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Rising restaurant costs

The Budget and why eating out in India has become as expensive as in Europe and America

By Anoothi Vishal 

LAST WEEK, just a day prior to fi nance minister Pranab Mukher jee reading out the Budget speech, we sat down at our neigh bourhood restaurant to the com fort of an Indian-Chinese meal. Between two adults and one child, we ordered, not sparingly , but not immodestly either–two appetisers, two main courses, some rice, a cold drink and a bottle of water–and ran up a tab of about R 2,600, of which almost R 600 comprised taxes; a 10% service charge and the rest, the stateVAT(wewereeatinginNoida,justoutside Delhi,fortherecord).

That’sabout25%of ourspendintaxes.With this Budget’s proposal to include air-conditioned eateries (and which restaurant isn’t really, at least in the metros these days; even PuraniDilli’sfamedParanthewaliGallihasan air-conditioned parantha joint!) in the service tax ambit, the spend will go up even higher and not because we are necessarily indulging in fancierfood.That,combinedwithinflationand the increase in food prices, including those of importedfoodstuffslikecheese,willmeanthat we will be paying more for eating out in India thanwedoinmostplacesinEuropeorAmerica (bar,acoupleof cities).

A `good’ meal in Europe, which would includeaglassof wine,forinstance,comesinthe vicinity of about euros 20 per person. That’s about R 1,200. In India, where the cost of eating out has risen sharply in the last few years, the average restaurant spend per person at a midpriced, standalone restaurant in Mumbai and Delhi (Bangalore is still a little cheaper) is R1,000,sansalcoholandtaxes.Evenatakeaway meal for a single person, ordered, for instance, to satiate Moti Mahal butter chicken cravings cansetyoubackbyacoolR1,000.Aget-together of about ten friends in a slightly trendy place can easily cost you R 20,000. A working lunch of takeaway pizza, plus garlic bread and a cold drink is not exactly loose change, forget speciality restaurants like Wasabi at the Taj, where R 5,000 per person would be what you would set aside for lunch or dinner (and where a single portion, in fact, of say Waghu beef steakcanbemuchmore). On an average, a meal in a five-star hotel comes to aboutR2,500plusperperson,without alcohol.Buttheseare2010prices.Andthesefig uresarezoomingupfast.

In2011,these costs are going to go up, but not just thanks to rising taxation. For one, several restaurants, which had notpassedonrisingfoodcosts(weallknowhow the prices of veggies, for instance, went throughtheroof lastyear)becausesuppliesare contracted out at a fixed price for specific time frames will have to do so now. But demand and supply economics are not the only reason for eatingouttobesoexpensiveinIndia. Hospitality graduates are often taught a simple formula of arriving at menu costing: Multiply the cost price of any dish by at least three. That becomes the selling price. But that logicusuallyoperatesforrelativelyexpensive, non-vegetarian dishes. In fact, if the food cost of a particular dish of truffles or New Zealand lamb chop works out to be high for arestaurant given its foreign sourcing, it is sold at a slightly lower markup to encourage more diners, making it in reality a value-for-money proposition!

Conversely , diners have every right to feel `cheated’ while paying for many salads, most soups, desserts, dals and breads, not to mentionstartersandmains,wheretwo-fourpieces of potatoes or paneer costing R 500-700 constitutes a rip-off. The cost price of most of these dishes is low and they subsidise the fancier thingsonthemenu.

On an average, restaurants operate at food costsrangingfrom18-30%of theirexpense.The rest comprises real estate, staff costs and sundries like breakage and so on, with quite a tidy profitof about30%thatasmarteaterycanlook forward to at the end of the month after the initial trying phase is over. Or, at least that’s how foodconsultantsprojecttheirfigures.Withrising rentals and staff costs (a waiter with minimalEnglishlanguageskills,forinstance,takes home a monthly salary of at least R 10,000 these days),the pressure is always on the kitchen to keep food costs down to the minimum. And it’s notmerelyaquestionof usingcheapercooking oil, mushroom, butter or coffee fragrance (insteadof thereal,moreexpensivestuff) or gram flour to thicken the gravy instead of cashew paste that cheaper restaurants maydo. Instead, at swisher `lifestyle’ restaurants, chefs, for instance, are in a race against each other to find the most competitive sourcing for their ingredients.

If the Vietnamese basa is cheaper than Indian fish(so much so that a kilogram of basa fillet costs less than a kg of Indian surmai, forinstance),or if scallops from our neighbouring waters are less expensive than Canadian ones, restaurants will hasten to include the `exotic’ dishes on their menus, not quite passing on the price benefit to ignorant consumers.  Which means that when we eatout, you and I don’t necessarily pay just for what we eat. But then as savvy restaurateurs point out and upwardly-mobile, middle-class perhaps realise, eating out in India today is more about entertainment, a larger lifestyle really than the consumption of mere food. And, tax or no tax, eating out prices are also rising in India because of our nouveau-ness, if you like.

Having come in to larger disposable incomes than were available to our parents, we are now willing, indeed keen, to spend — and be seen spending. Ordering foie gras, or having an expensive bottle of wine,ortakingourgueststhroughaspecial, seven-coursedegustationmenuisallaboutcultivatinganimage.Andthatcostsmoney .

(The column appeared in Financal Express on March 6, 2011)

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One Response to “Rising restaurant costs”

  1. I like farfalle, too, esp. for salads or with a lot of vegetables and not a lot of sauce. For carbonara and tomato sauce (thick) we like spaghettini best.

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