Hotels, restaurants in Bengaluru hold off on price hikes despite revised minimum wages

Bengaluru: Hotels and restaurants across Bengaluru are holding off on menu price hikes despite the state government’s notification on revised minimum wages, which proposes an average increase of around 60 per cent across sectors, in the hope that the wage revision will be moderated.

Industry stakeholders said they are waiting to see whether the government revises the proposal following representations from employer associations and trade bodies. The revised wages are expected to significantly increase labour costs for the hospitality sector, where manpower constitutes a major share of operating expenses.

“We are waiting for government officials to return to Bengaluru. We want to seek an audience with some members of the government to urge them to reconsider the hike. We are bringing together multiple associations and union bodies for this. If we receive a negative response, it will have a cascading effect and prices of commodities across sectors will have to be increased,” said P C Rao, president of Bruhat Bengaluru Hotels Association.

An immediate increase could place additional pressure on businesses already grappling with rising oil and other costs, said Nikhil Gupta, co-founder of Pizza Bakery, Smash Guys and Paris Panini, while acknowledging the need for better wages for workers.

“No restaurant wants to be the first one to make the move and raise prices. That will have a negative impact on the business,” he added.

The suddenness of the hike will impact mid-segment restaurants, said Ananth Narayan, NRAI Bengaluru Chapter head.

“The revision lands as a sharp 25 per cent to 35 per cent jump on baseline payrolls almost overnight, which is significant for any industry running on 8 per cent to 10 per cent net margins. Standalone restaurants, mid-segment dining, QSRs and budget hotels will feel it the hardest; large-format hotels and organised chains have the balance sheet to absorb it more gracefully,” he said.

He added that the future is not fewer hands but smarter ones, with more eateries now moving towards automation and energy-efficient electric kitchens.