Bengaluru: The Indian food services market, valued at $80 billion in 2024, is likely to grow at a compound annual growth rate (CAGR) of 10-11 per cent to reach $144-152 billion by 2030, according to a report on Wednesday. 

The organised food services market, currently constituting half of the overall sector, is outpacing the unorganised segment, driven by online food delivery and brand influx, said the report by Redseer Strategy Consultants.

Cloud kitchens, by leveraging shared infrastructure and resources to operate multiple brands, are excelling in scaling brands within the market. They have disrupted traditional dining models, offering scalability and flexibility to adapt to the different needs of various demographics. Cloud kitchens grow faster and operate more efficiently by utilising shared kitchen spaces that significantly reduce capex and overhead costs.

“The plug-and-play model of cloud kitchens facilitates scalability, with new brands reaching Rs 100 crore revenue in as little as 2-3 years, significantly faster than the 6-10 years typically taken by dine-in-focused brands,” said Rohan Agarwal, Partner at Redseer Strategy Consultancy.

Consumers in metro and tier 1 cities are increasingly opting for ordering in and dining out, driven by convenience and a desire for a break from routine. Additionally, outside meals are increasingly viewed as a social activity, offering opportunities to spend quality time with loved ones and to celebrate all occasions, the report mentioned.

Social media, pop culture and the demand for variety have fuelled the rise of niche cuisines, contributing to the rising frequency. “Multi-brand strategies have proven to be the winning formula, enabling businesses to diversify portfolios, mitigate risks, and scale efficiently across various customer segments and meal slots,” said the report.

Notably, only 1-2 per cent of companies in India have scaled beyond Rs 500 crore, with most of this success driven by the multi-brand approach. However, even for these companies, rapidly expanding the number of stores alone to drive scale can lead to diminishing returns, especially as the market diversifies with new cuisines and service models, the report said.