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Time of India

Finally, deals back on the menu for QSRs, cafe chains

India's quick service restaurant (QSR) and cafe industry is witnessing a revival in deal activity after a lull of five quarters, aided by a gradual recovery in demand, industry executives and private equity (PE) companies said. Homegrown chains Mad Over Donuts, Biggies Burger and Theobroma are in the final stages of raising funds from PE investors or family offices, executives directly aware of the developments said. This follows nearly a dozen angel and seed-stage funding deals in the space over the past few weeks. On Monday, diversified entrepreneur Ravi Jaipuria-backed Devyani International , which operates global fast-food chains KFC, Pizza Hut and Costa Coffee, said it is acquiring a controlling stake in Sky Gate Hospitality, which operates domestic chain Biryani By Kilo. Last week, Wow! Momo raised '150 crore from Haldiram promoter Kamal Agrawal and Malaysia's wealth fund Khazanah Nasional. Play Video Pause Skip Backward Skip Forward Unmute Current Time 0:00 / Duration 0:00 Loaded : 0% 0:00 Stream Type LIVE Seek to live, currently behind live LIVE Remaining Time - 0:00 1x Playback Rate Chapters Chapters Descriptions descriptions off , selected Captions captions settings , opens captions settings dialog captions off , selected Audio Track default , selected Picture-in-Picture Fullscreen This is a modal window. Beginning of dialog window. Escape will cancel and close the window. Text Color White Black Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Text Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Opaque Semi-Transparent Transparent Caption Area Background Color Black White Red Green Blue Yellow Magenta Cyan Opacity Transparent Semi-Transparent Opaque Font Size 50% 75% 100% 125% 150% 175% 200% 300% 400% Text Edge Style None Raised Depressed Uniform Drop shadow Font Family Proportional Sans-Serif Monospace Sans-Serif Proportional Serif Monospace Serif Casual Script Small Caps Reset restore all settings to the default values Done Close Modal Dialog End of dialog window. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Air conditioners without external unit. (click to see prices) Air Condition | Search Ads Search Now Undo Earlier this month, cafe chain Nothing Before Coffee, which focuses on tier-2 markets, raised $2.3 million in a funding round led by venture capital firm Prath Ventures. Live Events "The sector has picked up due to a combination of factors," said Sagar Daryani, president of the National Restaurants Association of India (NRAI). These include restaurants adopting low capex and opex models and value-for-money pricing, leading to multiple dining-in and repeat orders, as well as a shift in consumer habits with people increasingly preferring ordering in, OTT streaming over multiplexes, and house parties over hangouts - which "are all driving the turnaround," he said. "Also, Gen Z consumers who are deal seekers, want convenience and digital-first experiences are fuelling QSR growth," said Daryani who is also a cofounder of Wow! Momo. NRAI represents over 500,000 restaurants in the country. Executives say investors are preferring to invest in QSRs as part of their overall consumer investment strategies . "The transaction by Devyani International furnishes an alternative expansion lever, with synergistic upsides and potentially greater importance in the delivery sector compared to their primary KFC portfolio," Nuvama Institutional Equities wrote in a report on Tuesday. Another large recent deal was cloud kitchen startup Rebel Foods - which operates Oven Story Pizza, Lunchbox, Faasos and Behrouz Biryani - raising a fresh funding round from investment firm KKR in December. "Industry growth tailwinds and proven penetration beyond the top 20 cities to the next 50 cities provide good growth visibility," said a fund manager from a Mumbai-based homegrown PE fund who requested anonymity. "Scalable QSR businesses have strong payback periods and, therefore, high return on capital." Domino's Pizza and Popeyes operator Jubilant FoodWorks (JFL), which held its first analyst meet this February, said it is opting for a strategy of prioritising customer acquisition over price-led growth. It is relaunching its loyalty programme and may experiment with sub-franchising. Company chief Sameer Khetarpal outlined in the meet that store expansion would be central to its strategy with plans to open an additional 1,000 Domino's Pizza stores by FY28, set up four more commissaries by FY28, and focus on integrated supply chain with in-house sourcing of key ingredients. The QSR sector is expected to see a turnaround in the current fiscal after a tough year, aided by gradual demand recovery and improving operating leverage, Bernstein Research said in a report.