On a recent visit to our Bengaluru office, I passed the famous Rameshwaram Cafe, packed as usual.
I was told that despite such long lines, the service is quick – from getting a token to enjoying your idli and dosa, it takes less than 15-20 minutes.
That's just one piece of the puzzle explaining why this place always teems with people.
Nestled in a compact 10 x 15 square feet space, Rameshwaram Cafe outdoes itself. This South Indian eatery:
The success story of Rameshwaram Cafe and thousands of other restaurants in India highlight the immense potential inherent in India's QSR business model.
In this edition of Three Point Five, let's explore the interesting business of Quick Service Restaurants (QSR).
Brands like IDC, a pan-India chain, The Filter Coffee in Bangalore, and Idlinama in New Delhi are all part of the burgeoning trend of offering quick, local food to consumers. These brands have carved out a niche in the QSR market, each with its unique approach and success story.
Here's how they've managed to do so –
Prioritising branding: In the past, restaurateurs often overlooked the significance of branding. However, trailblazers like Rameshwaram have flipped the script. They've meticulously crafted every detail - from their logos to the vibrant yellow and orange flower garlands adorning each outlet - creating an experience transcending fast food's realm.
Valuing quality over price: These brands have prioritised the provision of hygienic and top-notch food, even at a price marginally higher than local eateries. This strategy resonates with the contemporary urban lifestyle, where consumers are increasingly willing to pay a premium for products tailored to their health-conscious needs.
Quick Service Restaurants, known for their fast and minimal table service, first made their way to India and China in the '90s, courtesy of global chains like Pizza Hut and Domino's. But in the late 2000s, QSRs truly found their stride here, riding on the back of changing consumer behaviours and technological advancements.
International brands still hold the lion's share in the QSR market, contributing ~44% in outlets and ~53% in revenue.
Yet lately, QSRs have discovered a winning formula offering quick Indian dishes–- a unique blend of traditional Indian eateries and the efficiency of QSRs, presenting a perfect combination of the traditional and modern.
We are witnessing a significant shift towards a more organised sector, emphasis on customer retention and a diversified range of offerings.
QSRs have successfully expanded their customer base, catering to both price-sensitive consumers and those with higher disposable incomes.
Quick Service Restaurants (QSRs) are experiencing a boom in India, an impossible phenomenon to ignore. According to a report' Quick Service Restaurant Market in India 2023', the QSR market was valued at an impressive INR 171.90 bn in FY 2022, and the forecast indicates a bullish trend with an expected value of INR 431.27 bn by FY2027.
According to Yahoo Finance, a telling indicator of the growth potential is that there are currently about 490 QSR brands, with 428 actively operating. This sector has attracted a massive investment of $1.3 bn through 64 deals, pointing to a buoyant and vibrant market.
The Indian QSR segment is poised for an exciting future. According to a rating agency, ICRA, the Quick Service Restaurant industry is projected to continue with robust revenue growth estimated at around 30-35% YoY for FY2023.
While ICRA anticipates the growth rate to moderate slightly, it is expected to remain strong at 20-25% in FY2024. This sustained growth is attributed to increased demand and market penetration, propelled by a rapid nationwide expansion of outlets.
The incredible success story of Rameshwaram Cafe and the surging acceptance of QSRs indicate immense growth potential, ripe for innovative business models.