From tables to takeout: Middle class cuts back on eating out

As the middle class is becoming more cautious with its money, many QSRs are rethinking their business models

- Suneera Tandon

Restaurant tables are emptier, but delivery bikes are busier, as India's middle class cuts back on dining out despite easing inflation and rising confidence.

The shift points to a deeper strain on discretionary spending. While wealthier consumers continue to frequent fine-dining establishments, middle-class households are becoming more cautious with their money. As a result, many quick-service restaurants (QSRs) are rethinking their business models and leaning harder on delivery.

With the exception of Jubilant FoodWorks' Domino's, most large QSRs flagged slowing dine-in demand in the June quarter, even as delivery remained resilient.

Among QSR stocks, Jubilant was an outperformer thanks to its delivery moat, brokerage firm Motilal Oswal said in a June note. Nearly three-fourths of Domino's orders are for home delivery, the company said in an investor presentation last month.

"In pizza, Domino's reported strong near-double-digit same-store sales growth (SSSG)," brokerage firm Jefferies said in a note last month, adding that Pizza Hut slipped back into negative territory.