Eating Out — An everyday chore


    As a working woman, I am always on a look out for ready-to-make food in supermarket and was surprised to see how many new brands have come up with inventive "healthy" food items. The changing life style has created a global demand for healthy alternative food to home cooked meals. Investors have been smart to pick on the trend and build strong restaurant chains.

    The global restaurant industry is estimated to be worth over USD 704 billion, employing over 48 million people in over 8 million restaurants. America accounts for 53% of the global revenue followed by Asia-Pacific (24%) and Europe (20%).
    Singapore alone has a population of 4 million, yet 1.5 billion meals are served a year in that country. Each person eats out for at least one meal every day. There are about 18,000 food outlets hiring 128,000 employees or approximately 6.3% of the workforce.

    Due to Paucity of time, the industry has low or no substitutes especially in economies where hiring a help for cooking is expensive. Many global chains have evolved over time, keeping in mind the current needs of customers. There is an emergence of quick-casual restaurant chains. They claim to provide fast food, without the disadvantages of "fast-food". They cater to business people, travelers, school kids, serving healthy and delicious menu. Companies under this segment have performed well on the US stock exchange. Market median for gross profit margins in this segment in US is a stellar 51.3 basis points.

    One of the Hindu articles had quoted that "in India, about Rs. 35,000 crore is spent annually on eating out and bout Rs 2,500 crore is spent at quick service restaurants." A retail survey shows that 85 per cent of the consumers in the top 12 cities of the country eat out at least once a month, of which 36 per cent spend between Rs 200 and Rs 500 on one occasion. Global chains (like subway) have made headway for this potential market. Some of the Indian chains (like HLL) have also risen further up in the value chain to provide healthy quick food. Old established brands like MTR have had a huge success with their ready-to make packs for Indian food. Indian food industry is soon to see an epochal change, where eating out is not just considered as a celebration, but an everyday chore.

    — Priyanka Rana


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