Parul
The Indian government’s recent tax relief, unveiled in the 2025-26 Union Budget, is poised to act as a potent catalyst for the quick service restaurant (QSR) industry, according to Goldman Sachs. The initiative raises the non-taxable income threshold to Rs 12 lakh, offering significant reprieve to middle-class taxpayers.
This fiscal measure is anticipated to invigorate the economy by encouraging taxpayers to channel savings into consumption, investment, and savings. Goldman Sachs’ report, ‘India QSR: The tide is turning,’ notes that the October-December quarter marked the start of a positive cyclical shift in QSR demand, propelled by enhanced affordability.
Fast food chains, primarily serving items like burgers, sandwiches, and pizzas, are positioned to capitalize on this trend. Increased disposable income from the tax cut is expected to accelerate industry recovery from the onset of the 2025-26 fiscal year.
QSR companies are regaining ground in the food delivery market, as evidenced by their regained market share in late 2024. The favorability for dine-in experiences is also witnessing a resurgence, indicating robust growth for QSR operators.
In the third quarter of fiscal year 2025, a sharp recovery in QSR dine-in sales was observed, with year-on-year growth reaching 4.2 per cent. Innovations like takeout shifts by Domino’s, due to reduced delivery thresholds, are highlighting adaptive strategies in the industry.
The QSR sector faced a demand decline due to inflation and price hikes around late 2023 but did not implement further price increases in subsequent quarters. The resilience and value offerings presented by QSR players are pivotal in their ongoing recovery.
Goldman Sachs believes these customer-centric value initiatives are essential for sustaining order-driven recovery, pointing to a promising outlook driven by improved affordability.
