Challenges faced

The challenges being faced by these new styles of Indian restaurants and fast food joints are,

Food price fluctuations
Cumbersome licensing laws
High cost of real estate
Lack of skilled workers
High food inflation
Rigorous competition

Even though the volumes have not dipped yet, the companies are struggling for margins.

There is severe cost pressure in raw materials and fuel charges, which is causing a lot of strain which is no different for other quick-service-restaurants and cafe chains. Input costs have increased 10-20% across food and beverage categories.

The fast-food chain business in India is very lucrative, but no player wants to price himself out of the market. In the coming few years, the key challenge for the food companies will be to keep their products reasonable, especially for the mass markets, to enable conversion from non-users to users and from unorganized to organized units.

Pizza restaurants and cafe houses make up the largest chunk of the organized food and beverage retail business. Brands such as Pizza Hut, KFC, McDonald’s, Café Coffee Day, Costa coffee are some of the formats that already have already created a mark and are looking to grow further. The food and beverage retail market in India is growing but the market so dynamically, that a lot of movement is expected over the coming years.

The cafe business is more competitive than the fast-food chain business in India with players such as Café Coffee Day, Barista Lavazza and Costa Coffee competing in the same market. At present, the café business is estimated to be worth 600 crores with approximately 1,400 outlets across players. But the catastrophe of the industry is that it is dominated by the unorganized sector with branded chains accounting for less than 10% share, as per reports.