuits made out of flour whose husks or outer cover has not been separated.
  • Going Gluten-free: People with celiac disease on consuming gluten-containing foods develop intestinal inflammation. Also, gluten does not hold any nutritional value. Bakery brands are developing gluten-free biscuits, cookies, and bread. For vegetarian customers, brands are going eggless by adding egg replacers resembling the texture of egg bakes. 

We are already thankful enough to Mughals and Delhi Sultans for adding Kebabs, Firni and Mughlai to the Indian palette, but are grateful to them for introducing their heritage dish biryani to India. Interestingly, since its origin in Persia, biryani in India has evolved under the influence of various tastes and spice preferences of Sultans and Nawabs. The Nizams gave a spicy touch to Hyderabadi biryani, Nawab Wajid Ali Shah added potatoes and aroma to Kolkata biryani and the Nawabs of Lucknow added saffron and dry fruits to add a unique taste to Lucknow biryani. 

Biryani – a concoction of meat, sometimes potato, long-grained basmati rice, and rich spices comprising star anise, bay leaves, cinnamon topped with fried onions is a highly relished dish among Indian families during festive and wedding occasions. 

Coming to current times, several hotels and food companies do serve this authentic dish, but what was not liked by two entrepreneurs – Kaushik Roy and Vishal Jindal – was biryani being treated like pizza or burgers, which hotels served in 20 min. It meant that the dish was repacked and reheated to serve in aluminium foil boxes. They soon plunged into the food business to offer a unique experience of this heritage dish. 

Let’s disrupt the biryani eating!!

The duo, Kaushik Roy and Vishal Jindal began their entrepreneurial venture by founding Biryani By Kilo in 2015 from Gurugram. Leveraging Kaushik’s experience of spending many years in the food industry and Vishal’s dream of entering into entrepreneurship, they thought of developing a cloud kitchen model of delivering fresh dum-cooked biryani. The venture soon opened outlets in different cities. To maintain consistency in taste, the duo implemented customised measuring tools and technology for every ingredient to be used in the same manner at different outlets. 

Biryani By Kilo – reviving the Khansama culture 

Biryani By Kilo revived the Khansama style by offering biryani in an earthen pot or famously known as Handi with the brand name embossed. For every order, the biryani is freshly cooked and with every biryani order, they provide customers with Aanch, a chulha, or a stove to help warm the biryani as per the convenience. Moreover, with the word ‘Kilo’ in the name, they provide biryani in Kgs of 1 to 2 serving 3-4 people, perfect for a small family gathering at home. Biryani by Kilo serves both veg and non-veg biryani in three variants: Hyderabadi, Bengali, and Lucknowi. It also serves delectable kebabs, curries, and Mughal-inspired desserts such as Matka Firni and Gulabjamun with Rabri.  It also offers customised catering for at least 50 people. 

It used to be a widely believed notion that for a brand to have national appeal and outreach, it needed to rely heavily on traditional strategies and physical structures more than anything. But the truth is that physical markets typically account for the highest expenditure shares towards rental and business expenses and pose different challenges in expansion processes.

When the COVID-19 pandemic started, many restaurants had to close because they could not pay the rental and administrative fees. And that is where cloud kitchens became the game-changers. Cloud kitchens are a reality today and will continue to exist for various profitable reasons such as accessible scaling capacity and low operating costs. The cloud cooking industry had also performed well in the pre-COVID era; the pandemic gave this idea the boost it needed.

What are cloud kitchens?

A cloud kitchen is a commercial facility explicitly designed for the preparation of takeout meals. Cloud kitchens are sometimes also referred to as virtual kitchens, ghost kitchens, or shared kitchens.

Food prepared by home cooks, housewives and stay-at-home mothers is the most valuable and precious asset which money can’t buy. No gourmet restaurant can provide the satisfaction of eating a fresh, home-style meal made by experienced hands. 

Daalchini, the Woman-led Enterprise

Daalchini is a food tech start-up based in the Delhi-NCR region that’s improving access to affordable home cooked food through IoT (Internet of Things) technology. The company sets up food kiosks and provides instant, affordable, healthy home cooked food through IoT enabled phygital (physical + digital) vending machines. Prerna Kalra leads the enterprise and is currently one of India’s emerging women leaders who turned an idea perceived as feminine (home cooked food) into a novel start-up innovation.

Prerna Kalra – Brain behind the company 

Prerna Kalra, the brain behind Daalchini is a former Paytm employee who co-founded the start-up alongside her Paytm colleague Vidya Bhushan. 

Her womanpreneur story

Prerna Kalra’s womanpreneur story stemmed from a brief work visit to China where she found the answer to her constant struggle with accessing fresh home cooked meals amidst a busy schedule every day. The answer was found in vending machines that could dispense fresh food items. She leveraged the huge tiffin services sector in India after thorough research into the market for home cooked food. 

Business acumen

Prerna’s keen eye quickly observed that despite the home tiffin market comprising over 3500 services providers back in 2017, access to home food was still difficult for consumers. Through Daalchini, she quickly tapped into the demand for strong tiffin and home food services. She also identified several gaps in the market like the shortfall of the logistics infrastructure which she fulfilled through her start-up Daalchini. 

Prerna’s Vision for Home-Cooked Meals in Food Tech

Prerna’s vision for home-cooked meals in food tech was to make healthy and affordable home food instantly available to consumers. The company’s fleet of smart vending machines that make this possible became operational in business settings such as offices, hospitals, and hotels. 

How she led the vending machine concept for home-style meals

Prerna led the company into a vending machine concept for home-style meals by bringing together a team of home chefs who started working at 3 am every day to prepare daily fresh food using prescribed recipes and ingredients. Food safety compliance norms are met with and monitored to ensure that the food is consumable, healthy, and safe to be vended out of the Daalchini kiosks.