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NEW DELHI : Your next meal could be dearer as fine dining, casual dining and quick service restaurant chains are all considering a hike in prices in view of escalating costs of raw materials.

Both large and small eateries Mint spoke with said they were dealing with high inflation in edible oils, vegetables, and transportation costs. In some cases, even employee salaries had increased. Rents, on the other hand, have been stable thanks to landlords relenting on lower rentals in a post-covid world.

The cost of perishables such as tomatoes and chicken, for instance, have shot up, while companies have raised edible oil prices by nearly 50% from a year ago.

Wow! Momo, which operates nearly 400 outlets is set to raise prices by 7- 8% starting December.

The chain had last revised prices at the end of 2019, but high inflation is making the business unviable. By December, the chain will “definitely take a price hike across the board", Sagar Daryani, co-founder and chief executive officer (CEO), Wow! Momo, said.

Inflation is currently a hot topic in the industry, Daryani said, adding that tomato prices have jumped from 20 to 70 a kilo and chicken from 180-200 a kilo to 270 a kilo. “There’s a huge surge in fuel costs, and, as a result, all raw material prices have gone up. Food inflation is high, fuel cost is high, raw material prices have gone up, and, at the same time, our inherent pain point of not getting any GST input tax credit is quite challenging," he added.

While many restaurants have already revised menu prices, others are thinking of doing so, said Daryani.

Pizza chain Domino’s, operated by Jubilant Foodworks, took a small price hike earlier this year due to rising inflationary pressures in dairy, cooking oil, and packaging. Higher cost of both petrol and diesel has also impacted its delivery costs, the company’s top management said in an earnings call on 20 October.

However, Jubilant said moderating dairy prices have helped mitigate the effect of inflation in other categories. Other restaurant chains are also reviewing prices after over two years.

“We haven’t had a price rise for at least three years. We cannot escape the fact that we have to do it at some point," Delhi-based restauranteur Thomas Fenn, who runs Mahabelly, said.

Rohit Aggarwal, director at Lite Bite Foods, which operates a range of restaurants such as Punjab Grill, You Mee, The Artful Baker and Zambar, said rising commodity costs have become “difficult" to manage. The company will “wait and watch" before revising menu prices, he added. Pricey imported foods are especially hurting the company.

“Cooking oil, for instance, which is the number one thing consumed in a kitchen, has increased substantially. Shipment costs are an issue and everything imported has become even more expensive as a result. When the price of petrol goes up, everything goes up," said Aggarwal.

Restaurants were among the worst hit during the covid-led lockdowns, as they impacted mobility, and the government ordered eateries to shut down for months. Though restaurants are recovering, most eating joints are yet to hit pre-covid levels of business.

In Mumbai, Riyaaz Amlani, chief executive and managing director, Impresario Entertainment and Hospitality Pvt. Ltd, which runs the popular Social cafe-bar, said it will take a call in December whether prices need to be raised.

The company revises prices annually, typically in February-March. “Prices have gone up substantially but we’re seeing if we can absorb them this month and if they start tapering off from next month as is being promised by suppliers," he said.

Others are treading with caution given the general slump in consumer sentiment. Zorawar Kalra, founder, Massive Restaurants, which runs popular chains such as Farzi Cafe and Louis Burger, said it was not a good idea to raise prices when demand is hit. “We have to absorb the cost for now in the larger interest of the industry, even though some of our restaurants are working on high costs of goods sold," Kalra said.“I think everyone should have a measured approach towards increasing prices due to the very real price elasticity phenomena that exists in India, especially till the rebound is complete."

The promoters of HT Media Ltd, which publishes Mint, and Jubilant Foodworks are related. There are, however, no promoter cross-holdings.

 

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