Goldman Sachs: Government’s Tax Relief To Boost Quick Service Restaurant Business
Goldman Sachs: Government’s Tax Relief To Boost Quick Service Restaurant Business
Strap – The announcement made on 1 February was a respite to taxpayers, especially the middle-class
In the Union Budget 2025-26 presented recently by Finance Minister Nirmala Sitharaman, the Central government announced no income tax would be payable on income up to Rs.12 lakh compared to Rs 7 lakh earlier.
In its report 'India QSR: The tide is turning', multinational investment banking company, Goldman Sachs has stated that the October-December quarter was the beginning of a cyclical upturn in quick service restaurant (QSR) demand, driven by improving affordability.
QSRs focus on fast food - burgers, sandwiches, fried foods, nuggets and pizzas.
The government’s purpose was that taxpayers save money through lesser income tax and, in turn, benefit the economy by way of consumption, savings and investments.
The government said the increased disposable income from the income tax relief would help accelerate the recovery in the industry starting the first quarter of the Financial Year 2025-26.
Goldman Sachs claimed the QSR players were gaining a share within the food delivery market after several quarters of loss.
The American multinational’s report said that the launch of Zomato Gold had a positive impact on its gross order value and the growth gap between QSR sales and aggregators' gross order value narrowed in the October-December quarter. It added that the positive for QSR operators was that dine-in sales were also recovering.
The report read, "The 3QFY25 also saw a sharp recovery in dine-in sales growth at QSR players. QSR dine-in sales growth was 4.2 percent year-on-year in 3QFY25 after several quarters of negative or low single-digit growth.”
It further stated, "Domino's saw some of its takeaway sales (which it reports as part of dine-in) shift to the delivery channel because it lowered the minimum order value that qualifies for a delivery fee waiver."
The demand slowdown had begun in the QSR sector around the second half of 2022-23, led by high inflation and price hikes. Four quarters later, the slowdown extended more than expected due to the impact of geopolitical issues in the October-December quarter of 2023-24.
Goldman Sachs said, "Over the last few quarters, most QSR players have not taken any significant price hikes, which helped the recovery process. We believe these initiatives will continue to drive order-led recovery for the sector, as affordability has improved over the last eight quarters."
