Many tastes, many brands: A single type of biryani won’t cut it in a market like India

• A single-product food service brand might find it difficult to scale up beyond ₹100 crore, says a Redseer study.
• House of Brands like Rebel Foods, Cure Foods and Specialty Restaurants can see better success going ahead.
• The share of organised players in the food service business is expected to grow to 55-60% by 2028 from 44% in 2023.

Variety is the spice of life. Much more so in India where regional, local and personal tastes determine food choices. It makes an extremely difficult market for new and organized brands in the food service business to scale up beyond ₹100 crore, says a report by Redseer.

Take for example, India’s all-time favourite dish — the biryani. The spiced and flavoured rice dish has multiple regional variations such as Lucknowi, Kolkata, Ambur, and Hyderabadi.

Since the choice is broken down, it cuts into the total addressable market (TAM) of a category, says the report.

“In the ₹20,000-30,000 crore biryani category, a typical metro city may only have an organised market size of ₹800-1,200 crore. Thus, achieving a revenue target of ₹100 crore by operating solely in a single metro city within the organised biryani cuisine world, necessitates capturing 10-15% market share, posing a significant challenge for a standalone brand to overcome,” says Redseer.

The same theory works across food categories, the report adds. It says that even popular brands like Pizza Express, Keventer and Burger Singh are ‘growth stage’ companies whose revenues are anywhere between ₹50-100 crore.

Redseer’s estimates on a brand’s market share
Source: Redseer

House of Brands

Not only is a brand expected to scale beyond a city, it must also expand its food options to bring in more customers that allows them to scale. The best way for organized players is to take the ‘House of Brands’ route, the report suggests.

Successful House of Brands are characterized by their ability to build and scale multiple brands across diverse cuisines, which help them capture higher revenue, instead of dependence on an anchor brand. Also, they expand geographically with a consumer funnel, optimized capital & operational expenditures, it adds.

For example, Specialty Restaurants houses popular chains like Mainland China, Oh! Calcutta and Asia Kitchen by Mainland China. Cure Foods also has brands like Frozen Bottle, Cakezone, Eat Fit. Or, Devyani which has Pizza Hut, KFC as well as Vaango.

There are also unlisted examples like Rebel Foods which has options like Lunchbox, Faasos, Oven Story etc. All these companies come under ‘large scale’ companies.

“House of Brands, which owns multiple brands across various cuisines under a single umbrella, demonstrates an average revenue at least five times higher than standalone brands. This is partly due to their ability to target a larger TAM across cuisines and meal slots,” the research firm says.

More power to organised players

The food service business in India is extremely competitive and fragmented. The good news however is that India’s young and vibrant population is veering towards organised brands.

The share of organised players in the food services market is expected to grow to 44% in 2023, as compared to 42% in 2022. As per Redseer’s estimates, it will grow at 8-12% in five years to make up for 55-60% of the share. Unorganized players’ share is expected to grow at 3-5% during the same period.

There are other changes in consumer behaviour that augur well for new players. “Outside eating behaviour is now more habitual for Metro and Tier 1 consumers rather than being a luxury, which can be seen by the frequency of outside eating going up by 30% and 20% for students & young adults and mid-lifers respectively compared to 2018,” the Redseer report reads.

To capture this, however, players must expand their offerings to capture a wide share of the market as well as the Indian consumer palate.