Mangaluru: Hotels and restaurants in Mangaluru may increase food prices by 5-10% following the Rs 8 per litre hike in Nandini milk prices from November 1, with rising grocery, fuel and other operating costs adding to the pressure on the hospitality sector.
Dakshina Kannada Hotels and Restaurants Association (DKHRA) president Kudpi Jagadish Shenoy said the association would discuss the impact of the milk price revision at a meeting. Hotels may consider increasing menu prices by around 10%, depending on their operating costs.
He said the milk price increase, along with the rising cost of groceries and other essential supplies, was likely to affect food prices. The association had considered a proposal to revise menu rates during the previous round of milk price increases but had not implemented it.
No uniform price increase expected
DKHRA secretary Devi Prasad said there would be no uniform increase across hotels and restaurants. Individual establishments would decide whether to revise prices based on their operating expenses and existing menu rates.
He pointed out that prices of popular items such as tea and coffee varied considerably between establishments. While some hotels charged Rs 20-25 for tea or coffee, others charged Rs 35-40.
This leaves limited scope for a steep increase at establishments already charging higher rates. However, hotels offering these beverages at lower prices may have to consider revising their rates to manage the rising cost of supplies.
Prasad said the overall increase in food prices could range from 5% to 10%, depending on the establishment.
Rising grocery prices add to pressure
Apart from milk, the increase in the prices of essential food ingredients has become a major concern for hoteliers.
According to Prasad, the price of toor dal and urad dal has increased from around Rs 120-130 to approximately Rs 150. Onion prices, which were earlier around Rs 20, rose to Rs 50-53 and remained at that level for nearly three months.
Rice prices have also climbed significantly, increasing from Rs 50-52 to around Rs 85. Some varieties are expected to touch Rs 100, further raising the cost of preparing meals.
The hospitality sector is also concerned about a possible increase of Rs 200-300 in LPG prices. Any such revision would add to the operating expenses of hotels and restaurants, which depend heavily on commercial cooking gas.
Prasad said rising overheads could push some establishments into losses if they were unable to adjust their menu prices.
Festive season delay and declining business
Hoteliers had held back from increasing menu prices during October, taking into account the festive season and the possible impact of higher rates on customers.
However, business conditions have become more challenging after the festive period. A slowdown in business and a decline in tourist activity are adding to the concerns of hotel operators.
With food ingredients, milk and fuel accounting for a substantial share of operating expenses, establishments are now reassessing their costs before deciding whether to revise prices.
The proposed increase is expected to vary according to the size of the establishment, its existing rates and the extent to which it can absorb higher input costs.
Catering industry also expects price revision
The catering industry is also preparing for higher operating expenses following the milk price increase.
A Ashwatham Hegde, proprietor of Tulunadu Food Catering Services and executive member of the Dakshina Kannada Catering Owners Association, said the revision would have a substantial impact on catering establishments.
“Milk and curd are major items for us. Given the quantity we use, the increase will significantly affect the catering industry. Prices will definitely have to be increased, even if only slightly. A 5-10% increase is certain,” Hegde said.
He said catering operators would have to reassess their costing before deciding the extent of any price revision.
Rice prices, which have been changing frequently, are creating additional uncertainty for caterers when calculating the cost of preparing meals for events and functions.
Hegde added that any further increase in fuel and LPG prices would place an additional burden on the industry.
With hotels, restaurants and catering establishments facing simultaneous increases in the cost of milk, groceries, rice and fuel, consumers may see higher food prices in the coming weeks. However, the extent of the increase will depend on individual businesses and their ability to absorb the additional expenses.