Shares of quick-service restaurant (QSR) companies declined in Tuesday’s trade as a disruption in commercial cooking gas supply forced hotels and restaurants in several Indian cities to either halt operations or warn of imminent shutdowns.
Domino’s-owner Jubilant FoodWorks’ share price fell 2 per cent intraday, while Pizza Hut and KFC-operator Devyani International’s shares slipped 1 per cent.
Shares of Sapphire Foods India, too, declined 2.5 per cent, and United Foodbrands (formerly Barbeque Nation Hospitality) lost 1.6 per cent. Restaurant Brands Asia shares also eased half a per cent intraday.
That apart, shares of food delivery platforms, Eternal and Swiggy, also fell up to 2.3 per cent during the session amid reports that hotels and restaurant chains across multiple cities, including Mumbai, Bengaluru, Chennai, and Lucknow, were facing difficulties sourcing commercial LPG cylinders used for cooking.
The decline reflects investors’ fears that the disruption in LPG supply could temporarily hit revenues for food chains and restaurants, especially if the shortage persists for long.
LPG shortage: Restaurants warn of shutdowns
Similarly, 20 per cent of Mumbai’s hotels have shut down due to gas supply issues, according to Mumbai’s hotel association, AHAR.
“If the situation continues, up to 50 per cent of the hotels in Mumbai could shut down over the next two days,” the association reportedly said.
Similar concerns have been raised in other cities as distributors reportedly stopped accepting fresh bookings for commercial LPG cylinders in some regions.
Reports from Lucknow suggest restaurants, hotels and small food businesses have complained that the refilling of commercial LPG cylinders has been halted by oil and gas companies since Monday amid a supply crunch.
The National Restaurant Association of India has cautioned that shortages of commercial cylinders could lead to a “catastrophic closure” of restaurants if the situation continues.
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Iran war leads to energy crisis
India imports a significant portion of its LPG requirements and the conflict in the region has affected shipping routes and energy exports from Gulf nations, including Qatar, Saudi Arabia, and the UAE.
Industry estimates suggest that India consumes over 31 million tonnes of LPG annually, with a large share used by households, while the remainder is consumed by commercial users including restaurants and hotels.
Government steps in
On its part, the oil ministry set up a panel on Tuesday to review supply requests from the hospitality industry and assess ways to stabilise commercial LPG availability.
The Government has likely invoked the Essential Commodities Act, 1955, allowing the central government to regulate the supply, distribution and trade of petroleum and petroleum products to maintain their supplies or secure their equitable distribution.
