Cup of tea sets the pace for rise in restaurant prices

There's nothing a cup of tea won't fix...but its price! Cafetarias and restaurants across the UAE are battling hard to increase the price citing recent hikes in costs of cooking gas and essential comodities. And yet there is no uniformity in the price of tea as some outlets have increased rates and others, afraid of losing customers, are squeezing their margins.

In higher end eateries and restaurants a cup of tea can cost as much as Dh15 now. In some places the cost has even risen to Dh20.

Even at the lowest end of the sector - cafetarias - the price for a cup was just 50fils for almost 28 years, because of strict government control. Now prices have doubled. From 75fils recently, a cup of tea in Sharjah, Ajman and Northern Emirates today costs Dh1 and even Dh2 in some places.

Some cafetaria and budget restaurant owners claim they charge reasonable price as it is costlier in supermarkets associated with petrol pumps, where a cup costs Dh2.50.

Even as restaurants justify their reason, layman finds the cup too hot to savour.

"This is rediculous. This is 100 per cent increase,' said a disgruntled bachelor, who depends on cafetarias for his daily cups.

"Some restaurants in Al Wadha, Sharjah, have even displayed notices stating a cup of tea with fresh milk costs Dh2. It is a 100 per cent increase,” said Abudul Wahab, a Sharjah resident.

"Everyone has a reason to hike prices. We should boycott cafetarias," said another resident of Dubai.

And that is what the owners fear the most. "Now there are many more cafeterias and restaurants vying with each other to attrat customers. Due to economic slowdown, customers are reluctant to spend. So we cannot charge more than 75fils," said a cafetaria owner in Ajman.

Tea cup history

In November 2004, more than 6,000 cafeterias and restaurants across the UAE decided to go for a uniform price increase of 50 per cent from 50 fils to Dh1.

Price for a cup of tea in the UAE remained 50fils for almost 28 years.

Later some places increased it to 75fils. But customers boycotted the move and they were forced to revise the prices. Later when orders banning serving tea in plastic cups were implemented, cafetarias and restaurants raised the price again to 75fils citing thermocol cups were expensive than plastic ones.

In fact, there is no uniformity in tea prices. Some big hotels charge Dh5 per cup. "Some supermarket chains and restaurants associated with patrol pumps charge Dh2.50 for a cup of tea. For the same quality tea, most cafeterias have been charging only 75fils," sid one cafetaria owner in Shajah.

Moideen, a restaurant owner in Sharjah, said: "We have started charging Dh1 per cup because cost of sugar, tea powder, milk powder, cooking gas, fresh milk and other ingredients have gone up."

"We would have increased the price long back, but for recession. Our attempts to increase price to Dh1 was unsuccessful and so Dh50fils continued for a long time," Moidenn added.

Food prices

Meanwhile, some restaurants are planning to increase meal prices, Moideen said, and added that their margins are squeezed if they do not raise prices.

Cost of chicken, mutton, beef, fruits and vegetables have gone up substantially, he added.

However, there are some budget restaurants that are not increasing the prices because of heavy competition.

Many small and medium-sized restaurants have increased menu price: “We have increased the price of biryani by Dh2 from Dh10 to Dh12. Chicken price has gone up substantially over the last six months,” said the owner of a restaurant in Sharjah. He said the price of 'paratha' (Indian flat bread) has been increased by 25fils to Dh1.  Cafeterias in Deira charge between Dh9 and Dh13 per biryani.

"Prices are going up, but we are not increasing the price now,” said manager of Abdul Jalil Cafeteria in Deira.

Sumesh Govind, Managing Director of Salkara and Calicut Paragon, said commodity rates have been going up and business is relatively dull. “Restaurants cannot afford to sell at the prevailing rates. Our food cost has gone up by five per cent from 40 to 45 per cent of the total cost.  We are going through a tight business period. Vegetable price, especially onion price has been going up. Only if business volume is high, we can make up for the high commodity prices. A lot of new restaurants have cropped up in recent months, creating undue competition.

Therefore, we are not in a position to increase prices now. Some restaurants are closing down and many are running on severe losses."

Manager of Al Era cafeteria in Bur Dubai said: “We have been charging Dh1 per tea, and the price of meal, biriyani, etc will go up soon. “Onion and vegetable prices have gone up substantially, but restaurants continued to sell at the previous rate. Now they are compelled to increase menu price. Chicken price have also been going up steadily."

“Most restaurants and cafeterias in Ajman have hiked tea price to Dh1 per cup. Cooking gas cylinders cost 20per cent more now. A 22kg medium-sized cylinder is Dh115.The price of 11kg cylinders has gone up from Dh60 to Dh75, while the price of the 44kg cylinders, used for commercial purposes, have gone up from Dh200 to Dh240. Considering all this isn't it justified we increase the menu price?" asked one owner.

NR Mayin, Managing Director, Sagar Restaurant, Bur Dubai and Sharjah said: “It is severely affecting our profit margin but being a budget restaurant, we don’t wish to increase the menu prices now due to poor market condition. Customers don’t have enough money to spend and if we increase the menu price, it will only further affect our sales. Propensity to spend is low and we are absorbing the increased cost. Food cost in running a restaurant was only 25 per cent of the total cost when we started business. Now it has gone up fortto 40 per cent of the total cost.”

He said restaurants are contemplating future price hikes which need permission from the Municipality and other authorities.

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