Macquarie has released a comparative view on India’s food services sector, maintaining a positive bias towards QSR franchises over food delivery platforms. The brokerage believes that increased disposable incomes, aided by recent tax rebates, will likely boost discretionary spending in restaurants over the next few quarters.
Macquarie said it prefers names like Devyani International and Westlife Foodworld—two of the top QSR (quick-service restaurant) operators in India—due to their franchise-led models, robust store expansion plans, and strong brand associations with global names like KFC, Pizza Hut, and McDonald’s.
In contrast, the brokerage remains cautious on food delivery platforms like Zomato and Swiggy. While gross order value (GOV) growth is likely to be driven by new user additions, Macquarie does not foresee significant margin expansion or a change in unit economics for these companies in the near term. With competition intensifying and regulatory oversight on deep discounting practices increasing, the food delivery segment may face headwinds despite sector growth.
Overall, Macquarie believes the restaurant space offers better visibility, higher operating leverage, and more attractive valuations at this point in the consumption cycle.
