The QSR (quick service restaurants) industry in the emerging economies such as India is undergoing a wave of disruption and re-engineering. Many global brands in QSR food servicing have resorted to technology and innovation in one or more aspects of their value chain in order to maintain leadership positions in a market that is facing some fast-growing competition from various channels, especially with the penetration that service aggregators like Zomato, Swiggy, and Uber Eats have managed to gain. This study aims to establish a general direction towards which the QSR industry is progressing in India by examining not only the current trends in India but also the trends that are prevalent worldwide and which have the potential of diffusion to emerging economies like India.
TopIntroduction
India has been characterized as the fifth-largest country in the World in terms of nominal GDP and the third-largest in terms of purchasing power parity. Nearly 60% of India's GDP is driven by domestic private consumption and continues to remain the world's sixth-largest consumer market. According to 2017 PricewaterhouseCoopers (PwC) report, India's GDP at purchasing power parity could overtake that of the United States by 2050. India ranks second globally in food and agricultural production. As depicted in Figure 1, Disposable Personal Income in India increased to 206 INR Trillion in 2019 from 192 INR Trillion in 2018.
Figure 1. Disposable Income in India
The key drivers of F&B industry in India are increasing consumer expectations on transparency, increase in consumer preference for plant based food, and increasing conscience towards health and wellness. These drivers combined with the potential of the Indian economy, gives the F&B industry enormous opportunities for growth and success.
Along with the economic patterns changing for the better, India is also adapting to the western tastes and cultures. India is now the world’s 10th fastest growing market for specialist coffee and tea retail chains, valued at Rs. 2,570 crores in 2018, estimated to grow by 6.9% to Rs. 4,540 crores by 2023, as shown in Figure 2.
Figure 2. Market Size of coffee retail chain in India,2014-2025
The Figure 3 illustrates that the share of the organized food and beverages market is poised to grow in the overall industry.
Figure 3. Projected share of organized and unorganized segment in the F&B market
This is how this study has been structured. The Section 1 (the current section) lays down the introduction to the topic and the motivation behind this study. The Section 2 reviews the existing literature on service innovation. The Section 3 explains the research methodology. The Section 4 discusses the upcoming trends in the industry, and is the longest section of the paper. The effort has been made to touch upon every domain of QSR innovation in this section. The Section 5 discusses the lessons posed by the Covid-19 Crisis, and the Section 6 concludes the article.
TopLiterature Review
The detailed study of the existing literature on the service innovation was reviewed and it was found that there is good amount of work done on this topic. In services industry, it is not as important to acquire customers as it is to have customers (Berry, 1980). Barras (1986) was among the early researchers who came up with the theory of service innovation. Managing the total experience of the customer right from prospecting till the product disposal and repeat purchasing assistance has become of paramount importance (Berry et al. 2002).
Innovation in the services industry acts as catalyst for the economic growth of services sector (Snyder et al. 2016). Quality of service delivery has a substantial influence on the customer satisfaction (Shostack, 1984 and Crosby et al. 1990) as well as on creation of new markets (Berry et al. 2006). The higher customer satisfaction can increase the customer loyalty (Cronin and Taylor, 1992). Bourke et al. (2020) showed that a structured approach to innovation benefits the professional services firms while explaining the same with an example of a legal services. Keaveney (1996) laid down the eight broad categories of reasons for customer switching in the service industries, all of which can be addressed by bringing innovation and use of technology or analytics.