Fine dining and quick service restaurants, bars, and cafes are increasing prices by up to 15% to deal with steep food inflation caused by global supply disruptions even as there is a surge in travel. Many chains are undertaking a combination of reducing discounts and increasing prices as their raw material costs have shot up by anywhere between 7% and 30% over the past three months, adding that the price hikes are happening after two-to-three years in most cases.
“We are increasing prices by at least 5% now after three years,” said Anjan Chatterjee, chairman of Specialty Restaurants that operate multiple brands including Mainland China, Asia Kitchen, and Sigree Global Grill. “We didn’t expect the impact of the Ukraine-Russia war to impact prices of raw materials such as sunflower oil and fuel to such a huge extent.” He said suppliers are no longer willing to renew their annual contracts on the existing terms. “So, we have no choice but to increase consumer prices, even if it can hurt demand.”
Some restaurant owners claim that they are only passing on a portion of their cost increases to customers.”We can’t increase menu prices overnight in sync with inflation, but we are increasing pricing by 4-5%, that too for our top selling products,” said Raymond Andrews, founder of Biryani Blues. “That is the only way we will be able to offset some of the inflation, though we will still end up taking a hit.” He said costs of key ingredients, including chicken, oil, and dairy products, have all shot up in recent times, adding that the QSR chain has increased prices after a gap of one and a half years. Impact on
Spending Jasper Reid, chief executive of Sierra Nevada Restaurants, which operates multiple restaurants, including QSR chain Wendy’s, said he would be cautious about increasing prices too steeply. “Certainly, there’s inflation where the input price includes transport and so reflects the price of oil,” he said.
There are some positives for the industry: travel and vacations in the country are on the rise, regular international flights have resumed, and most pandemic-related restrictions have been lifted. The surge in prices is as much in fine-dining as it is for quick service restaurants (QSRs) that operate on entry-level mass prices. Jubilant FoodWorks, which operates Domino’s Pizza, has increased prices by 5% this month, its second increase in five months after a 4-5% price hike late last year. Franchisee operators of Yum! Brands-owned Pizza Hut and KFC, too, have increased prices. Sapphire Foods, for example, has increased KFC prices by up to 10% and Pizza Hut prices by up to 3%. For KFC, the last price hike was 1.5% in November last year. In the case of Pizza Hut, the last price hike was back in April 2019.