Restaurants across the country are facing a fresh round of cost pressures as an ongoing LPG supply squeeze coincides with rising prices of key food commodities, including edible oils, dairy products and imported ingredients.
Industry executives say the twin pressures are beginning to compress already thin operating margins, particularly for small and mid-sized eateries that rely heavily on commercial LPG cylinders and imported food inputs.
Navigating the Perfect Storm
“Fuel and shipping costs are rising. Anything imported will become more expensive,” Pranav Rungta, vice-president at the National Restaurant Association of India (NRAI), said. “Sunflower oil prices have not moved immediately, but increases are likely. Palm oil could also be affected.”
Apart from cooking oils, restaurants are bracing for supply disruptions in dairy products. Industry representatives say smaller dairy processors depend on LPG for heating and processing, which could affect the availability of items such as paneer and other milk derivatives.
“Large players such as Amul have electric-based heating systems, but many smaller suppliers still depend on LPG,” Rungta said. “That could affect the supply chain for several dairy products.”
Restaurant operators also pointed to higher prices for imported dry fruits and specialty ingredients. Almonds, cashews and pistachios have become costlier in recent weeks as shipping costs and freight disruptions add to procurement expenses.
“The prices of several items such as imported cheeses, fruits, nuts and cooking oils have risen because of supply chain disruptions linked to the West Asia conflict,” Tushar Chopra, owner of a Kake Da Hotel franchise, said. “Margins were already tight due to rising operating costs.”
Commodity traders in Delhi said refined vegetable and seed oils have risen by Rs 10–20 per litre in recent weeks, mustard oil by Rs 8–10 per litre and palm oil by around Rs 5 per litre in wholesale markets. Traders attribute the rise to higher freight costs and supply chain uncertainties.
The LPG shortage has also triggered a shift towards electric cooking equipment, adding another layer of cost pressure. Retailers pointed to a surge in demand for induction cooktops as restaurants attempt to reduce dependence on gas.
“Prices of commercial induction equipment have risen 50–100% in the past few days,” Rungta said. “Most commercial-grade units used by restaurants are imported and largely unbranded, which makes supply limited and regulation difficult.”
The adjustment is particularly challenging for smaller operators. Restaurants typically operate on net margins of 3–6%, while quick-service chains deliver around 6–9% under favourable conditions, according to industry estimates.
Operational Survival
“With costs rising, some restaurants may have to adjust menu prices,” said Ashok Aggarwal, owner of Aggarwal Sweets.
Industry representatives said many operators are currently attempting to absorb part of the cost increases or rationalise menus, though further adjustments may depend on how long the supply disruptions persist.