Railways' modernisation plans brighten growth prospects for food service chains like TFS, Lite Bite Foods

By Divya Sathyanarayanan & Shashwati Shankar

MUMBAI: 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 Rs 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 Rs 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 Rs 15-20 crore.

According to Varun Kapur, director, TFS, the company has readied investments to the tune of Rs 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.