India's organized food services sector is on track to double its revenue to USD 120 billion by 2030, but rising input costs are proving to be a significant challenge. Speaking at the 17th India Food Forum, Ravindra Yadav, Partner – Retail & Food Services, Technopak, emphasized the strain on profitability due to increasing costs for raw materials, manpower, rentals, and maintenance.

"Same-store sales growth is down, while operational costs continue to climb," Yadav noted during his keynote address on the second day of the forum.

One of the key growth drivers in the food services industry is the rapid formalization of the market beyond metro and tier-II cities. The informal segment is shrinking, with the organized food market projected to grow from 15% to 21% by 2030. Meanwhile, the unorganized market is expected to contract from 52% to 41% during the same period.

The forum also highlighted regional growth trends. Between 2019 and 2024, metro markets have grown at a steady rate of 6.5% to reach USD 11 billion, while tier-I cities have expanded by 6.9% to USD 10 billion. Tier-II cities have seen an even higher growth rate of 12.8%, touching USD 5 billion. Remarkably, the rest of India has experienced a 25% growth rate, reaching USD 3 billion.

Yadav added that the rising prominence of smaller cities reflects the broader formalization of India's food services market. "The focus is shifting from metros to untapped regions, unlocking significant opportunities for organized chains," he said.

Despite the optimism surrounding the market’s potential, tackling operational challenges remains critical for the sector's sustained growth.