Bengaluru was once a solid growth engine for QSR chains. Not anymore

Jubilant FoodWorks, which operates the country’s largest QSR chain, Domino’s; Works at Westlife Foodworld McDonald’s; and Barbeque Nation pointed to slowing growth or a decline in sales in the southern city.

Analysts estimate that Bengaluru is among the top three cities for QSR operators, along with Mumbai and Delhi-NCR, although the exact revenue contribution is not available. But that tension becomes more pronounced as such chains grapple with a broader slowdown in discretionary spending.

Jubilant FoodWorks noted earlier this month that the city was one of the slowest-growing major metros last year, and Domino’s same-store sales remained muted despite aggressive value-focused offers and digital incentives. Store additions in the city have also slowed as the operator prioritizes consolidation and smaller-format outlets.

“Sentiment is low in highly concentrated IT services regions like Bengaluru and Hyderabad and these geographies have seen less growth for us,” Jubilant FoodWorks CEO Sameer Khetarpal said during the September quarter earnings call. “Performance in these regions has been softer, while other markets have compensated for this.”

Barbeque Nation reported a 4% decline in same-store sales in the city from July to September, compared to a 5% increase at premium eateries. The company operates 35 outlets in Bengaluru across the mass market Barbeque Nation and premium casual dining segments.

“Overall, Bangalore outperformed pan-India for our premium portfolio, but casual dining was impacted by seasonal factors such as Navratri,” Barbeque Nation CFO Rahul Agrawal said in its Sept. 26 fiscal year earnings call. he said.

McDonald’s operator Westlife Foodworld also cited Bengaluru, its second largest market in the South, as a barrier to growth. “Bangalore, where we operate around 65 to 70 restaurants, has been the biggest hurdle in the system,” said Saurabh Kalra, managing director of the company. Delivery and food traffic in the city is under pressure, especially among younger consumers in the affluent segment Kalra said there are SEC A and B segments.

Change preferences

Analysts said the city’s savvy, tech-savvy consumer base is fueling the premiumization trend and making the value-driven model of global QSR giants increasingly challenging.

“The younger generation is increasingly choosing local bistros, artsy cafes and Asian fast casual formats,” said Sandeep Tirukoti, vice president of Avalon Consulting. “Customer frequency is fragmenting, and someone who tries six or seven different restaurants a month is automatically visiting their regular QSRs much less frequently.”

At the same time, Bengaluru’s cafe and fast-casual culture is eliminating some of the demand.

AB Gupta, co-founder of three Bengaluru-based restaurants Paris Panini, The Pizza Bakery and Smash Guys, said the September quarter was the best in the last few years. “We expanded our footprint across Bengaluru after seeing customers across age groups visiting frequently. Online orders have also increased significantly.”

High rents, fragmented market

Changing preferences among young and affluent consumers are not just behind the QSR slowdown in Bengaluru.

Analysts say the city’s high real estate costs are worsening unit economics for QSR operators, with rent now becoming one of the biggest stress points. According to Avalon Consulting’s Tirukoti, rents in areas like Indiranagar have increased by over 30% on an annual basis. “Once rent starts taking up 20-25% of a store’s revenue, operating a QSR outlet profitably becomes extremely difficult, even for well-known chains.”

The rise of cloud kitchens and localized delivery options has also intensified competition. Sagar Daryani, CEO of Wow! Momo highlighted that the Bangalore market has become “flooded” with cloud kitchens, both established and startups, and demand is fragmented. He noted that tech workers, a historically significant consumer base, are moderating their out-of-home spending due to slower wage growth compared to rising costs of living. “Even as the overall market pie grows, individual players are seeing a contraction in their share.”

According to Avalon’s Tirukoti, competition is not only expanding but also accelerating. “Cloud kitchens have driven fragmentation even further. Specialty cafes have exploded – the Third Wave alone has more than 40 outlets, often in locations where QSRs once dominated. There are even concepts like Rameshwaram Café where a single outlet can produce ₹4.5-6 crore per month, diverting consumer attention away from legacy chains.”

Hybrid work models have also shifted weekday demand in tech corridors. “People now spend money on premium meals but opt ​​for very value-oriented meals throughout the week. In this divide, the middle segment, where most QSRs are located, has become obsolete. Many tech workers rely on canteens or ₹Tirukoti said one should save on discretionary expenses for 100-150 meals on weekdays and more experimental venues on weekends.

Structural changes are needed

To counter the slowdown, some chains are adjusting their strategies. Wow! Momo, for example, has increased in-app discounts in Bengaluru and is focusing on dine-in experiences to attract customers back. Westlife has tried menu innovations and operational improvements at tech parks to increase foot traffic, with mixed results.

Analysts say QSRs will need structural changes to stimulate demand in the city. “High street locations like Indiranagar should no longer be treated as volume drivers but as brand showcases. The real yield should come from smaller delivery-friendly units in residential clusters with more stable rental structures,” Tirukoti said. he said.

Despite the turbulence, Bengaluru remains an important market. “Bengaluru remains a major hub for QSRs in South India,” said Arvind Singhal, MD, The Knowledge Company. “But unlike Hyderabad or Mumbai, the twin challenges of space cost and consumer expectations mean chains need to constantly innovate or risk losing relevance.”