India Food For Thought.. Demystifying The Opportunities In F&B Retail April 2018
The Food and Beverage (F&B) segment, globally and in India, has undergone a transformation, moving away from a “sub-segment of retail” to a” full-fledged segment” capable of functioning independently of traditional retail.
The change in our F&B landscape has been due to structural shifts in the eating out equation – increasing urbanization, rising disposable incomes, rising trend of socializing, nuclear families, and rising consumerism; all of which have orchestrated a change in the way India dines.
In order to gauge the depth of the F&B segment in our key cities, a survey was conducted by CBRE research across more than 1200 restaurants in key locations in Delhi-NCR, Mumbai and Bangalore. It was noticed that almost 60% of the restaurants were located on high streets vis a vis 29% in malls. This is largely on account of favorable rentals on high-streets, organic expansion opportunities and limited availability of quality mall space.
In terms of nationality, almost 82% of the restaurants were domestic standalone outlet/chains with around 18% restaurants being of international origin with restaurants from the US accounting for almost 70% of the restaurants in the international category. In terms of location, their choices were divergent; while 62% of all international restaurants are located in malls; 68% of all domestic restaurants are located on high streets.
Casual dining restaurants (CDR) has been a category that has gained significant traction in the past couple of years; with the category accounting for almost 46% of all restaurants that were a part of the survey. In terms of location, more than 60% of CDR’s in the survey are located on high streets.
As the F&B landscape matures, it has given enough opportunity for the emergence of home grown chains. With the availability of funding and PE investments in the F&B business, operators have expanded their brands across cities. NCR and Mumbai are the cities that witness the most "cross expansion", with chains headquartered in either of the two cities expanding to the other city fairly quickly.
With the F&B segment gaining so much significance in recent times, the real estate sector has also responded to be in line with its requirements. More space allocated for F&B in malls, the emergence of dedicated F&B clusters, food festivals in malls, F&B pop ups, increased allocations in commercial buildings are some of the key trends that have been noticed off late.
To ensure that the growth trajectory of F&B is maintained, it is critical that landlords understand the unique requirements of the F&B segment. Factors such as allowing for flexible/customizable spaces, making F&B integral to the planning stage of shopping centers, having an optimum mix of restaurants and increased collaborating with F&B operators are likely to play a critical role in ensuring sustainable growth.
On the other hand, operators need to be innovative in not only their cuisine but also their operation format, invest in increasing visibility with satellite units and pop up units, establish local connect with their catchment, tap segments of the F&B chain that are untapped but offer growth potential and use technology to enhance customer experience and improve efficiencies.