Restaurateurs yet to get industry benefits as inflation hits eateries hard

When Asif and his two friends opened a restaurant in the capital's Bashabo in January 2022, they thought the time was favourable as the pandemic was over.

But, it was not easy sailing, as they thought it was going to be.  Within a few months, they were making losses, which only kept mounting every month as the Russia-Ukraine war dealt a fresh blow to the pandemic-battered economy. And they had to shut down their Biriyani outlet in November.

"We were in profit for only three of the 9 months. In the end our losses totaled Tk15 lakh and we had no choice but to shut the business down", said Asif.

"People started to cut extra spending amid rising costs," Asif observed as the main reason for the restaurant's closure.

The entrepreneurs-trio's restaurant is one of many eateries that have wound down in the last six months while others are struggling to keep their business afloat and many contemplating selling their food business.

Restaurateurs say they are yet to get industry facilities despite the government officially declaring industry status for the sector in September last year.

"Owners are not thinking about profit, they are now focused on surviving," said Nazmul Huda Bappy, founder of Mumbai Express, which has two outlets in Dhanmondi and Uttara.

"The situation for the sector is worse than it was during the pandemic," he said.

"People have reduced consumption. Our customers at the Dhanmondi branch have been ordering less than they used to. In other words, the sales have dropped," he added.

Abul Bashar, manager of Mezbaan Hotel in Mirpur-10 also said that their sales have decreased by one-fourth over the last six-seven months.

"Although we are not making losses yet, our profit margin has shrunk to the very edge," he said, adding, "If the downturn continues, we will surely incur losses."

Another restaurateur Md Nasir, owner of Cafe Sugondha in Mirpur, said they are yet to see any profit since the opening of the restaurant last year.

"I am losing around Tk2.5 lakh each month. Now I am thinking of closing the business," he added.

Rising commodity prices have squeezed profit margins for most eateries in the capital, both expensive and budget friendly ones, as the restaurateurs are not able to rise their food price to match the rising costs.  

The Bistro, popular among low-earners for its low-priced food, have been struggling as well.

"In our eatery our most popular item is egg curry and vegetables," said Rajib, one Bistro outlet owner Rajib.  

"Since the egg price shot up, many of our customers now finish their meal with only vegetables, which keep their bill to Tk40. If most sales are only vegetables, it is hard to make any profit," he added.

General Secretary of Bangladesh Restaurant Owners Association (BROA) Imran Hasan said "We cannot increase food prices in line with commodity prices. Besides, workers' wages and expenses have jumped manifolds. Plus, the price of gas and water have increased too."

As a result, it has become difficult to bear the rising costs and many have closed their business, he said.

"There were about 60,000 restaurants across the country. According to our data, about 5% of the restaurants have closed in the last 6 months alone," he added.

Some 1.20 crore people are involved directly and indirectly in the restaurant sector, which is one of the emerging industries.

"Businesses in the sector need the government's support to stay afloat," said BROA general secretary.

He also demanded supply of commodities through the Trading Corporation of Bangladesh (TCB) and reduction of the value-added tax (VAT).

"The sector is yet to get the industry benefits like industrial priced utility, priority power connection and uninterrupted power supply," alleged the BROA general secretary.

Pointing out that it is hard for the restaurateurs to get bank loans as they deal with perishable goods, he urged the government to make it easy for the eatery owners to get loans on easy terms.

Imran Hasan also demanded a separate government body to cut harassment in getting permits, registration and licensing, as well as a separate body to monitor the restaurants in coordination with the BROA and under relevant ministries and departments.

He also suggested that the government should set up an institute to develop skilled manpower for hospitality management, which is high in demand.

"It will not only help meet local demand, the government can also send the skilled ones abroad, which can boost remittance," he added.