LPG supply curtailment could impact 95% of restaurants, QSR chains, industry body says

File photo

• LPG shortage affects 95 percent of Indian restaurants' operations
• NRAI seeks clarity as costs rise and stocks dwindle
• West Asia conflict disrupts LPG imports via Strait of Hormuz

Did our AI summary help?

Any disruption in LPG supplies would affect the operations of nearly 95 per cent of restaurants across the country, as the vast majority rely on it as their primary cooking fuel, Sagar Daryani, president of the National Restaurant Association of India (NRAI), told Moneycontol on March 10. NRAI represents over 5,00,000 restaurants across India, ranging from global QSR chains to independent standalone eateries.

“There is considerable ambiguity at the moment. LPG distributors have already sent out communications asking them to stop supplies to commercial establishments, while the central government has invoked the Essential Commodities Act, 1955, under which restaurants are entitled to receive supplies as an essential service under Section 4 of the Act. This has created significant confusion on the ground. As a result, costs have risen nearly 1.5 times, but for us the priority is continuity of operations because restaurants are left with just two to three days of stock and nearly 95 per cent of them rely on LPG,” Dayani said.

The NRAI represents several prominent quick service restaurant (QSR) brands and franchise operators in India, including Domino’s Pizza operated by Jubilant FoodWorks, McDonald’s run by Westlife Foodworld in west and south India, as well as KFC, Pizza Hut, Burger King, Subway and homegrown chain Wow! Momo.

Dayani, who is the  co-Founder and CEO of Wow! Momo, said the association is writing to the government and in discussion with the oil marketing companies (OMCs) to seek clarity on the supply situation. Presently, he sees more impact on restaurants and QSRs operating in Bangalore and Pune.

The ongoing conflict in West Asia involving Iran, Israel, and the United States has triggered a severe LPG (Liquefied Petroleum Gas) shortage in India. This crisis stems from the effective closure of the Strait of Hormuz, a critical maritime chokepoint through which nearly 85-90% of India's LPG imports pass

Meanwhile, the government order from  March 10, has asked gas marketing entities to ensure that gas supply to tea industries, manufacturing and other industrial consumers supplied through the national gas grid is maintained at eighty per cent. of their past six-month average gas consumption subject to operational availability.

The restaurant industry, with an annual turnover of Rs 5.7 lakh crore is the third largest after retail and insurance in the service segment, providing direct employment to over 8 million Indians.