Tamil Nadu: Crowds back in eateries after COVID crisis, but cost of essentials keeps profits away

CHENNAI: Business is brisk in hotels across the State. Sales have been picking up and have almost reached the pre-pandemic levels. But profits aren’t as high as in 2018-19, due to the high prices of edible oil, diesel and gas.

The prices hikes have caused profits to fall by 50 per cent, says Dindigul-based C Rajkumar, of Balaji Bhavan Hotel. Hoteliers have largely been taking the blow and not passing on the impact to customers so business doesn’t get affected.

Some hotels, such as Vasanta Bhavan, have increased their prices by a slight five per cent for North Indian thali  or side dishes, while others are following a wait-and-watch policy. Owner of the Vasanta Bhavan chain of restaurants M Ravi says the prices of South Indian dishes, such as idli and dosa, remain unchanged. “The cost of tea and coffee have increased, but hoteliers haven’t raised the price,” he points out.

Commercial gas cylinders, which were sold at Rs 1,249 in 2020, are now sold at Rs 2,040 — a 65 per cent hike. “But we still haven’t hiked our prices as doing so would affect our clientele,” says Ravi.

Interestingly, Ravi plans to switch over to electric vehicles so the fuel price rise doesn’t affect his transportation of raw materials and food.

“But these vehicles are expensive. The government should provide sops or reduce the prices so the switch-over happens smoothly,” he says.

KT Srinivasa Raja, of the Adyar Ananda Bhavan chain of restaurants, says the festive season has given a fresh lease of life to the hotel industry.

“Sales have increased by 15 per cent, and we are now planning to open restaurants in Koyambedu, which were shut during the pandemic,” he says, adding that while the prices of diesel, cooking oil and gas rose, labour became cheaper, thus reducing the impact on profits.

Interestingly, many smaller restaurants in the city are using fewer vegetables, as prices have spiked.

For example, some restaurants have taken tomato rice off the menu as the per-kg price of tomatoes has crossed Rs 50 in retail stores.

Restaurants absorbing the blow to retain customers

Commercial gas cylinders, which were sold at Rs 1,249 in 2020, are now sold at Rs 2,040 — a 65 per cent hike.

“But we still haven’t hiked our prices as doing so would affect our clientele,” says M Ravi, owner of the Vasanta Bhavan chain of restaurants