Surviving COVID-19 Crisis by New Business Models: A Case Study of the Indian Restaurant Industry

Surviving COVID-19 Crisis by New Business Models: A Case Study of the Indian Restaurant Industry

Tahir Sufi (Amity University, Noida, India) and Selim Ahmed (World University of Bangladesh, Bangladesh)
DOI: 10.4018/978-1-7998-6776-0.ch015
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Abstract

The foodservice sector is one of the three leading sectors in India, with a market size of 152 billion USD. There are over 500,000 organized and unorganized restaurants in India, and the sector has seen exceptional growth during the past decade. A high percentage of the young and working population is driving the India foodservice market, which is further fuelled by organized retail space that is encouraging the growth of local and international brands across different formats. This study explores how the crisis caused by the COVID-19 pandemic has led to adapting to the new business model by the food service sector in India.
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Background

The Indian restaurant industry is among the top three service sector (after retail and insurance). The sector is 20 times larger than the film industry, 4.7 times of hotels and 1.5 times of the pharmaceutical industry in India. The Indian restaurant offered jobs to 7.3 million people in 2018-19. India's food service industry is innovative and provides an exciting opportunity to expand due to an average of 6.6 eating out frequency per month in the country (“NRAI”, 2020). Indian restaurants had a market value of about 152 billion U.S. dollars in 2014. The foodservice market in India is divided into two segments, the organized and unorganized segments. The significant chunk of businesses (86%) is unorganized, and in comparison, the organized restaurant businesses contribute to 14% only.

Key Terms in this Chapter

Cloud Kitchens: Kitchens or catering units that sell food directly to customers without an attached dining facility. The food demand from customers is generated through mobile applications or websites.

ECR: Electronic Cash Register, an electronic device for calculating and recording sales transactions and printing receipt for the customer.

Food-Tech Startups: Companies that sell food using the internet and Smartphone applications.

Restaurants Own Delivery System: Restaurants taking orders directly from customers and delivering the same through restaurants own fleet of vehicles.

EPOS: Electronic Point of Sales (a system used for recording information of goods sold by a retailer).

Organized Restaurants: Different types of restaurants that include cafes, fine dining restaurants and other catering establishments.

Business Models: A business model describes the rationale of how an organization creates, delivers, and captures value, in economic, social, cultural or other contexts.

Hybrid Model Delivery: The system of restaurant business whereby the restaurant has its food delivery system and also accepts food orders which get delivered through the aggregator.

Aggregator Business Models: Aggregator Business Model is a network model where the aggregator firm collects the information about particular offering providers, sign contracts with such providers, and sell their services under its brand e:g Amazon, Uber, etc.

Food Aggregator: Food aggregators facilitate orders and provide customer support. They act as mediators between customers and local restaurants, offering access to various cuisines through a single website or Smartphone application.

Complementors: Company selling such product or service that complements the products or services of another company and hence are called as complementors.

Artificial Intelligence: A branch of computer science dealing with the simulation of intelligent behaviour in computers.

Dabbawala: A unique system of delivering lunchboxes collected from homes and restaurants to working-class people in Mumbai city manually.

Platform Business Model: Aggregator business models defined above is also labelled as the platform business model.

Machine Learning: The process by which a computer can improve its performance (as in analyzing image files) by continuously incorporating new data into an existing statistical model.

Time and Space: Changes in the food aggregator website reflecting the meals served at a particular time. For example, the web site shall display breakfast in morning hours and move to lunch menus in the afternoon.

NRAI: National Restaurant Association of India. A voice of the Indian restaurant industry representing over fifty thousand restaurants of India.

Unorganized Restaurant: Vendors selling ready to eat food on carts, roadside eateries and street stalls.

CRM: Customer Relationship Management (CRM). An approach that helps businesses improve existing customer relationships and acquire new customers faster.

OFD: Online food delivery whereby customers order food from local restaurants or food delivery companies through websites or Smartphone applications or “apps”.

Digitalization Strategies: Strategies focusing on using technology to improve business performance, whether that means creating new products or reimagining current processes.

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