With many food options available, a steep rise in the disposable income of the mobile generation, a sudden increase in Internet users, and customer confidence in buying online, the food tech space has also witnessed fast growth.
“In the past, most Indian consumers ate out only on special occasions. However, today, eating out is an occasion in itself,” says Riyaaz Amlani, restaurateur and president of the National Restaurant Association of India (NRAI).
“Until recently, the food delivery options in India were inefficient with lacklustre service. But with start-ups leveraging technology, the scenario has changed. Today, customers can use their smartphones to order food from any restaurant of their choice. No waste of time, no traffic hassles and no quality compromise –– customers are able to save time and enjoy restaurant food at the same time,” says Amlani.
The Indian diner is also becoming experimental. On September 19, NRAI had its annual general meeting, where trends, and the growth and challenges faced by the food industry were discussed. Here are the highlights of the report.
Home chefs: Demand to consume home-made food without compromising on quality and hygiene gave birth to a new category –– home chef aggregators. Players, who fall under the category, act as aggregators to chefs in the city, who provide home-cooked meals.
Food trucks: In the past year, several food trucks have cropped up in the city. However, this trend is facing its own set of challenges. In the absence of clear laws for parking, permission from resident associations is needed even after obtaining the Food Safety and Standards Association of India (FSSAI) licenses.
Modern Indian cuisine: Modern Indian food is being prepared by using elements of molecular gastronomy. Farzi Café, at Lower Parel, creates an illusion with food. It serves global cuisine with an Indian influence. Also, SodaBottleOpenerwala, in Bandra (E), connects consumers to authentic Parsi cuisine.
Regional cooking and revival of recipes: Chefs and food enthusiasts are reviving forgotten recipes and connecting consumers with the history of cooking.
Craft Beer: Microbreweries are experimenting with new flavours. Beers, now, include cardamom, cloves, mango and apple, ragi and honey, etc.
The road ahead
Apart from the challenges faced by restaurateurs, a major issue affecting the industry’s growth and consumers are the several taxes levied on restaurants such as Value Added Tax (VAT) and service tax, apart from the state taxes. This adds up to the bill by 18 to 25%. This tax is much higher in comparison to the taxes levied on other sectors such as apparel and footwear, where it ranges from five to 15%.
“NRAI had been advocating for the reduction or simplification of the same. We welcome the centre’s move for the much awaited reform –– Goods and Services Tax (GST),” says Amlani.
However, Amlani points out that alcohol should be included in GST. “Exempting it defeats the purpose of bringing in a uniform single tax structure. This allows states to have their own taxes without a cap. This is neither beneficial for the business nor for the customers,” says Amlani.
Challenges of the food industry
Shortage of skilled staff: 5.8 million people in India are employed in the food industry. This figure is expected to reach 8.7 million by 2021. This means that about six lakh people will be required in the industry every year.
High real estate and manpower costs: High labour and real estate costs, and service tax on property are exerting pressure on profitability, and deterring the growth of food outlets.
Inadequate supply chain infrastructure: The lack of appropriate infrastructure, inadequate investment in technology and non-integration of the food value chain are the key factors leading to 30% to 40% wastage across the supply chain.
Financing issues: Food service operators find it hard to get working capital loans without any collateral. High cost of domestic funding further adds to the problem.
Overlicensing: You need 12 to 15 government licenses to open an outlet in India. In the US and Singapore, it’s seven and four, respectively.