Commercial LPG price hikes pinching Hospitality sector

New Delhi, June 4: The increase in prices of Commercial LPG by Rs 42–53.50 per 19-kg cylinder from June 1 has immediately put pressure on the public eateries, including restaurants, and they are ruing.

The impact is more severe for smaller operators with limited financial flexibility, while larger chains are relatively better placed to absorb shocks due to scale efficiencies and centralised procurement.

Smaller restaurants and cloud kitchens are more vulnerable to repeated LPG price hikes because they operate with lower margins, smaller inventory capacity and weaker procurement leverage compared with large chains, restaurant operators say.

Restaurant operators say the impact has been immediate, particularly for businesses with high kitchen dependency and difficult logistics.

Some operators also reported supply disruptions and shortages in recent weeks.

Rising LPG costs have compounded existing cost pressures, particularly for hospitality businesses located outside city centres where logistics are already expensive, says Laksh Dembla, Founder and Director of Basil Restaurant at Whispering Woods Resort near Mumbai.

He said supply shortages in some areas have further complicated operations.

Operators said cost management efforts now include tighter procurement, inventory management, kitchen optimisation and reducing wastage.

“There were days when there were no cylinders available at all,” Dembla said.

According to Aashi Gupta, Co-Founder and Marketing Head of Salt Café Delhi NCR, restaurants are more exposed to LPG volatility because they rely heavily on gas for daily operations, adding that “repeated price increases directly impact operational costs and profitability.”

Anirudh Khanna, Managing Director, Independence Brewing Company, said commercial LPG remains a significant operational input for restaurants and bars, with rising fuel costs adding pressure to margins in an already inflationary operating environment. “Higher fuel costs continue to compress margins,” he said.

Dembla said his restaurant shifted nearly 50 per cent of kitchen operations to electric systems to manage supply disruptions and reduce dependence on LPG, though he noted that the transition itself involved high upfront costs.

Hitesh Keswani, Managing Director and CEO, Aspect Hospitality, said operators are prioritising internal efficiencies over customer-facing price increases. “Menu pricing is always the last conversation,” he said.

Anirudh Khanna said Independence Brewing has chosen not to increase menu prices or reduce portions, instead focusing on process optimisation and operational discipline. “Consistency in the guest experience remains a priority,” he said.

Smaller Restaurants Hurt More

Dembla said larger hospitality players generally have stronger supply networks and more flexibility to absorb disruptions, while smaller operators often lack the bandwidth to make costly operational shifts.

“The impact is much more severe,” he said.

Industry executives said repeated LPG price increases are reinforcing the need for tighter operational discipline, efficiency planning and diversified energy strategies as hospitality businesses navigate continued volatility in fuel costs.