Restaurant Bills To Rise By 8% This Month; Here's Why

Eating out and ordering food will be more expensive, including chocolates. The bills in fast food restaurants and upscale restaurants could rise by 5-8% from this month, as the prices of cocoa, coffee, palm oil and sugar have risen sharply in the last quarter. This will be the first such increase in about a year and a half, said industry managers and restaurant owners. Prices for cocoa and coffee are at an all-time high and palm oil has risen by 10% year-on-year. Executives from a dozen restaurant and cafe chains said they were examining price increases this month.

Aseem Grover, owner of the upscale The Big Chill Cafe and the dessert chain The Big Chill Cakery, is closely monitoring the costs. “Raw material prices are rising sharply and inflation makes it increasingly difficult to balance profitability,” said Grover. “We assess the situation closely.” Cocoa prices have risen to a record level and reached over $10,000 (Rs 8.3 lakh) per ton after harvests in important producing countries such as Ghana and Ivory Coast were disappointing. Cocoa prices doubled in the January-March quarter compared to the previous quarter.

“Bad news. We interrupt the production of our milk chocolate. And increase the prices for our dark chocolate … Because real food has its price,” wrote Shashank Mehta, founder and managing director of the packaged health food company The Whole Truth, on LinkedIn last week. He added that cocoa prices are at the highest level in 45 years and that the prices of the product have risen by over 150% in just one year, while the price of cocoa butter has risen by 300%.

Most commodity prices are rising, which leads to higher input costs, said Anjan Chatterjee, chairman of the listed speciality restaurant, Mainland China and Sigree. “That’s why we check our prices, and if this continues, we will be forced to increase our menu prices,” he said. Executives said that companies face the dilemma of either accepting a loss of profits or risking the loss of market share if they raise prices.

“The market is quite competitive, so we have only accepted price increases of 5% overall, although the loss we have to accept is much greater given the increased input costs,” said Saurabh Khanijo, Managing Director of the restaurant chain Kylin.