Rapid Expansion of Zomato, Swiggy to Impact QSR Sales: Report

Rapid Growth of Delivery Platforms: Zomato and Swiggy surge, challenging traditional QSRs amid sluggish demand, says BNP Paribas.

In a landscape where convenience and choice reign supreme, the rise of food delivery platforms has ushered in a new era for the food industry in India. Platforms like Zomato and Swiggy have experienced exponential growth, revolutionizing how consumers access their favorite meals. However, this growth isn’t without its implications, particularly for quick service restaurants (QSRs) already grappling with sluggish demand.

A recent report by BNP Paribas sheds light on the seismic shift underway in the industry. Zomato, for instance, has seen a staggering increase in its average monthly active restaurant partners, soaring from 61,000 in FY19 to a remarkable 270,000 by FY24. Swiggy, not far behind, boasts 272,000 active restaurants by the end of FY23. These figures far surpass the number of stores belonging to listed QSR brands, which stood at a mere 5,300 during the same period.

The proliferation of delivery partners has significantly expanded customer reach, particularly benefiting smaller restaurants. Zomato’s restaurant base now towers over branded QSR stores, highlighting the growing dominance of delivery platforms in the food ecosystem. Analysts at BNP Paribas warn that this expansion, while offering consumers more options, is fragmenting sales and exacerbating the challenges faced by QSRs amid sluggish demand.

Indeed, QSR players have been grappling with weak sales figures, compounded by subdued consumer spending and a challenging macro environment marked by inflation. Despite these headwinds, QSR companies have maintained their store opening plans and capital expenditure guidance, signaling optimism about future prospects. Management remains hopeful, anticipating a sequential uptick in the first quarter, traditionally stronger than the fourth, particularly post-elections.

In the face of adversity, QSRs are doubling down on expansion strategies. Jubilant FoodWorks, for instance, recently launched its largest food processing unit, the Jubilant Food Park in Bengaluru, with a substantial investment. This facility is poised to support hundreds of Domino’s stores along with other brands under its umbrella. Jubilant’s ambitious plans include the opening of numerous Domino’s, Popeyes, and Hong’s Kitchen stores across India, reflecting a commitment to growth despite prevailing challenges.

Similarly, Devyani International is gearing up for substantial expansion, aiming to add hundreds of new stores to its portfolio in FY25. From KFC and Pizza Hut to Costa Coffee outlets, Devyani’s aggressive growth strategy underscores its confidence in the resilience of the QSR segment. Restaurant Brands Asia, operator of Burger King, is also on track to significantly increase its store count, targeting a substantial number of outlets by 2027.

While traditional QSRs navigate these turbulent waters, delivery platforms continue to disrupt the status quo. Zomato, a prominent player in this space, is not only expanding its restaurant base but also venturing into other segments such as grocery delivery and cloud kitchens. This diversification underscores Zomato’s ambition to become a one-stop solution for consumers’ culinary needs, further challenging the dominance of traditional QSRs.

In the stock market realm, Zomato’s performance reflects investor sentiment surrounding the evolving food landscape. Despite trading fluctuations, the company’s presence on the National Stock Exchange underscores its significance in the market and its potential to shape the future of the food industry.

As the tides of change sweep through India’s food industry, adaptation is key for QSRs seeking to thrive in this new era. Embracing digital innovation, enhancing delivery capabilities, and exploring new revenue streams are imperative for staying relevant in a highly competitive market. While challenges abound, opportunities for growth and innovation abound for those willing to embrace change and cater to evolving consumer preferences.

In conclusion, the rapid expansion of food delivery platforms like Zomato and Swiggy is reshaping the landscape of India’s food industry. While presenting new opportunities for consumers and smaller restaurants, this growth poses challenges for traditional QSRs already grappling with sluggish demand. However, with resilience, strategic adaptation, and a focus on innovation, QSRs can navigate these challenges and emerge stronger in a rapidly evolving market.

News Bureau
News Bureauhttps://businessheadline.in
Business Headline is a digital news media organisation which covers news related to Business and Stock Market and Technology related news.

Latest articles

Related articles

Leave a reply

Please enter your comment!
Please enter your name here