Rising costs push city’s restaurants into a Catch-22

Local vendors to high-end restaurateurs, everybody is reeling under the impact of inflation

Local vendors to high-end restaurateurs, everybody is reeling under the impact of inflation | Photo Credit: FILE PHOTO


Hard work and hope had just about seen the city’s restaurants through the two gruelling waves of the pandemic. However, within months of the second COVID-19 wave subsiding, restaurateurs are grappling with rising costs, changing consumption patterns and reduced footfall due to soaring inflation.

The restaurant managers are now walking the tightrope of increasing the prices of the items on their menus, to cover their additional costs, while not losing out on any more customers.

Several restaurant owners said the phenomenon of ‘revenge-dining’, which had caught on after COVID-19 restrictions were lifted, seems to be over. There is little to no waiting time for tables at several restaurants even at peak business hours.

Reduced footfall

Savar Malhotra, a partner at The Embassy, Connaught Place, said the input costs have risen to an all-time high resulting in reduced footfall. “Inflation is a growing concern. We had to increase our rates by 3-4% to maintain profitability,” he added.

Puneet Kanojia, manager of Cha Bar, a popular cafe chain, reported a significant drop in waiting time for tables.

“The waiting period has significantly reduced from 45 minutes to 15 minutes over the past few months. We see a reduced footfall during the weekdays. However, we’re still getting a sizeable crowd over the weekends,” Mr. Kanojia added.

At Diggin, Anand Lok, the waiting period for tables is low even over the weekends. According to Manish Rana, the manager, the restaurant no longer has the 20-minute average waiting period for its customers as was the case earlier this year.

“On some weekends, the footfall is marginally higher in comparison. We have also increased the cost of our dishes by ₹20 each,” he added.

A branch manager of Haldiram’s at Connaught Place said a significant reduction in customers has impacted the sales of their signature products such as thalis and food combos, which sold in bulk earlier.

The situation is equally grim for dhaba owners. Vijay Parashar, the owner of a dhaba in Shankar Market, has hiked his prices across items by 25%.

“Ten months ago, things were different. The retail price for rajma was ₹95, now it’s ₹155; chole was ₹80, now it’s ₹110; dals were ₹100, now they sell for Rs 120,” he pointed out.

Mr. Parashar also feels that his customers’ paying capacity has reduced. “Some of my regular customers who used to order one plate of rice per head, now order less and share the items,” he added.

However, for some in the business, the rising inflation has hardly left a mark. Thomas Fenn, a partner at Mahabelly, a south Indian & seafood restaurant, said he has not witnessed any change in the waiting period at his restaurant.

“Though we are yet to touch the pre-COVID levels, our restaurant is running to full capacity. People are choosing to dine in but there is a shift in consumption pattern. We are getting more people during the weekdays now, perhaps due to the new work-from-home culture,” he said.

Industry perspective

According to Kabir Suri, president of the National Restaurant Association of India, restaurants are dealing with a surge in the prices of cooking oil, fuel, meat, vegetables and imported food items.

Pradeep Shetty, joint secretary, Federation of Hotel and Restaurant Associations of India (FHRAI), said everybody, from a local vendor to a high-end restaurant owner, was reeling under the impact of inflation.

“Many restaurants have been forced to hike their prices by 15-20%. Initially, we thought the price rise was temporary and so we waited and watched for three months. But now, we are anticipating a further hike in prices,” he said.

In a letter to the Union government in May, FHRAI stated that the hospitality industry was in “dire need” of long-term credit facilities due to inflation and high operational costs of the sector.

Mr. Shetty said inadequate manpower was another problem for restaurants. “We are training workers to multitask, but it’s challenging to hire people in the current economic condition, with additional costs in place,” he added.

Thinking twice

While some restaurants are trying to attract customers by offering discounts on dine-in and takeaways, consumers say they are still not willing to eat out as much as they once did.

“Earlier, I would visit restaurants every weekend. Now I go out to eat out on alternate weekends only,” said Ria Sharma, a 26-year-old lawyer.

Ms. Sharma said till a few months ago she would order two to three separate items at the restaurant, now she prefers to order price-saving combos. Moreover, to reduce her travel expenses, she now prefers to order food at home.

Shubham Singh, 24, a college student, who earns a small salary by working part-time as an intern, said he had cut back his dine-ins by half.

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Printable version | May 21, 2022 12:32:46 am |