Inflation pinches: Eateries dole out discounts as foodies stay away

Stung by rising food inflation, galloping real estate costs and a slowdown in consumption, India’s food and hospitality industry have stepped up deals and discounts to tempt back foodies who are looking the other way as menu costs have risen around 10 percent in the last year.

Retail price inflation rose to a record high of 10.91% in February and economic growth forecast by the government at 5% this fiscal year to March, the slowest in 10 years, has forced consumers inIndia to watch their spending.

[caption id=“attachment_745591” align=“alignleft” width=“380”] Another reason for customers staying away could perhaps be the imposition of service tax on on fully or partly airconditioned eating houses[/caption]

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Food servicing companies are not leaving any stone unturned in enhancing customer experience and convenience and hence, trying their best in getting hold of the brand royalty of customers.

Some of them have started developing affordable menus to rope in new customers; whiles others are providing discount coupons, prepaid cards, loyalty points, etc to lure customers.

According to a report in the Economic Times, food retail sales are down 5 percent in the January-March quarter against the year-ago period which has promoted several fast food outlets ans restaurants to offer aggressive deals like price-offs, value meals, happy hours, freebies etc to lure consumers.

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“Value propositions are the way forward even if it means lesser margins. It’s better to have consumers walk in by offering attractive deals than not having them come in,” Virag Joshi, president and group CEO of Devyani International, the franchisee partner of KFC, Pizza Hut and Costa Coffee, was quoted as saying in ET.

Cut throat-competition has forced both Domino’s and Yum! Restaurants too launch ’entry-level’ pizza at Rs 44, while KFC has a new ‘wow’ menu starting at Rs 25. Several restaurants like TGIF and Moti Mahal are luring customers with lunch meal deals and ‘happy hour specials.’ Mcdonald’s too has launched a value-added scheme where customers can get a McVeggie burger free on a minimum order of Rs 200.

Another reason for customers staying away could perhaps be the imposition of service tax on on fully or partly airconditioned eating houses as it has resulted in almost a hike of one third in restaurant bills for those preferring to have their meals in air-conditioned comfort.

Rahul Mandliya,told _Firstpost t_hrough a YouSpeak video that if small hotels are taxed, customers will bear the brunt and small hotels will face a crisis. Check out the video here.

Mano Krishnan R agrees that since this tax is in addition to existing state taxes, eateries are bound to become an expensive affair. Watch the video here .