Sagar Daryani Warns of 60% Lpg Surge, Menu Hikes
Commercial lpg costs have climbed 60% since March, and restaurant operators are now preparing menu price increases. Sagar Daryani, founder of Wow! Momo and president of the National Restaurant Association of India, said the fuel shock has pushed the industry to a point where price rises are no longer optional.
“Quite a bummer to be honest. The prices went up by 10% about a month ago when LPG availability was a crisis. Now 50% more. So that’s technically a 60% jump from the base in March,” he said. “Such high inflation on the fuel cost will lead to increase in food cost and now we’ve been pushed against the wall where there is no other option but to take up a price raise.”
Menu prices face a lag
12% to 15% of food costs is where LPG is now expected to land, up from about 10% before the latest increases. Price revisions usually take a few weeks to roll through menus, which leaves operators exposed in the short term. Daryani said, “For the next two to three weeks, the industry will work on negative gross margins.”
Mid to late May is when those hikes could begin to show up for customers. The industry had resisted increases during weak demand, and more business had shifted to food delivery, where higher commissions, marketing spends and discounting already squeezed margins before the fuel shock.
Wow! Momo splits the impact
About 600 stores in Wow! Momo’s core business run largely on electricity and have reported about 25% same-store sales growth, so the LPG hit has been lighter there. The company’s sister brands, Wow China and Wow Chicken, operate about 250 outlets and had to shift partly to electric operations or reduce hours.
15% to 16% is the negative impact those brands have seen, and Wow! Momo has already incurred nearly ₹1 crore in extra capital expenditure to convert outlets to a hybrid model. “It was more about survival and being future ready,” Daryani said.
India's 10 million jobs
Close to 10 million people work in India’s restaurant industry, so the cost spike reaches far beyond one brand’s balance sheet. Daryani said, “Everyone is first looking at survival. Profits become a luxury in a crisis.”
25% is the reduction Daryani hopes the latest 50% increase will ease by, but for now the sector is moving on a narrow window: hold prices too long and margins go negative, raise them too fast and demand weakens further. “This is definitely not a good start to the new financial year,” he said.
