Thu, 09 Jul, 2020

Huge jump in vegetable prices A big concern for restaurant owners

Restaurants across the State are bearing the brunt of a sharp rise in prices of vegetables. Unable to pass it on to the customers, they have no choice left but to take a hit on their margins. Fortunately for them, seafood prices have deepened a bit, but still, they are much higher than the average levels

02nd December 2019, 02:09 Hrs

Karan Sehgal

Running a restaurant is a difficult task, but far more difficult is to pass on the rise in input cost to the customers. This is exactly the situation, which the restaurant owners are facing for the last few weeks in Goa.

Heavy and unexpected rains in October badly affected crops in large parts of Maharashtra and Karnataka. As a result, the supply of fresh vegetable has declined and their prices have soared upwards.

Let’s take the case of onions, which forms the base of most Indian recipes. The price of onions has shot up from less than Rs 30 per kg to almost Rs 120, which is a 300% jump. Even other vegetables like tomato, beans, carrots and coriander have seen a hike in prices causing huge concern to restaurant owners.

Michael Carrasco, president, All Goa Bars and Restaurant Owners Association said, “Our margins are badly affected due to the increase in the price of vegetables and seafood. We are just reaching break-even now.”

“Every restaurant fix prices on its menu once a year, typically in April after it gets the licene from the Excise Department to serve alcohol. Once vegetable prices start increasing, there is no way for us to increase the prices on the menu,” Carrasco added.

Gaurish Naik, owner, Peep Kitchen in Taleigao, said, “Most restaurants like ours operate on 30 to 35 per cent food-cost model, which means that of our total cost, this much is on account of food. But due to the increase in vegetable prices, this shot up to 38 to 39 per cent recently, which affected our margin.”

As Carrasco pointed out, the price of seafood had increased too because fishing wasn’t possible during October due to heavy rains. But recently seafood prices have softened to an extent. The price of Kingfish has come down to Rs 650 per kg from Rs 750 a while ago.

This is where the issue becomes peculiar for restaurant owners. In the event vegetable prices increase, they can’t pass that on to the consumer because prices of vegetarian dishes are printed on the menu. But in case of seafood, especially big varieties like Kingfish and Chonak, they can increase the rates because it is served as per the size of a portion.

So the bigger headache for restaurant owners has been a huge increase in vegetable prices. Around Diwali, when we were getting heavy rainfall, the price of coriander was 100% up. French beans and carrots were expensive as well.

These are some of the most common and basic vegetables, which we can’t do without in Indian cooking. As a result, restaurant owners had to absorb the entire price hike.

As it is, the restaurants were struggling before Diwali because prolonged monsoon had resulted in fewer tourists coming to Goa. There was very little demand and the price of inputs was very high. Come November, the number of tourists has increased with the season beginning and restaurant owners can breathe a sigh of relief.

Alka D’Souza from Foxes Fiesta in Calangute said, “We are just so relieved that tourists are finally coming to Goa. Before October, restaurants had a terrible time because tourists were not coming due to the heavy rainfall. Now that they are coming, we are happy even if the prices of certain vegetables and meat are up.”

With tourists coming in which is also due to festivals like IFFI, restaurant owners are a bit relieved, but they are still struggling to control the economics of the trade. The supply of meat and vegetables is still not consistent.

A restaurant owner, who preferred remaining anonymous, said, “We aren’t getting the right quantity of fish. If we were getting 100 kg of fish earlier, we are only able to source 20 per cent now.”

Some restaurant owners have also stopped giving onion salad for free on the side as they used to do earlier. So people are trying to find ways to adjust to the situation. But, the situation remains complex.

The supply and price of seafood are coming back to normal, but that is not the case with vegetable. The price of onions is still more than Rs 100 per kg. Moreover, their quality is not consistent. However, tourists have started coming to Goa.

Assuming that the price of vegetable and seafood comes down in the next few weeks, there is a possibility their prices will again increase around Christmas time. In the anticipation of high demand between Christmas and New Year, the suppliers always increase the prices of vegetable and meat for the restaurant owners.

A lot of restaurant owners also increase the price for the tourists at that time. But there are genuine restaurant owners as well, who do not increase the prices on the menu during Christmas. They will face the challenge of maintaining their margins when input prices shoot up again.

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