Food Service Chains Find a Recipe for Growth in Railway Revamp Plan

BIG OPPORTUNITY Indian stations handle 1 lakh passengers a day who spend Rs 125 per meal
The central government’s decision to modernise 400 railway stations in India has brightened the growth prospects for food service companies such as Travel Food Service (TFS), Lite Bite Foods, Jubilant Foodworks among others, within the travel retail sector. Indian Railways handle over 800 crore passengers a year -a huge captive business for companies.“When it comes to Indian Railways, there are various local and unorganised players who run the railway canteens on long-term tenders and sometimes they are run by the government,“ said Ankur Bisen, vice-president, retail at Technopak Consultants, adding that this potential can be well tapped by the organised players with efficient systems and technology.

The government plans to modernise 400 railway stations under A1 and A categories which have an annual passenger earning of more than . `50 crore, including key stations in Mumbai, Delhi, Bengaluru, Chennai, Pune, Bhopal, Jaipur, etc.

With the rapid growth of passenger traffic and growing disposable income, brands cannot choose to ignore this segment for too long. For instance, railway stations handle over one lakh passengers a day and these passengers on an average spend around ` . 100-125 on a meal.

“While the passenger spends in a railway station are less than that of an airport, the former will give us almost double the volume of business than in an airport,“ said Gaurav Dewan, chief operating officer, TFS, which has recently won the contract to develop food courts at Pune and Vishakhapatnam railway stations. The company, a subsidiary of K Hospitality Corp, is partnering local F&B brands in these markets to bring the local flavour.“Customers in a railway station look for more regional and local cuisine which should be competitively priced and easy on the pockets,“ said Dewan.

There are four kinds of F&B formats in railway stations -food courts, kiosks, vending and onboard catering -which are tendered by Indian Railway Catering and Tourism Corporation (IRCTC).

Industry experts point that setting up a food court at a station entails an investment of around . `15-20 crore.

According to Varun Kapur, director, TFS, the company has readied investments to the tune of ` . 200 crore in railways and airports over the next 2-3 years.Jubilant Foodworks, which runs Domino’s Pizza and Dunkin’ Donuts in the country , recently started a trial project with IRCTC to deliver pizzas onboard 201 trains and 41 stations. “This is qualitatively a big opportunity and we are very positive about it, but we cannot ascertain it’s quantum without a trial of consumer response to this new service and also logistical feasibility of delivering hot and tasty pizzas on train seats,“ said Harneet Singh Rajpal, senior vice-president, marketing, Domino’s Pizza India.

Lite Bite Foods too has initiated discussions with the railway authorities to develop its brands in stations. “Railways is a huge opportunity and untapped potential for us,“ said Rohit Aggarwal, director, Lite Bite Foods, which owns quick service restaurant brands such as Punjab Grill, Street Food by Punjab Grill and Bistro Café Baker Street. The company’s recent joint venture with US-based food service firm HMSHost will bid for the railway projects, said Aggarwal.

ET VIEW

Expand & Better the Rail Menu

There certainly is a lot of potential to modernise rail travel and attendant services such as food and beverages during such a travel experience. The best way to go about this is to provide more choice. But in tandem with this, we need to revamp safety and sanitation inspection, oversight and standards, and set a high bar as a part and parcel of the modernisation process.Also, we need to leverage modern technology to empower consumers to vet and rate food items. Passengers must be able to place orders, provide feedback and know ratings over mobile phones.

Source: The Economic Times

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Author:

Neeraj; an entrepreneur & a visionary in the field of Railway, Defense & Automobiles, is a graduate in commerce and a Harvard Business School Alumni. He’s an expert in govt. liasoning & contracting and has an exceptional network & connections at both local as well as global level. He’s an expert in Market Strategy & Planning and has served number of overseas companies as an advisor/consultant. He takes a profound interest in upcoming startups & is very receptive towards ground-breaking ideas & innovations. He likes to brainstorm those ideas and if the values & philosophies matches; he is even ready to invest his resources, serve as a mentor or act as an incubator to futuristic businesses.

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