Price increases on the table for restaurants and cafes

Diners may soon have to pay as much as 15% more when dining out as several eateries in metro cities plan to raise prices to offset the impact of rising raw material costs. Since January of this year, raw material costs for restaurants have risen 5% to 20% as sellers renew contracts at higher rates amid rising inflation.

“When it comes to our restaurants, The Bombay Canteen and O Pedro, we have seen an 8-11% increase in input costs since January 2022. These include increases in ingredient costs, beverage and fuel prices,” said Yash Bhanage, Founder and COO of Hunger Inc Hospitality of Mumbai. Recognizing that there will be a price hike in the restaurants, Bhanage said that instead of a general price increase for all items on the menu, the company will look at the input or ingredient costs for each dish and increase prices accordingly, adding : “For example, the cost of vegetable oil has increased by 80%, which affects the entire menu.”

Bengaluru-based VRO Hospitality has witnessed a 5-6% rise in raw material costs this year at its restaurants and bars Badmaash Lounge, Hangover, Plan B, Nevermind, Cafe Noir, Taki Taki and Tycoons. “Looking at the current trend and with revenue growth not in line with our regular metrics, we’re looking at increasing rates by 5% to mitigate the rise in inflation costs,” said Asif Syed, CFO, VRO Hospitality. The current food and beverage price of the company ranges from Rs 300-600 on average for all its brands.

At Roastery Coffee House, which has locations in Noida, Kolkata and Hyderabad, raw material costs have increased by 20%, according to cafe founder Nishant Sinha. “Our dishes are priced in the range of Rs 150-450 and we operate with low margins,” Sinha said, adding that they will be raising prices by 10-15% soon.

Kolkata-based Chowman Hospitality raised prices at its Chowman, Oudh and Chapter 2 restaurants by up to 5% in May following an overall increase in input costs. “We had to raise prices, but we only did it by 3-5% because affordability comes first for us,” said Debaditya Chaudhury, MD, Chowman Hospitality.

Many eateries similarly play it safe by marginally raising prices. “Since January, we have witnessed an increase in input costs of as much as 10%. The main reason is the unavailability or limited supply of consumables and perishables,” said Akshay Anand, co-founder of Cozy Box, a multi-cuisine restaurant in New Delhi. But adds that they will not increase prices by more than 5%.

Rajan Sethi, founder and MD, Bright Hospitality, said the industry has witnessed an 18-20% increase in raw material costs since the beginning of the year. However, the New Delhi-based company, which owns the restaurant brands OMO, AMPM, The GT Road and Ikk Panjab, has no plans to change menu prices.

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