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Restaurants pressured by rising veggie prices and dwindling gas stocks

11 Jan 2022

  • Owners, workers, and consumers air litany of woes
BY Sumudu Chamara Unlike in the case of the Covid-19 pandemic, the prevailing economic crisis, which is often attributed to the pandemic, has affected almost all segments of the society. While the shortage and price hikes of certain consumer goods, including essential food items, seem to be worsening, some have warned of a famine, which is more concerning. In fact, a large number of people depend on the restaurant industry – some as service providers and some as consumers – and the prevailing crisis in the industry is affecting both these parties. Due to the prevailing situation, restaurant owners and workers have warned of a collapse of the industry, and certain restaurants have already closed. The All Island Canteen Owners’ Association (AICOA) had last month warned that more than 80% of canteens and hotels would have to be closed due to the increase of prices and the shortage of liquefied petroleum gas (LPG) and ingredients such as vegetables and meat. Moreover, restaurant owners had warned that they may have to stop selling certain food items such as milk tea, and increase the prices of rice packets and short eats. Declining restaurant industry To look into the present situation of the restaurant industry, The Morning spoke to several restaurant owners and workers, and most of them lamented that their businesses and jobs are in an extremely uncertain situation. Restaurant worker Kapila Ratnayake said that during the past two months, the restaurant industry had faced an unprecedented decline. This, according to him, is a result of a number of factors of which the main ones were the rapid and unbearable increase in prices of ingredients and also shortages of various ingredients. He explained: “Short eats, rice and curry, fried rice, and kottu are the most popular food items we sell. All these items require vegetables of which the prices have skyrocketed, and we have to use a relatively lesser amount of vegetables than we used to use. Even if the price was not an issue, there is a very limited supply of vegetables and we cannot buy more than 50-60% of the amount of vegetables we used to buy. Even though we can use potatoes as a substitute for vegetables when we make short eats, we cannot do the same with other dishes, and using discarded vegetables is absolutely not an option despite them remaining cheaper. Customers complain about the quality of food more often, but there is very little we can do.” However, according to him, it is not only the quality of food that dissatisfied customers complain about, and increasing prices is also a main reason that affects customer satisfaction, sometimes more than the quality of food. He elaborated on how it has affected customers as well as the business: “Restaurants decreasing the quality of food is a common thing nowadays, even though it is not really acceptable. At the same time, we have had to increase the prices to cover our costs, and this has in turn affected most types of food items we sell. We try our best to make sure that these price hikes are as small as possible, and we have done that despite our profits being very low compared to early 2020. Overall, this situation has reduced the number of customers we get. I believe that most people have started cooking at home. We cannot blame the customers. If they have to spend half of their salary solely on food, they too have to look for some cheaper alternative.” Meanwhile, restaurant owner D.C. Soyza expressed similar sentiments with regard to the decrease in the number of customers. Soyza further said that the prevailing LPG shortage as well as the increase in prices of LPG is also a pressing issue that affects everyone in the restaurant industry. He noted that even though the increase in prices of ingredients was manageable, without LPG, the restaurant industry will further collapse. He said: “If the shortage of LPG continues for a few more weeks, the restaurant industry will face a much more difficult time. Unlike in a domestic environment, we have to use a lot of LPG, and some normal restaurants I know use two LPG cylinders a day. In fact, gas is one of the necessities on which our industry depends, and using kerosene or firewood is not really practical alternatives for us.” In this context, he noted that some restaurant owners have had to close their restaurants indefinitely, until such time gas becomes available as before. Meanwhile, another restaurant worker, who wished to remain anonymous, talked about how the above mentioned situation has affected those working in the restaurant industry. His main grievance was restaurant workers facing a risk of the loss of jobs due to the closure of some restaurants. He explained: “We have lost our income due to pay cuts. Although restaurants are usually seen as businesses that make over 100% profit, that is not true in most cases. Even if there was such a profit, it is not true anymore. In order for us to attract enough customers to keep the business afloat, we have had to increase the prices of food minimally, and this affects the overall profit. In a context where the prices of some ingredients have increased by 200%, we cannot continue this business without increasing the prices of certain food items by at least 100%. To cover this loss, or inadequate profits, restaurant owners have to take cost cutting measures, one of which is keeping only the minimum number of workers. Some restaurant workers have even lost their jobs during the past few months, because restaurant owners have had to resort to layoffs. In a context where most restaurant workers have little job security, being sacked is one of the risks we are facing. I cannot speak for others but, in my case, this is the only trade I know, and in a context where all restaurants are struggling, finding another job in the same capacity is difficult. Even though there may be jobs in upscale restaurants, my skills are not nearly enough to find a job at such a place.” When queried as to what sort of measures can save the restaurant industry, he responded that the rising cost of ingredients and LPG as well as the shortage of the same are both equally pressing issues, and that therefore the Government has to make sure that adequate vegetables come to the market and that they are sold at a reasonable price. He added that if the Government can provide the necessary ingredients and LPG for restaurants at a reduced rate, such would be immensely helpful. Another potential measure, according to him, is giving restaurants some sort of subsidy at least until the prevailing crises are resolved. Those who spoke with The Morning also raised concerns about other costs such as transport costs, adding that while the original cost (market price) of ingredients already includes the transport cost (transport of ingredients to markets), they have had to bear the cost of transport of the ingredients from the market to the restaurant as well. They added that the increased fuel prices, therefore, affect them twice during the process of obtaining ingredients. Consumers’ plight However, those in the restaurant industry are not the only ones who are affected by the prevailing situation. There are a large number of people who obtain food from restaurants regularly, and some obtain all three main meals from restaurants. The Morning also looked into how this situation has affected them. Several construction workers, most of whom have shifted to the suburbs of Colombo for employment, lamented that the increase in prices of food had affected not only their financial status but also other aspects of their life due to the amount of money they have had to allocate for food a month.  One construction worker said: “Among other daily expenses, food is what we spend most of our money on. Unlike other needs, food is not a need we can ignore or postpone at least for a day. We make only around Rs. 2,000 a day, and we work only 20-25 days a month. Since we have to travel to construction sites everywhere, we cannot cook, and have to buy all three meals. Regardless of the overall cost of living, we have to keep buying food from restaurants and from those who make food at home and sell, and pay whatever the amount they ask for.” He explained how the cost of food has increased: “We have chosen food providers who supply food for lower prices. Early last year, when the cost of living was not this high, we spent around Rs. 100 for breakfast, and Rs. 150-170 for lunch and dinner. However, now, we have had to spend Rs. 120 for breakfast, and Rs. 190-220 for lunch. Some days, when we cannot buy food from regular food providers because we travel to various areas, we have to spend around Rs. 150 for breakfast, and around Rs. 250 for lunch and dinner.” Another construction worker said that this situation has affected their state of life: “I pay my employer Rs. 7,000 a month for rent, and have to send at least Rs. 20,000 to my family for their expenses. Also, other necessary expenses (apart from food expenses) have increased significantly. In this context, the increase of food expenses affects other aspects of my life as well, because I had to increase the amount of money I allocate for food every month. This is the situation of almost everyone who works with me.” They also expressed concerns about their salaries not being increased compared to the rising cost of living including food expenses.  According to them, another issue that worsens their financial situation is the challenges faced by the construction sector. They said that a number of construction projects they have been working on have come to a halt due to the cement shortage and due to the increase in the cost of other building material. They pointed out that due to this situation, some clients have not yet paid their employer the money the clients owe, which in turn delays their salaries. “The overall situation eventually affects the money we send our families, because there is no other expense we can cut down on, and this is not only a matter of our food, but also a matter of how our families eat,” they added. When questioned about the possibility of preparing their meals by themselves whenever possible, they noted that even if they had the resources and time to prepare their own meals, in a context where the cost of ingredients has risen and there is a shortage of the same, it is neither practical nor financially beneficial.  What is more, they said that while the prices of food have increased, they have also experienced a drop in the quality of food. According to them, this is also a huge issue, not only because of the financial aspects, but also due to the fact that they require nutritious food as hard working labourers.   While the Government has claimed that it is looking into the prevailing crises, the lack of availability and the high prices of the goods the restaurant industry needs, will have to be dealt with soon. However, the crisis this industry and the consumers are facing has continued for months, and those in the restaurant industry believe that the Government should provide them with some form of relief until the economic crisis is resolved.

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