Synopsis

Amid rising food inflation, many Indian restaurants are implementing various strategies to manage costs. These strategies include pausing high-cost menu items and introducing smaller portions for diners. Increased operational expenses due to regulatory compliance have also led to price hikes for consumers. Many restaurant operators indicate they must share some inflation costs with patrons to maintain profitability. Consequently, price increases of 10-15% are expected across several restaurants in Mumbai.

Cafes, restaurants resort to smaller meals, reducing portions and increasing prices (Representative Image)

New Delhi: From pausing high-cost items on the menu, to introducing smaller meals or reducing portions, or increasing prices by 4-5% starting October, fine-dine chains, restaurants and cafes are resorting to various measures in peak festive season amid surging food inflation and higher costs of hygiene compliances.

"We have paused serving some higher-priced options in our biryani range, which involve high-cost ingredients," said Raymond Andrews, co-founder of quick service restaurant (QSR) chain Biryani Blues.

Executives said they are putting in place a combination of measures amid tight market conditions, adding that the ongoing inflation is having a far more long-term and significant impact compared to the LPG supply disruptions crisis during March-April this year, at the peak of the West Asia war, which had led to unchecked increases in costs.

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"There is no other way out now but to share some of the inflation load with consumers, and some costs we will absorb," said Saurabh Khanijo, managing director at Asian cuisine chain Kylin.

The spotlight and crackdowns by Maharashtra Food and Drug Administration (FDA) and Food Safety & Standards Authority of India (FSSAI) on food safety, sanitation, storage methods and licensing violations have further led to increased costs by chains, some of which chains are passing on to consumers, executives said.

The new costs, or 'hygiene surge' include hiring additional audit staff, using higher-quality ingredients, engaging with external labs for testing and sampling and reinforcing legal teams. "There are a lot of compliances by regulators now that impact everyone-from small operators to large chains. For example, we are replacing oil used for deep frying quicker than even the permissible standards, as we don't want to take a chance and be called out by regulators-some of that cost we are passing on to consumers ," said the chief of a prominent Delhi-based chain. He requested not to be named.

India's retail food inflation shot up to 7.74% in September, amid surge in prices of vegetables and staples including edible oils, sugar, onions, ginger and garlic.

"Restaurants are facing rising input costs, including gas, water and employee expenses, alongside aggregator commissions and the pressure to offer discounts. At the same time, competition from newer players operating at aggressive price points is making it increasingly challenging to maintain profitability," said Shashank Shetty, director, Peninsula Redpine, which operates Tattva Bar & Cafe.

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Over the weekend, the Indian Hotel and Restaurant Association released a statement that restaurants in Mumbai are gearing to increase prices by 10-15%. AHAR president Vijay K Shetty attributed the increase to "sustained increases in the cost of preparing and serving food".

Avanish Chaturvedi, F&B manager at ITC Grand Central, Mumbai added that rising food and ingredient costs, manpower expenses, rentals and utility bills are contributing to increased operating costs," Restaurants can mitigate cost pressures through menu engineering, efficient procurement, waste reduction and operational improvements," he added.

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