High vegetable prices may spice up hotel menus

The recent upsurge in vegetable prices including onion and garlic has left Gujarat hotel industry in jitters as margins have started shrinking amid higher prices, which may prompt them to hike prices on the menu.

Most of the hoteliers are not willing to shift the cost burden to the consumers, but a sustained hike in prices may lead to an upward revision of menu prices. "We have more or less maintained the same price point which is that of Rs 475 in our inclusive dinner buffets so that more people could come and try out our food. We include a lot of imported vegatables and pastas in our menu and with the food inflation at an all time high, we did not want our quality to suffer. So we have increased our dinner buffet to Rs 525 and revamped the menu so that we can continue with to give our customers the same quality with a difference," says Anang Chaturvedi, Director of Sales, Courtyard by Mariott.

But there are mixed views and the mood is far from being upbeat. "The recent price hike in vegetables; mainly in onions and garlic, has badly affected the hotel industry. The economic viability is fading away and profitability is shrinking. However, presently there are no chances of price hike on menus. Hotels cannot change the prices every now-and-then. But if the situation remains unfavourable, the hotels may take a call on price hike," said SP Jain, former president, Hotels and Restaurant Association of (Western India).

However, in the wake of falling arrivals in the market place, the prices of key vegetables including onions are feared to rise again. A market source at Ahmedabad informed, "So far, the onion prices have fallen from the peak of Rs 1200 per 20 kg to around Rs 850 per 20 kg in past one week. But the arrivals are very thin with around 8-10 trucks (weighing around 10 tonnes each) at present. This may fall in coming weeks and jack up the prices further."

An official from Chimanbhai Patel Agricultural Produce Market Committee (APMC) in Ahmedabad has informed that the market has daily arrival of onions of about 18 trucks against the 35 trucks in the regular season.

"Recently, most of the arrival comes from Saurashtra, which is priced at around Rs 350 to Rs 750 per 20 kg, while Maharashtra arrivals are thin and priced at Rs 350 - Rs 800 per 20 kg," informed the official.

The vegetables costs hold around 40per cent of the total food cost for the hotels. While most of the hoteliers buy onions and garlic through traders and commission agents, some of them prefer buying directly from the market place (mandi). "Usually, we procure most of the vegetables through vendors. But at times, we do purchase directly from market place," informed an Ahmedabad-based hotel operator.

Speaking on the possibility of price rise by the hoteliers, a Vadodara-based hotel operator informed that the prices were making a dent in the profits and this might get worse if things did not come to normal in near future.

"Usually, we revise our menu prices annually, but given the high price scenario we are facing tremendous cost pressure," said Ashwin Gandhi of Express Hotels, which has three-four star hotels in Vadodara and Jamnagar. Only the coming weeks will decide the fate of the burgeoning food industry of Gujarat.