Inflation bites: fast food prices up 5-10%
Mumbai/New Delhi: eat at the restaurant or order on the spot? Prepare to shell out more as restaurants and fast food chains across India are opting for higher prices due to rampant inflation.
Most quick-service restaurants (QSRs), including Dominos, Pizza Hut and KFC, have implemented price increases over the past month, while others are about to do so. The average increase in the menu varies between 5% and 10%.
“We’re trying to keep inflation out of our margins,” a senior executive at one of India’s biggest fast food chains told TOI. “But at the same time, we need to keep consumers interested. As we pass on some of the increased costs to consumers, we try to lock in prices from our suppliers based on long-term volume commitments.
The restaurant industry has been impacted by rising fuel, freight and energy costs, as well as higher prices for food grains, edible oil and chicken. They were also impacted by the increase in the payroll.
“While you may have some control over certain things, like your alcobev wallet, utility costs like electricity and gas are something you cannot predict,” said Rahul Singh, Founder and CEO of The Beer Cafe. “I was just working on the price increases on my menu.”
Similarly, Nitin Saluja, founder of Chaayos, told TOI that he could raise prices by 5-6%. “In 2019, the prices of the cardamom we use increased from Rs 1,400 to Rs 4,500. We did not increase our prices at that time. But currently, everything, including dairy products and paper for packaging, has increased. We do not have the choice.
Jubilant, which owns the franchise of Domino’s Pizza outlets, recently recorded a price increase of around 5%, after nearly 4-5% in December.
The increase in food menus in some cases came after more than two years. Struggling with lockdowns, restrictions and reduced hours due to Covid, the past two years have been difficult for the industry, with low attendance and lackluster business.
Yum Brands, along with fast-food chains Pizza Hut and KFC, raised prices by up to 10%, with Pizza Hut rising about 3% lower. KFC had taken a marginal 1.5% price increase on its menu in November 2021.
Although consumer reactions to price increases are difficult to estimate and also vary across brands, ICICI Securities analysts said relatively premium QSRs are expected to have less of an impact on volumes, while value-driven brands like Burger King may struggle to pass on a double-digit price hike.