New Delhi: The Indian food service industry (FSI) is expected to grow by nine percent CAGR over FY20-25E.

As per Motilal Oswal Financial Services (MOFSL), the growth of FSI is being driven by rising income levels, urbanization, and nuclearisation apart from innovative offerings that appeal to the youth and the changing dynamics of the space, with the growth of online food delivery and food tech.

Within FSI, organized players are growing faster than the industry, with the companies covered in this report growing even faster. Over FY20-25E, the organized in- industry is expected to deliver 15.4 percent CAGR, while the companies in this report are expected to deliver an aggregate sales CAGR of 18.5 percent.
According to MOFSL, the contribution of organized FSI players has increased to 38 percent in FY20 from 29 percent in FY15 and is expected to see its share increase to 50 percent by FY25E.

"The organized Indian FSI is witnessing enhanced growth prospects post-Covid, led by sustained high delivery levels compared to the past aided by increased technology adoption by consumers; incrementally strong gains from unorganized peers, led by closures of 30 40 percent the restaurants," MOFSL said.

"An evident move towards more trusted brands, with better hygiene standards; accelerated store expansion by organized players; favourable cost outlook by variablising them; and increased supply of real estate, due to closures of restaurants and other retail players, making it attractive for the survivors to expand their store networks," it said.

Besides, MOFSL said that once the impact of the lockdown on the dine-in channel recedes, increased focus on the value segment by the leading Quick Service Restaurants (QSRs) and Casual Dining Restaurants (CDR would precipitate faster conversion from smaller and organised peers.

"While dine-in was affected by the restrictions on operations, branded players, with a strong delivery presence and supported by their investments in technology, were far more resilient compared to smaller and unorganized players as the delivery channel continues to drive sales," it said.

Source- IANS