As diners anticipate their next restaurant outings, they may find themselves facing higher bills, attributed to the surge in prices of key commodities such as cocoa, coffee, palm oil, and sugar. Industry experts project a potential 5-8% increase in dining expenses starting this month, marking the first significant rise in about 1.5 years.
The escalation in prices is notably driven by various factors, including disappointing harvests in cocoa-producing nations like Ghana and Ivory Coast. Cocoa prices have skyrocketed to unprecedented levels, surpassing $10,000 per ton. In response, industry players, including restaurant and cafe chains, are contemplating price adjustments to offset escalating input costs.
Aseem Grover, owner of upscale establishments like The Big Chill Cafe and The Big Chill Cakery, highlights the challenges posed by inflation, emphasizing the need for careful cost monitoring.
Shashank Mehta, CEO of The Whole Truth, expressed concern over the impact of rising cocoa prices on chocolate production, indicating potential disruptions due to supply shortages.
Restaurateurs face a dilemma between maintaining profitability and retaining market share amid intensifying competition. Saurabh Khanijo, managing director of the Kylin restaurant chain, underscores the delicate balance in implementing price increases to mitigate losses without burdening consumers excessively.
In addition to cocoa, other commodities like palm oil are experiencing significant price hikes, affecting the hotel, restaurant, and cafe (HoReCa) segment. Sandeep Bajoria, CEO of Sunvin Group, predicts continued price rises in palm oil until early June due to reduced supply from major producing countries.
As the industry grapples with mounting costs, quick-service restaurants (QSRs) are also evaluating potential price adjustments, despite facing stiff competition from hyperlocal chains offering discounted menus.
Likewise, stakeholders are exploring alternatives to mitigate the impact of rising commodity prices. Some cafe chains are considering substituting costly ingredients with cheaper alternatives to manage expenses effectively.
With the current trend in commodity prices, diners may soon find themselves paying more for their favourite meals as restaurants navigate the challenges posed by inflationary pressures.