After the Delhi High Court banned restaurants from levying 10% optional fees, many stores and chains included the same price increase in their menu prices. In shopping malls or premium areas, income-related increases in rental agreements may be higher. Typically, most restaurants rise about 5% per year to offset the cost of rising input costs.
“Ideally, restaurants hope to raise prices by about 15-20% this year to explain food inflation and service costs. But that is not feasible at the moment – customers won’t pay as much, especially when demand slows down and the industry is already a bit weaker, Sagar J. Daryani said, Narrai of India’s nrai and Servic Cahing sagar J. Daryani said Mom. The association represents about half a million restaurants in the country.
Casual dining chains have begun reprinting menus at revised prices.
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“Yes, we have to raise prices and are reprinting our menus. In our case, consumers will not pay earlier than they do,” said Zorawar Kalra, founder and managing director of the large restaurant, which operates Farzi Cafe, including Farzi Cafe, Masala Library, Bo-Tai and Papaya, including Farzi Cafe. “But we absorb a lot of the cost of food inflation, so the total bill will remain exactly the same.”
However, he said that due to income sharing agreements with some landlords, price increases will vary by location. “We don’t have too many tips as India lacks a strong tip culture.”
In Mumbai, Chrome Asia Hospitality, which operates Gigi, Lyla, Eve, Kaia, Donna Deli and other stores, is also adding menu pricing.
“India has no tip culture, so we have to increase the price by 10% on mid-market brands,” said founder Pawan Shahri. “However, in the premium channel, we ask for permission from our guests, including voluntary service fees, and if they are happy with it, we will add it.”
Dining outside the hotel is already very expensive. From April 1, the hotel’s restaurants charge more than the fees ₹Last year, a room of 7,500 a night now has to be levied on the food bills at 18% GST instead of 5%.
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According to industry estimates, India’s overall organized restaurant industry accounts for 1.9% of the country’s GDP, contributing about 1.5% to annual GST collections. Due to ongoing uncertainty, higher prices pose risks to stop consumers.
Pranav Rungta, director of Mint Hospitality, said consumer spending has been stressed out, which operates Tamak and Nksha restaurants in Mumbai. “The spending per visit is reduced, but the number of visits is not reduced. People are still out, but they are not spending as they used to.”
To be sure, the overall food service market is expected to be from ₹5.69 trillion yuan in 2024 ₹According to a July 2024 report, by 2028, it will be $7.76 trillion in 2028, with a CAGR of 8.1%.
Diners are afraid of double tips
Regular diners worry that prices will exceed expectations.
Early “optional” service charges are now being built into the cost of food. If the service is not good, 37-year-old restaurant traveler in Mumbai said customers would not be able to complain or compete for it to ensure 10% standardization. He said that after the meal, the server would also expect the server’s extra prompts.
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“It’s possible to have double tips right now,” another regular restaurant said. “You pay more for the food and you tip again because there’s no longer a service fee.”
Some restaurants in the capital Mint In the past few weeks, visits have not yet been withdrawn from the final bill for service fees. Service fees are usually added to the bills for cafes, bars, bars, lounges, and casual and exquisite in-store. In FY24, casual dining had the largest share in the organized food sector, accounting for 48.6%.
Employees are hit
Restaurants believe that service changes will affect employees.
According to Rungta of Mint Hospitality, in most restaurants, employee income includes both fixed and variable salaries, which contributes a lot to service fees.
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“Cancel service charges will directly reach revenue. Restaurants will have to modify their financial position, raise menu prices and still ensure fair payments – otherwise, it will be difficult to keep them,” Rungta said. “But one way or another, the fees will still fall on the consumer. Early on, it was transparent through service charges, and diners usually don’t raise the fees here. Now, restaurants will be forced to raise prices, and customers may end up dumping.”
According to NRAI, the restaurant industry directly employs 8.55 million people, and it is estimated that this figure will increase by more than 20% by 2028.
“The move (to the attorney service fee) was too sudden and it took some time to re-orient everything,” Rungta said. “Those who are based on the income sharing contracts on the restaurant’s income or rent sharing agreements with the landlord, they must also re-negotiate if the price is occupied.”
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