Forecast for the development of the restaurant services market
The relevance of research
The subject of this study is the restaurant services market as part of the catering market in India. The market of restaurant services in this study is understood as a set of enterprises that form the supply of the market, the number of consumers that form the demand of the market, as well as the relationship that arises between sellers and consumers. The end consumers in the restaurant services market are individuals - the population of India
Purpose of the study
Analyzing the state of the restaurant services market in India, assessing the market size, analyzing competitors, as well as determining the factors affecting the restaurant services market
Content
Chapter 1
1.1. Market size
1.2. Growth rates of the restaurant services market
1.3. Restaurant service market trends
1.4. The main problems of the industry
1.5. Stage of life cycle of the market of services of restaurants
1.6. Estimation of the number of buyers and their financial capabilities
1.7. Estimated consumption per capita
1.8. Analysis of sectoral indicators of financial and economic activity
1.9. Price analysis
Chapter 2
2.1. Economic components
2.2. Social Components
2.3. Technological components
2.4. Political Components
2.5. STEP-analysis of the restaurant services market
Chapter 3. Assessment of the degree of competition
3.1. Scale of competition (local, regional, national, global)
3.2. Number of competitors and relative market shares of the largest competitors
3.3. Compact location of industry companies in certain regions
Chapter 4 Industry Forecasts
4.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
4.2. Analysis of the impact on the state aid industry at the current date
4.3. Assessment of the extent of the impact of the crisis on the analyzed market. Barriers existing in the restaurant services market
4.4. Prospects and growth drivers for the restaurant services market
4.5. Forecast for the development of the restaurant services market in the context of the current economic crisis
Chapter 5 Forecasting Methodology
5.1. Methods for forecasting key industry indicators
5.2. Sources of information for forecasting
5.3. Timing of forecasting
Research excerpt
Chapter 1
1.1. Market size
The subject of this study is the restaurant services market as part of the catering market in India. The market of restaurant services in this study is understood as a set of enterprises that form the supply of the market, the number of consumers that form the demand of the market, as well as the relationship that arises between sellers and consumers.
The end consumers in the restaurant services market are individuals - the population of India, in addition, legal entities that organize meals for citizens, for example, during events, can also be consumers.
The Indian restaurant market is still quite young.
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The catering market in India can be divided into three segments according to the types of establishments and the purpose of their visit - eating during working hours or eating together with leisure, as well as on the basis of price:
- public canteens, snack bars;
- canteens of educational institutions, organizations, industrial enterprises;
- restaurants, bars, cafes.
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1.2. Growth rates of the restaurant services market
Market growth rates in the period 2017-2021 allow us to state that the restaurant services market is in a growth stage close to maturity, this is indicated by a slowdown in the market growth rate with a steadily positive trend in the development of the industry, increased competition, and relative price stability in the middle segment.
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Diagram 2. Dynamics of the volume of the restaurant services market, 2017–2021
Dynamics of the volume of the restaurant services market during 2017-2021 has a stable positive trend of development with a tendency to slow down the growth rate.
1.3. Restaurant service market trends
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Let's briefly consider the main trends of previous years, which continue to influence the industry and the restaurant services market.
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It is also worth noting more global trends regarding consumer behavior, changing habits, as well as changing approaches to business in the restaurant services market and other markets.
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1.4. The main problems of the industry
Experts and market operators attribute the lack of personnel to the main problems of the industry.
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However, the most serious problem is the lack of staff, especially chefs. Due to the introduction of restrictions on the work of establishments, restaurateurs had to transfer staff to the minimum wage. The current unstable situation has led many employees to leave for other, more stable industries, and many workers simply did not want to return to the restaurant service industry, as they do not feel stable.
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1.5. Stage of life cycle of the market of services of restaurants
The restaurant services market in India is in a growth stage close to maturity.
The growth stage is characterized by high growth rates of production and revenue. The increase in sales is due to an increase in purchases by existing consumers who have a positive experience with the product. The main task of a company in the growth stage is to use all points of growth to extend this stage.
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At the stage of growth, close to maturity, a base of regular consumers has already been formed. It is necessary to maintain contact and promptly respond to the requests of each of them, as well as monitor related markets - the entry of new players, changes in the composition, market trends. When working with a potential target audience, the emphasis should be on:
- achieving awareness of the company's product and services among the potential target audience;
- search for new consumers - use all opportunities to expand the target audience;
- increasing the frequency of use of the product by existing consumers;
- active formation of loyalty and commitment to the product through attention to the needs of consumers.
The strategy for advancing to the growth stage close to maturity is formed with the aim of being present in the minds of consumers as a market leader. Here, it is most important to confirm your status not only by the terms of delivery and attention to consumers, but also by your presence in industry communities and social projects.
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1.6. Estimation of the number of buyers and their financial capabilities
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Earlier, Rosstat published a demographic forecast until 2036. The most optimistic scenario assumes an increase in the country's population to ...
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1.7. Estimated consumption per capita
The volume of consumption in the restaurant services market per capita in India as a whole correlates with the dynamics of the market volume, since the dynamics of the population over the study period, although it has a negative trend, is declining slightly.
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1.8. Analysis of sectoral indicators of financial and economic activity
Let us consider sectoral indicators of the financial and economic activity of the restaurant and catering services industry in general in order to determine the sustainability of the industry and the enterprises operating in it.
Table 1. Gross margin of the restaurant service industry compared to all industries in India, 2017-2021, %
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Profitability before tax is an economic indicator that characterizes the ratio of gross profit to revenue, in other words, how much profit is in each ruble from services sold.
The return on profit before tax in the restaurant services industry is rather low, throughout the entire study period, this indicator is lower than the same indicator for all sectors of the Indian economy, which indicates a relatively low profitability of this industry.
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The current (total) liquidity ratio is a financial ratio equal to the ratio of current (current) assets to short-term liabilities (current liabilities). This is the most common and commonly used measure of liquidity. The ratio reflects the company's ability to repay current (short-term) liabilities at the expense of current assets only. The higher the indicator, the better the solvency of the enterprise.
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The absolute liquidity ratio is a financial ratio equal to the ratio of cash and short-term financial investments to short-term liabilities (current liabilities). The source of data is the company's balance sheet in the same way as for current liquidity, but only cash and funds close to them in essence are taken into account as assets. It shows what part of the current liabilities of the companies in the industry are able to repay at their own expense and in the shortest possible time and is used to assess the financial position of the industry.
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The absolute liquidity of the restaurant services and catering industry is consistently higher than that of all sectors of the Indian economy throughout the study period...
1.9. Price analysis
Table 3. Consumer price indices in the restaurant services market in India in 2017–2022 (available period), %
The consumer price index (inflation index) is one of the types of price indices created to measure the average level of price changes for goods and services over a certain period in the economy.
A decline in the index means that the prices of goods and services are steadily falling, which is good for the economy. The price indices did not decrease over the period under study, but the increase to the values of the previous period is decreasing in 2019-2020, which indicates the relative price stability in the catering and restaurant services industry.
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Average consumer prices for various catering services are increasing from year to year, as evidenced by the data on average prices provided by Rosstat.
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Chapter 2
2.1. Economic components
Gross domestic product (GDP) is one of the most important macroeconomic indicators.
It reflects the market value of all final goods and services intended for direct consumption, which were produced for a certain period (quarter, year) in all sectors of the economy on the territory of the state for consumption, export and accumulation, regardless of the nationality of the factors of production used.
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2.2. Social Components
India's population is slightly declining in 2019-2021. - accordingly, the level of consumption of goods in the domestic market of India also slightly decreases;
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Changing consumer habits - in recent years, an increasing number of Indians use the Internet to find the necessary information, receive government and other services, which affects the change in habits: people prefer social networks and news feeds to reading newspapers and magazines, personal meetings are replaced by communication in instant messengers , purchases are made in online stores with delivery, etc. Such changes have a direct impact on the restaurant services market - during the period of restrictions, visits to offline retail outlets and restaurants decrease, while citizens began to buy more online, in connection with these facts, the demand for home delivery of ready-made food has increased, which is associated with a high pace of life, the need to work harder.
2.3. Technological components
Development of online trading and orders. When placing an order online, the buyer can pick up the order on his own in some establishments or arrange delivery. This factor has a positive effect on the development of the catering and restaurant services market, as it saves the buyer time on the road and makes it possible to choose the dishes that suit him slowly. An order can be placed on the website of a restaurant or cafe, through a mobile application or from aggregator companies.
Improving the technology of cooking products based on the use of modern innovative equipment, the use of molecular cooking
The possibility of using electronic menus and special mobile terminals, automating business processes and using specialized accounting software in general helps to optimize costs.
2.4. Political Components
The opening of any public catering enterprise is accompanied by the collection, receipt and approval of various documents that every cafe, bar, restaurant should have. In each case, the order of approvals and the composition of the necessary documentation may change, and this depends on various factors. Organizations providing public catering services must undergo certification of these services in accordance with the Federal Law of December 27, 2002 No. 184-FZ ""On Technical Regulation"". In addition, the company must obtain a permit for the production, sale and organization of consumption of public catering products - (SEN, Sanpasport, GPN, District Council), as well as a license for the sale of alcoholic beverages. Passing the procedure for obtaining permits minimizes the presence on the market of unscrupulous players providing low-quality services.
The introduction of an embargo in India, as well as anti-Indian sanctions on a number of products, lead restaurateurs to switch to domestic products, change the menu, increase prices for dishes, which in turn negatively affects some segments of the market under study.
On July 1, 2016, the Federal Law came into force, obliging all retail outlets to record information about the sold alcohol in the Unified State Automated Information System, from January 1, 2017, bars, cafes and restaurants selling alcohol came under the law.
The system of standardization in the catering market in India is based on the application of State standards (about 16 industry GOSTs), which have the status of interstate and operate in the territories of the member states of the Customs Union and apply to catering services in enterprises of various forms of ownership, legal entities and individual entrepreneurs .
It is also worth noting that during the coronavirus pandemic, the Government of India took a number of measures to support the affected industries, some of the support measures have been extended and are currently in effect. Measures have also been prepared and taken to support business in the current difficult economic situation, we will consider such measures in more detail in Chapter 4.
2.5. STEP-analysis of the restaurant services market
Based on the results of the analysis of the factors affecting the Indian restaurant services market, there is a balance of the influence of positive and negative factors of the macro environment on the market, and, accordingly, on demand.
- Significant constraining factors include the depreciation of the national currency, the high cost of rent, as well as the rising cost of food, the imposition of sanctions against India, the decrease in the purchasing power of the population, as well as the negative dynamics of population growth.
- The following political, social and technological factors have a stimulating effect on the analyzed market: GDP growth in 2021, state regulation of the industry and measures to support business in a crisis, the development of online trading and delivery, automation of processes in the industry and changes in consumer behavior and habits.
Chapter 3. Assessment of the degree of competition
3.1. Scale of competition (local, regional, national, global)
The restaurant services market in India, despite the huge number of establishments at present, continues to grow. According to GidMarket, in the medium term, the market may grow ...
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At the national level, tangible competition to other market players are federal companies operating under their own brands or brands of large international companies and present in every region of India. This type of competition is most pronounced today.
Regional and local types of competition are not so pronounced due to the fact that in most regions there are restaurants of large federal players, while it should be noted that local and regional competition is most pronounced in relation to local chains or single establishments. It is also worth noting that local and regional competition is more pronounced for establishments of the middle and premium segments, as well as small bakery cafes that are currently gaining popularity.
3.2. Number of competitors and relative market shares of the largest competitors
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In India, today there are about 90 thousand establishments in the restaurant services industry, while the market is heterogeneous in terms of establishment formats. In every state of the Indian Federation, there are catering establishments of various formats - from fast food restaurants and chain restaurants to premium class establishments.
Diagram 10. Shares of the largest competitors in the restaurant services market in 2021, %
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Chart 11. Dynamics of the total revenue of the largest operators of the restaurant services market (TOP-5) in India, 2017–2021
3.3. Compact location of industry companies in certain regions
To determine the compactness of the location of companies in the industry, consider the number of restaurants, bars and cafes in the states of India.
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Chapter 4 Industry Forecasts
4.1. Analysis of the impact of recent crises on the industry (the global crisis of 2008 and the currency crisis in India in 2014)
In 2020, many markets felt the impact of the pandemic and the onset of the economic crisis, the restaurant services market was no exception - the catering industry as a whole was recognized as one of the most affected.
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4.2. Analysis of the impact on the state aid industry at the current date
Forecasting the development of the restaurant services market in India is impossible without understanding the economic situation in the country, as well as the impact of the spread of the covid-19 virus and the measures taken to support the population and businesses of industries that have been particularly affected by the pandemic, which include the catering industry as a whole.
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Additional measures to support borrowers, the most vulnerable sectors of the economy and financial institutions:
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4.3. Assessment of the extent of the impact of the crisis on the analyzed market. Barriers existing in the restaurant services market
Since the beginning of the coronavirus pandemic, the catering and restaurant services industry has experienced difficult times. The pandemic and the imposed restrictions have had an impact on restaurant service trends, largely accelerating the already developing events and trends: process automation and the transition to online, the development of delivery.
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4.4. Prospects and growth drivers for the restaurant services market
In the future, the main growth drivers for the restaurant services market will remain the digitalization of the industry and automation of processes, the development of delivery and new formats of work (sale of finished products and semi-finished products through retail). At the same time, it should be noted that the Indian restaurant services market continues to grow at the moment, which is due to the demand for restaurant services not only in terms of home delivery of ready-made food, but also in terms of leisure activities, organizing holidays outside the home.
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4.5. Forecast for the development of the restaurant services market in the context of the current economic crisis
The market analysis was carried out on the basis of methods based on identifying trends over time, adjusted for expert opinion in the industry. When compiling the forecast, methods of mathematical modeling, mathematical analysis and statistics were used, adjusted for market trends and expert opinions.
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Based on the analysis of market indicators and assessments of experts and operators of the catering and restaurant services market in India, the following conclusions can be drawn:
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Chapter 5 Forecasting Methodology
5.1. Methods for forecasting key industry indicators
Modern statistical forecasting methods are used, taking into account the actual dynamics of the industry and the impact of the current and forecasted general economic situation…
In addition, when compiling the forecast, changes in real incomes of the population, trends in consumer preferences in a crisis, development forecasts and the degree of impact of other factors affecting the industry are taken into account.
5.2. Sources of information for forecasting
- Industry volume over the past 5 years
- Industry dynamics in 2008-2009, in 2014-2015, in 2017-2021*
- Dynamics of macroeconomic indicators over the past 9-10 years
- Current public assistance plans
- Databases of the State Statistics Committee of India
- Indian Revenue Service databases
- Open sources (websites, portals)
- Issuer reporting
- Company websites
- Media Archives
- Regional and federal media
- Insider sources
- Specialized analytical portals
Until October 2022 financial indicators for the main market operators and industry coefficients for 2021 - GidMarket forecast based on the dynamics for 2017-2020, except for cases when the operator discloses data on the results of financial 2021 publicly.
5.3. Timing of forecasting
The forecast belongs to the medium-term category - 5 years (2022-2026)
Diagrams
Chart 1. The structure of the catering market in India in 2021
Diagram 2. Dynamics of the volume of the restaurant services market, 2017–2021
Figure 1. Life cycle stage of the restaurant service market
Diagram 3. Population dynamics in India, as of 01 Jan. 2013–2022
Chart 4. Dynamics of real income of the population of India, 2013-2021, available period 2022
Chart 5. Consumption in the restaurant services market per capita, 2017–2021
Chart 6. Profitability before tax (profit of the reporting period) in the restaurant services industry in comparison with all sectors of the Indian economy, 2017–2021, %
Diagram 7. Current liquidity (total coverage) for the restaurant services industry for 2017–2021, times
Chart 8. India's GDP evolution, 2013-2021, available period 2022
Chart 9. Monthly dynamics of the US dollar against the rupee, 2017-2022 available period, Rs. for 1 US dollar
Diagram 10. Shares of the largest competitors in the restaurant services market in 2021, %
Chart 11. Dynamics of the total revenue of the largest operators of the restaurant services market (TOP-5) in India, 2017–2021
Diagram 12. Compactness of location of companies in the industry in certain regions
Diagram 13. Forecast of the size of the market for restaurant services in 2022–2026
Tables
Table 1. Gross margin of the restaurant service industry compared to all industries in India, 2017-2021, %
Table 2. Absolute liquidity of the restaurant service industry compared to all sectors of the Indian economy, 2017-2021, times
Table 3. Consumer price indices in the restaurant services market in India in 2017–2022 (available period), %
Table 4. Average prices in the restaurant service market by Union Territories
Table 5. STEP analysis of factors influencing the restaurant service market
Table 6. Main companies participating in the restaurant services market in 2021
Table 7. Assessment of the impact of recent crises on the industry
Table 8. Analysis of the impact on the industry of the state aid proposed to date
Table 9. Forecast indicators of the development of the Indian economy
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