The Indian population has a taste for Fast Food and is inclined towards trying different cuisines. Rapid urbanization, changing lifestyle and growing need for convenience has led to the growth of the QSR Industry in India. The QSR market size is estimated to grow to INR 16,785 crore by 2018 and stands currently at INR 5,500 crore (2013). The organized market is dominated with presence of International brands like, McDonalds, KFC and Dominos. These brands constitute over 60% of the market share. Based on the success of international brands, the Indian market witnessed the growth of domestic players like Faaso’s, Smokin’ Joes and Café Coffee Day. The domestic fast-food firms are expanding faster at about 37% in terms of number of stores, compared with international firms growing at 28% a year. 
The growing demand for the QSR Industry is due to:
- Increase in disposable income
- Increased preference for convenience food (Ready -to –Eat food items)
- Influx of International brands
- Rapid urbanization
- The incidence of dining out
- Increased participation of women in the workforce
More than 65% of the Indian population is aged less than 30 years and is exposed to international brands. Considering that large portion of consumers are youth, leading to increased expenditure on ready-to -eat food services. Families in Tier I cities spend an average of INR 6,000 per year on eating out, whereas families in Tier II cities spend an average of INR 1,500 to 2,000 per year.The growing incidence of eating out and the growth of the QSR Industry requires larger amount of perishable food products to be transported from point of origin to outlets. Cold Chain provides a solution in bridging this gap. Cold Chain also provides refrigerated storage to prevent the fresh produce from getting spoilt. Cold Chain plays a key role in supplying food quick and fresh, enabling QSR Industry to meet the growing demand.
The QSR Industry has huge potential and is projected to grow at a CAGR of 25%. However, the entry barrier for any new firm in the industry is low, so there is intense competition within the Industry. The QSRs emphasize on speed of service, low costs and convenience. In a business where consumer satisfaction plays a major role, ‘staying on top’ is a daily struggle. Cold Chain is essential to aid the QSR with procurement of food product. Since, customer satisfaction is on top of the priority list for QSRs, it becomes essential to ensure quality and freshness of the product. Therefore, it generates higher demand for Cold Chain.
Cold Chain forms the backbone of the QSR Industry and plays a crucial role in supplying food product from Farm to Fork. The supply chain of the QSR Industry follows a Hub and Spoke model. The process begins with procurement of fresh produce from the farm. This produce is then brought to a Centralized Kitchen where the food items are processed to ensure minimal cooking at outlets. These semi-cooked food products are then sent to a Distribution Centre (also called as hubs) where all the inventories are sorted, categorized and packed. Finally, these inventories are transported to various outlets (also called spokes), from where the final food product reaches the end consumer.
The movement of fresh produce from farm to the centralized kitchen requires Cold Chain as the product and perishable and hence the need to preserve its quality and freshness. Throughout the entire chain of supply an efficient and resilient Cold Chain is required to prevent the product from getting spoilt. Moreover, since the product is perishable it has a higher churn rate and requires to be transported quickly. Since, customer satisfaction is on top of the priority list for QSRs, it becomes essential to ensure quality and freshness of the product.
As the name suggests, “Quick” Service restaurants require fast and timely delivery of the product which is possible only with the help of Cold Chain. Cold Chain also ensures seamless delivery of your favourite food products and escapes the possible situation of product shortage. Also, intense competition forces the market players to ensure continuous supply of their favourite food products, which is met by Cold Chain. With high real estate costs, most QSRs are low on space and are unable to maintain a very large inventory. Thus, it generates greater need for Cold Chain to ensure seamless supply of food products. Cold Chain companies help to distribute and deliver food from centralized kitchens to outlets, where minimal cooking takes place.
With increased competition and cost of operations in the metros and Tier I cities, QSRs are aiming to expand business in the untapped Tier II and Tier III cities. The following factors have made expansion favorable in Tier II and III cities:
- Infrastructure growth
- Favorable demographics
- Increase in disposable income
- Greater penetration of variety of consumer goods
- Increase in nuclear families
- Exposure to media
The growing need for convenience and acceptance of International food brands have increased the annual spending of middle class families from INR 2,500 by 108% to INR 5,200 in Tier II and III cities . Fast-food chains including both international and domestic players are estimated to have combined sales of Rs.92,000 crore by 2016-17 as they expand into smaller cities. The biggest challenge faced by any QSR in Indian market, be it a domestic or an international player is to maintain consistency of the product and quality of service across various outlets. The QSR focuses on providing standardization in both product and experience. Cold Chain is crucial to ensure that the quality and taste of the product remains intact across various outlets. Inadequate Cold chain infrastructure for outlets in Tier II and III cities leads to higher risk of food products getting spoilt and possible delays in delivery schedule. Thus, expansion is an issue without Cold Chain. Increased quantity of QSRs in Tier II and III cities require efficient Cold Chain infrastructure to ensure quick transportation of food products. It also generates the need for more warehouses to store the fresh procurement.
Consumer behavior is showing a growing trend towards products made with fresh ingredients. With increasing demand for perishable products, it is essential for companies to invest in and manage effective Cold Chain infrastructure. Consumption on food is the basic necessity of life and changing consumption patterns will only lead to growth in the QSR Industry. From procurement of fresh produce to storage and to final delivery across outlets, Cold Chain’s role is prerogative to the QSR Industry.
 Source: ASSOCHAM (The Associated Chambers of Commerce of India)