The Indian food service industry has been dominated by the unorganised sector, which has a 66% market share in the overall industry. But the GST implementation in July 2017 changed the fundamentals of the industry and brought the price advantage and tax net benefit on a level playing field to the organised sector. Though there was a disruption in the initial stages of implementation of the GST in the country, it is a given that in the medium to long term, the benefits would accrue to the organised sector substantially. A very big positive was the reduction in the GST from the initial imposed rate of 18% to 5%, with the withdrawal of input tax credit. This has been regarded as a very progressive step by the food service industry, as it will improve consumer spending at restaurants. Major contributors to the total food service industry are the top eight cities, accounting for 42% of the pie, but smaller cities driven by youthful aspirations are slowly emerging from the shadows and embracing the main frame of food entertainment. The prospects of the restaurant chain market are huge and expected to grow to touch Rs 62,000 crore in the next few years. In the organised segment, quick service restaurants are forecast to drive growth, as it is the most preferred format across Tier 1 and Tier 2 cities. Jubilant FoodWorks Ltd is a classic example in the food service industry, poised to grow at a faster clip. It is part of the Jubilant Bhartia Group, having initiated operations in 1996 and getting listed on the Indian bourses in 2010. The company operates the Domino’s Pizza brand and is a market leader in the pizza segment with a network of 1,200 Domino’s Pizza restaurants across 270 Indian cities as of December 2018. Dunkin’ Donuts, a subsidiary of Dunkin’ Brands, is the world’s leading baked goods and coffee chain, selling more than 1 billion cups of coffee a year and serving more than 3 million
Rajiv Kapoor is a share broker, certified mutual fund expert and MDRT insurance agent.