Friday, June 14, 2024

It’s QSRs Vs Food Delivery Giants in the Indian Foodscape

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The surge in food delivery platforms has indeed presented significant challenges for quick service restaurant (QSR) operators, putting pressure on their revenue and margins. According to a report by BNP Paribas, a financial services holding company headquartered in France, the recovery path for these operators is expected to be more prolonged than initially anticipated.

The report underscores the growing preference for food aggregators such as Swiggy or Zomato, which has negatively impacted both dine-in sales and delivery revenue, leading to a fragmented market in the QSR segment. This shift has also contributed to a decline in average daily sales within restaurants. Additionally, heightened inflation adds to the challenges of this struggling segment.

According to the report’s findings, Zomato and Swiggy have seen a significant increase in restaurant onboarding, with numbers rising from 278 K in the fiscal year 2020-2021 to surpassing 700 K in the fiscal year 2022-2023. While gross margins may have improved due to lower raw material prices, operating margins have declined for most QSR firms due to increased costs related to employees and stores.

Overall, the QSR operators will need to navigate these challenges carefully and adjust their strategies to adapt to the evolving market landscape dominated by food delivery platforms.

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