Brace yourself for a costlier dining out experience

Eating out as well as ordering in is set to get costlier as inflation-hit restaurant chains have begun hiking the price of dishes. While some restaurant chains have already hiked prices by 5-10 per cent, others are monitoring the volatile macro-economic situation closely and expected to follow suit soon. Fine dining restaurants could look at even steeper hikes.

It’s a tricky situation for restaurant players as March has been the first month when the industry witnessed strong revival post the third pandemic wave, and a price hike could impact demand. On the other hand, price hikes are needed to mitigate the impact of inflation.

Chain reaction

Analysts pointed out that franchises of leading QSR brands Domino’s Pizza, KFC and Pizza Hut have already implemented price hikes.

Abneesh Roy, Executive Director-Institutional Equities, Edelweiss Securities, said that Jubilant FoodWorks has hiked prices by 5-8 per cent for most of the Domino’s Pizza portfolio in response to all round inflation including logistics costs.

A recent report by ICICI Securities stated that the “franchisees of Yum! Brands (owner of brands KFC and Pizza Hut) have taken up to 10 per cent increase. Sapphire Foods has taken a price hike of up to 10 per cent for KFC and up to 3 per cent for Pizza Hut”.

Other restaurant players are waiting and watching and expected to follow suit. Anurag Katriar, Founder & MD, Indigo Hospitality, said the company is likely to increase prices by 10-12 per cent to offset the impact of inflationary pressures.

As Rahul Singh, Founder and CEO, The Beer Cafe, explained, “The restaurant industry is facing an all-round impact of inflation across fuel, commodities such as dairy, vegetables and poultry prices besides utilities costs such as power and fuel.”

War impact

Kabir Suri, President, National Restaurant Association of India (NRAI), said macro-economic conditions including the Russia-Ukraine war has deepened the inflationary pressures for the industry. “Players have either already taken a price hike or are in the process of negotiating supply contracts with their vendors for the next 3-6 months. Depending on their strategies, this will mean price increase at the consumer-end."

Zorawar Kalra, Founder and MD, Massive Restaurants, said, “We are watching the inflationary effects very closely as our input costs have gone up quite significantly and vendors are pressuring us to increase costs. Our annual agreements have helped us keep some of these costs at bay but in some other areas the inflationary pressures remain. As of now we are not increasing prices but we will wait and watch the situation.”

Meanwhile, analysts said the branded QSR chains are unlikely to see a huge impact in demand due to price hikes.

COMMENT NOW