India may top China as hottest restaurant growth market

India may be ready to supplant China as the top growth market for Western quick-service brands, according to a new research note from Sara Senatore, securities analyst for Bernstein Research.

Based on projections that India’s economy could soon outpace China’s, and recent moves by McDonald’s Corp., Yum! Brands Inc., Starbucks Corp. and Dunkin’ Brands Inc., “the focus on the Indian foodservice market has intensified,” Senatore wrote.

India’s economic growth could exceed China’s as soon as 2014, the report said, adding that much of Indian consumers’ discretionary income likely would go toward spending at restaurants. This means the quick-service market in India could double by that year, she wrote.

“At $13 billion, the Indian market for fast food is just less than one-fifth that of China’s, but it is growing fully 4 percentage points faster — 19 percent annually versus 15 percent in China,” Senatore wrote. “Importantly, fast-food growth has consistently outpaced income growth in India by a factor of 50 percent, as Indian consumers disproportionately allocate incremental income to luxury goods like Westernized food.”