West Asia conflict | Quick service restaurant chains face closure risk due to LPG shortage

Bengaluru: The LPG supply disruption due to the ongoing West Asia conflict between the US-Israel and Iran has exposed a hidden operational risk in India’s food service sector. While independent restaurants are facing immediate closure risks, the large chains are facing margin pressures due to rise in LPG cylinder prices.

The severity of impact hinges on the duration of geopolitical conflicts and shipping route disruptions, especially through strategic choke points. As a result, companies may need to explore alternative fuels and supply chain adjustments to sustain operations amid ongoing uncertainties, according to experts tracking the sector.

Restaurants are more vulnerable than households because they rely almost entirely on 19-kg commercial LPG cylinders for high-volume cooking equipment such as ovens, fryers, grills, and high-speed cooking lines.

Large quick service restaurant (QSR) chains like Domino’s, McDonald’s, Burger King, and KFC are comparatively better positioned due to centralised procurement and backup fuel arrangements but are not immune to supply constraints, said JM Financial in a research note.

It said 60-65 per cent of cooking at major QSRs depends on LPG, with a buffer of one-two weeks of supply. If shortages extend beyond this, operations could be hampered significantly.

A five-day LPG supply disruption could reduce revenue per store by approximately 6per cent, with EBITDA margins declining sharply by 14–20per cent versus normal levels.

The impact varies across chains, with smaller outlets shutting immediately and larger chains experiencing capacity constraints. Cost pressures from rising LPG prices may force QSRs to increase menu or delivery prices, further affecting margins.

Sachin Jain, founder of The Benne Mane, a South Indian restaurant in Bengaluru, said that gas distributors have nearly doubled the price in the past few days. “We are now having to buy cylinders for around Rs 3,500–Rs 4,000 each, and distributors are saying the price may increase further,” he said.

Shorab Choudhary, Founder and Director of Khan Saheb Foods Pvt. Ltd., a popular fast-food chain in Bengaluru, said, “This situation is unprecedented for us. Our gas vendors, who have been supplying us reliably for the past 10 years, have informed us that they currently have no stock available. We completely ran out of gas on Tuesday and had to urgently source cylinders from alternative vendors at almost double the usual price.”

Typically, commercial gas cylinders cost around Rs 1,800 – Rs 1,900 per cylinder, but yesterday the firm purchased them at Rs 3,500 per cylinder. Even at this price, there is no guarantee that suppliers will be able to provide consistent stock in the coming days, he said.

Niloy Kar, Partner, Encuisine Foods & Franchisee Owner, The Studs Sports Bar and Mandarin restaurant in Bengaluru, said the ongoing shortage of commercial LPG cylinders has certainly created operational pressure for restaurants across Bengaluru.

“To manage the situation, we have temporarily streamlined our menu to focus on dishes that can be efficiently prepared using ovens and alternative cooking methods. At the same time, we are increasing the use of electric induction equipment wherever possible to support core kitchen operations,” he said.

His effort is to ensure that around 70–80 per cent of the menu continues to remain available to guests.

Bansi Kotecha, Founder, Kytchens, a leading Kitchen-as-a-Service Platform based in Mumbai, said, “The LPG supply disruption is creating real operational uncertainty for many restaurants, especially smaller operators who rely heavily on commercial cylinders. Across the industry, kitchens are adapting by simplifying menus, optimising prep cycles, and increasing the use of electric equipment like induction ranges or griddles where possible.”

Debaditya Chaudhury, Managing Director of Chowman, Oudh 1590, Chapter 2, and Chaudhury and Company, said the situation appears to be worsening in other metro cities, even if not as significantly in Kolkata yet. “Like many others across pan-India markets, we too are beginning to feel the pressure of inconsistent commercial gas supply. If the situation escalates further, we may have to consider temporary measures such as restricting menus to manage kitchen operations efficiently.”

To manage the situation responsibly, the chain has temporarily restricted operations and is currently focusing on serving dine-in guests and Chowman app orders from our highest-selling outlets in Bengaluru.

For quick commerce, the real damage is upstream. “India’s cloud kitchen market, valued at $1.2 billion in 2025 and projected to reach $3.7 billion by 2034 at a 12.28 per cent CAGR, runs almost entirely on LPG. These kitchens were already margin-thin. A Rs 115 per cylinder hike on top of OMCs already incurring losses of Rs 39,000 crore in FY25 at below-cost pricing means the actual cost floor is far higher than what’s being passed on today,” Madhav Kasturia, CEO & Founder, Zippee said.