India’s HoReCa Industry: A Growing Sector with Untapped Potential

The Economic Times of India recently published an article on India’s flourishing F&B and hospitality industry. The HoReCa (Hotels, Restaurants, and Catering) sector, contributes over USD 78 billion annually to the economy, accounting for more than 7 percent of the country’s GDP. Despite its significant impact, the industry faces various challenges, including a shortage of skilled labor, high customer acquisition costs, and funding constraints.

The HoReCa industry is divided into two segments - organized and unorganized. The organized sector includes registered establishments like hotels and restaurants, while the unorganized sector consists of dhabas, street vendors, and roadside food carts. With the street food sector’s rapid growth, this untapped market requires proper reforms and government support to realize its full potential.

The Indian hospitality industry has grown by 10% in the last three years and is predicted to grow by 6% more by 2022-23. However, it faces labor shortages, with only 2 million new jobs created annually due to inadequate training facilities and lack of job opportunities. Additionally, the high cost of customer acquisition poses a challenge to maintaining profitability.

Major restaurant chains are collaborating with technology startups to develop innovative solutions to stay ahead of the competition. The adoption of new technologies enhances efficiency and productivity in the HoReCa industry.

The unorganized sector, with an estimated 1.5 million restaurants, faces several challenges, including limited funding, high customer acquisition costs, and difficulty in finding skilled employees. These restaurants often struggle to compete with those offering delivery services, as they cannot generate enough revenue from their customers.

With the industry expected to reach over USD 280 billion by 2025, proper government policies and laws for the unorganized sector could significantly enhance the HoReCa sector’s potential. Implementing FSSAI norms and regulations will ensure safer food and improve the country’s overall health index. Furthermore, promoting job availability and providing insights into the industry’s vast potential will encourage more students to pursue careers in this rapidly growing sector.