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Restaurants face spectre of closure as price hikes continue

Many eateries are grappling with the increase in price of raw goods and other operational costs such as rent.

3 minute read
Many restaurant operators are struggling to deal with the increase in price of raw goods as well as costs such as rent.
Many restaurant operators are struggling to deal with the increase in price of raw goods as well as costs such as rent.

Concerns have been raised that restaurant owners might have to close down if the increase in price of raw goods continues. 

Ayob Abd Majid, president of the Federal Territories and Selangor Muslim Malay Food Entrepreneurs Association or Permas, said some of the traders in his association had already closed shop as they were unable to absorb the impact of the increase.

"In Ampang, three restaurants had to close as they could not deal with the increase in costs," he said.

"It's not just the price hikes that traders have to deal with. They also have to pay rent, so if their costs are too high, it is better for them to just shut down."

Speaking to MalaysiaNow, Ayob said customers were also on the decline as more people were choosing to eat at home due to the rising prices.

Traders meanwhile had no choice but to raise their prices by some 30%, he added. 

"In the last five months, customers have gone down 40%. When rice started getting more expensive, we lost another 10%.

"The situation is now in reverse. Many prefer to eat at home now, including those who are single or who don't have large families, because they think it's more cost-effective than eating out." 

Some industry players predict that food prices will rise as much as 20% by this month, due to imported inflation and an increase in operational costs. 

Ayob said that in this situation, whether or not shops close would also depend on their location. 

"The most at risk are eateries in housing areas," he said. 

"At these eateries, the regular customers have declined, unlike restaurants in the city where there are office workers."

Mohd Azrin Anver Ali, who runs a mamak shop in Bangsar, Kuala Lumpur, said some operators tried not to raise their prices even when faced with increased costs.

"They don't want to burden their customers even more," he said.

"But honestly, we don't know how long we can keep absorbing the increase in price, because we too have commitments like rent and so on." 

Domino effect

Economist Abu Sofian Yaacob said the increase in raw goods had a domino effect on the retail price of food.

Abu Sofian, of Universiti Keusahawanan Koperasi Malaysia, said price hikes could not be avoided as operators would also have to deal with an increase in operational costs. 

Speaking to MalaysiaNow, he said traders who chose to maintain their prices in order to keep their customer base would have to lower their production costs.

He also said that price hikes for raw goods would present a long-term problem for traders unless the government took effective measures to control prices. 

For example, he said, the government could take the immediate step of classifying raw goods as controlled items, or giving subsidies. 

He said there would also need to be a boost in the production of raw goods, to stabilise market prices.

He said the government would also need to take more aggressive measures against cartels.

"For now, I don't see the government doing anything proactive," he said.

"There doesn't appear to be very much coordination between ministries and departments, or impact from the government's call.

"The ministers meanwhile give excuses and blame the people instead."