Restaurants feel the burn as LPG cylinder prices surge

The latest hike is the steepest increase in three months, triggered by the war in West Asia, and an LPG crisis in the country. Cumulatively, commercial LPG prices have gone up by Rs 1,303 since March across cities, delivering a fresh shock for food service operators. 19-kg commercial cylinders in Mumbai now cost Rs 3,024 a unit, Rs 3,071.50 in Delhi, Rs 3,202 in Kolkata, and Rs 3,237 in Chennai. Price hikes are unavoidable, say restaurant owners across cities. Some players are trimming menus, shifting to induction cook stoves and alternate fuels to reduce the pain of price hikes.

“I will have to take at least a 10% hike in menu prices to factor in the latest revision,” Curry Leaf’s proprietor Nithyanand Shetty said. “With card rates at Rs 3,024 a cylinder in Mumbai, the unofficial market will double its rate at Rs 6,000 a cylinder. And this may still not guarantee cylinder arrivals on time,” he said.

“We will increase menu prices from tomorrow (Saturday) itself. We don’t have an option,” said Jagannath Singh, who owns Jai Ambe Snacks in Thane, near Mumbai. Rushabh Purohit, co-owner of Purohit Thali in Ahmedabad says that he will trim his menu than raise prices for now.

“For an office goer or a regular customer who orders our thali, a hike of Rs. 10 per thali would mean an additional cost of Rs. 300 per month. This could disrupt my clientele,” Purohit says.

Margin Squeeze

For an industry where profitability often hinges on tight cost control and high volumes, the latest hike has landed like a sudden, unavoidable surcharge on every dish served. While larger chains may manage the blow better through scale efficiencies and supplier contracts, small eateries, dhabas, and street vendors face a sharper squeeze, experts said.

Unlike other inputs that can be tweaked or substituted, LPG is non-negotiable, explains Pradeep Shetty, vice-president, Federation of Hotel & Restaurant Associations of India & spokesperson, Hotel & Restaurant Association (Western India).

“A mid-sized restaurant can go through 15–30 cylinders a month, turning this single revision of nearly Rs 1,000 into a monthly cost spike of Rs 15,000–30,000, he says. “There is no workaround. You either absorb it and see margins shrink, or pass it on and risk losing customers,” he says.

For small eateries and restaurants, the trade-off is stark. Ticket sizes are small and competition intense. The room to raise menu prices is limited without denting footfalls, says Pranav M Rungta, vice-president, National Restaurant Association of India.

“Increasing menu prices are a costly affair. You have to redo your menus, print, make re-allocations within the kitchen. So, restaurants will assess the situation before they think of increasing menu prices,” Rungta says.

“Our association is closely monitoring the situation. We are adjusting menus and exploring alternative cooking methods, but if it becomes unavoidable, we will have to revise prices,” M Venkadasubbu, president of the Tamil Nadu Hotels Association, said.

Regional Disruptions

Hotels across Tamil Nadu from street-side eateries to large restaurant chains have already raised prices by 5–10% amid LPG supply disruptions linked to the ongoing Iran war. The LPG shortage has also forced several establishments to shut temporarily or shift to alternatives such as electric cooking.

At Bengaluru’s iconic 83-year-old dosa institution, Vidyarthi Bhavan, which carried out its annual menu price revision of 5-10% in April, the latest LPG price hike may compel it to consider another round of increase shortly.

“If you just compare the LPG prices from two months ago, it has doubled. Definitely our operational expenses will rise, forcing us to re-look our price lines,” said managing director Arun Adiga.

While Vidyarthi Bhavan has shifted some items on the menu to electric equipment, the main draw, namely, dosas, depends on LPG as a cooking fuel. “Reduction in LPG consumption through alternate cooking remains minimal in that sense,” Adiga adds.