Restaurants consider raising prices by 20-30% amid LPG shortage

Industry face double whammy, input costs rising amid LPG shortage

Eating out is likely to get more expensive as input costs rise due to oil price volatility and restaurants pass down the cost to consumers, even as they deal with an immediate challenge of shortage of commercial LPG cylinders required for keeping their kitchens going. 

Several restaurants are preparing to raise prices by 20-30 per cent by next month, earlier than the typical cycle of price hikes that takes place in June-July, said industry executives. “Restaurants anyway revise prices around July, but with the current crisis, we may undertake these hikes as early as April,” Sagar Daryani, co-founder and chief executive officer at Wow! Momo told Business Standard.   

India’s hospitality industry is a significant consumer of commercial LPG. Prices of commercial LPG cylinders were hiked by ₹115 earlier this month, reaching ₹1,883 per cylinder in places like Delhi, following the rise in global fuel costs due to disruption in West Asia. The impact of rising raw material costs is unlikely to be fully absorbed by the industry, and hence be passed on to consumers. 

 Restaurants are preparing for a deeper hit, with packaging material costs expected to go up as well, said market watchers.     

“We still have old packaging remaining, but once that is exhausted we will have to pay more for new packaging material which will be more expensive. If we are not shut by then, we will have to raise prices for customers,” said Puneet Kohli, director of Sita Ram Diwan Chand. 

While alternatives such as electric or induction-based cooking are gradually emerging, they are not yet viable for most commercial kitchens that rely on high-intensity, fast-paced cooking methods typical of Indian cuisine. 

“Transitioning to such systems also involves significant cost and infrastructure changes. At present, the industry has no practical alternative,” said Pradeep Shetty, vice president, The Federation of Hotels and Restaurant Associations of India (FHRAI).