Mumbai/Bengaluru: Fast-food chains serving dosas and momos to pizzas across India have found out that switching away from cooking gas amid the ongoing supply squeeze is difficult. The piped gas network is confined to a few cities, and the transition to electric cooking is hampered by higher operating costs and a spike in upfront equipment prices.
“Over the past three weeks, we have made conscious efforts to reduce our dependency on gas by increasing the adoption of electric equipment across locations,” said Ankur Sharma, co-founder of Rebel Foods, which operates cloud-kitchen brands such as Faasos, Behrouz Biryani and Oven Story Pizza.
“In some areas, we continue to face constraints due to limited availability of equipment from vendor partners,” he said. “Operating on electricity tends to be more expensive than LPG, which adds to the overall cost considerations,” Sharma said, adding that it also requires power backups in locations with unreliable electricity supply.
The US and Israel’s war on Iran has effectively blocked the Strait of Hormuz, squeezing energy supplies for India that imports 60% of its liquefied petroleum gas (LPG) requirement, largely from the Gulf region. Limited availability has forced authorities to prioritize essential services such as hospitals, welfare schemes and households over commercial establishments.
The ministry of petroleum and natural gas prioritized has allocated 20% of the average monthly commercial LPG to restaurants, causing a severe fuel shortage.
Commercial LPG supplies depend on each state’s priorities. “In Delhi, on day one, around 42% was allocated to restaurants, while markets like Mumbai and Rajasthan were way behind,” said industry executives, who spoke on the condition of anonymity.
The supply of LPG cylinders to certain parts of Jubilant FoodWorks Ltd’s store network has been constrained, said a 28 March exchange filing by the quick service restaurant (QSR) chain, which operates Domino’s Pizza and Dunkin’ Donuts franchises and Hong’s Kitchen and COFFY brands.
“The operational impact at this stage is limited and being actively managed,” said Jubilant, which has over 2,396 Domino’s outlets in India. The company is accelerating its shift to alternatives such as electricity and PNG, it said.
In an emailed response to Mint’s queries, Jubliant shared the company’s exchange filing.
LPG crunch has soured investor sentiment. Shares of Jubilant closed 3.85% lower on Monday and have fallen over 21% since January, compared with a 14.5% decline in the Nifty 50.
Sapphire Foods India Ltd, which operates KFC and Pizza Hut outlets in some parts of India, fell 5.5%, while United Foodbrands (formerly Barbeque-Nation Hospitality Ltd) dropped 10% on Monday.
Rising costs
For WOW! Foods, earlier investments in electric cooking helped reduce the impact at Wow! Momo. “We moved to electrical fryers, combi ovens and grillers, so most of our stores are not affected,” said founder Sagar Daryani.
But its other sub-brands, Wow! Chicken and Wow! China, relied on LPG. The switch can be quick as it “took us three days to convert all Wow China stores to electricity”, said Daryani. “[But] It’s expensive. We had to convert all our stores from gas to electricity and invest in new equipment.”
And infrastructure constraints remain. “In many cases, we have to apply for higher electricity load, which takes time,” he said.
Devyani International Ltd, which also operates Pizza Hut and KFC franchises in India, and Restaurants Brands International Ltd, which runs the Tim Hortons and Burger King outlets in India, did not respond to Mint’s emailed queries.
The cost of electric equipment has risen sharply as demand has surged, according to Anurag Katriar, founder of Degustibus Hospitality, which operates premium Indigo, Tote on the Turf, and Neel restaurants. However, the shift away from LPG is more a compulsion than a choice.
“We have moved some of our processes to induction and increased that usage,” he said. “The whole idea is to conserve LPG as much as we can because we all know it is a national crisis.”
According to Katriar, piped natural gas (PNG) is emerging as a preferred long-term solution due to lower costs, but rollout remains constrained by infrastructure and regulatory hurdles, including delays in permissions to lay pipelines.
Dosas among the worst-hit formats
Formats that require continuous cooking, such as South Indian chains, are among the worst affected. “The biggest change is being seen with South Indian chains because if they are doing a dosa bhatti, it has to be on continuously,” Katriar said, adding that many are being forced to tweak menus or drop certain items.
Industry executives said some eateries across the country have temporarily shut operations in recent weeks due to the crisis.
A McDonald’s India spokesperson said certain areas are facing LPG shortages. “Less than 10% of its restaurants” are offering select items such as “new salad and grilled chicken burgers and wraps”, while others continue to operate as usual.
Rebel Foods has also recalibrated menus. “We have optimized our menus and, in certain locations, we have limited the availability of select items to peak operating hours to ensure efficiency and consistency in service,” Sharma said.