Milk price hike: some eateries may not raise rates

Cafes and darshinis will take time to see how the Rs 3 increase in the price of milk will affect their margins

Maverick & Farmer Coffee sells over 500 cups of coffee day on average across its three outlets. 

The hike in the price of Nandini milk by Rs 3 has added to the woes of cafes and darshinis already reeling from the unprecedented surge in tomato rates.

With tea and coffee among the most ordered items on the menu at these spots, owners are preparing to review their prices should it impact their overall profits. The new prices will come into effect on August 1.

“Darshinis, which charge around Rs 20 per cup, will be impacted more by the revised rates than cafes where coffee costs upwards of Rs 150. At Airlines, I feel we will have no choice but to increase our prices,” says Diwakar Rao, owner. However, he clarifies that he will only be able to take a call once the new prices are implemented. “We will keep an eye on how it affects the bottom line for a month before we make any decisions,” he states. The popular eatery, located off St Marks Road, uses 90 to 100 litres of milk a day, which increases to 140 to 150 litres during the weekend.

No knee-jerk reaction

Vidyarthi Bhavan, which hiked its prices by 5% to 10% just last month, does not plan to make any more changes to its menu, says Arun Adiga, owner of the popular breakfast spot in Basavanagudi. “Usually when one product gets more expensive, there will be a fall in price of something else. So the differences are automatically sorted out,” he explains, adding that it would be unwise to react every time there are fluctuations in prices, which is quite frequent.

Prashanth Raj, director at IDC Kitchen Private Limited, has a similar opinion. IDC, which sells coffee at Rs 20, uses about 500 litres of milk a day across its seven company-owned and three franchisee-owned outlets. However, they do not plan to increase their rates post August 1, as they revised them a few months ago in anticipation of a global surge in the rates of raw materials, says Prashanth. “We use a lot of ginger in our tea and ginger prices have also gone up. In addition, coffee prices are up by Rs 50 per kilo. We took all these factors into consideration,” he shares.

Impact on margins

Maverick & Farmer Coffee, which operates a cafe each in Halasuru and Koramangala, and one kiosk in a supermarket, is known for its farm-to-cup coffee. Across its outlets, 500 cups of coffee are sold per day on average, of which 70% are milk based. The average price of coffee is around Rs 180. Its co-founder Sreeram Gangadharan says that this will significantly impact their margins. “But for now, we plan to stick to our current pricing,” Sreeram tells Metrolife.

According to Chidan Kumar, area manager at Iris Cafe, J P Nagar, they will only change their prices if it begins to make a huge dent in their profits. “And coffee drinkers will not stop ordering coffee even if there is an increase,” he says. They sell about 120 - 150 cups of coffee per day, a majority of which are cappuccino and filter coffee. On the other hand, Shibani Muralidhar, founder of Ner.lu Cafe, Race Course Road, says it will not affect their business much as their customers mainly order black coffee.