The report says that the 15 to 20 per cent slowdown in throughput, as currently observed, is eroding nearly Rs 79,000 crore per month
Emphasising that the ongoing commercial Liquefied Petroleum Gas (LPG) supply disruption has created a serious operational crisis for the restaurant industry, a report has stated that a 15 to 20 per cent slowdown in throughput, as currently observed, corresponds to an estimated Rs 2,650 crore reduction in daily economic activity.
The report by the PHD Chamber of Commerce and Industry (PHDCCI) highlights that the 15 to 20 per cent slowdown in throughput is eroding nearly Rs 79,000 crore per month, representing a significant economic shock to the food services ecosystem.
According to industry estimates, the Indian food services market, valued at Rs 5.69 lakh crore in 2024 and projected to reach Rs 7.76 lakh crore by 2028, is expected to reach an estimated Rs 6.46 lakh crore in 2026. This translates into approximately Rs 17,700 crore in daily economic activity across the sector, the report mentioned.
“Nearly 10 per cent of restaurants have temporarily shut down, while 60 to 70 per cent of establishments have shifted to induction cooking, alternate fuels, reduced menus or shorter operating hours to manage limited supplies. This has started to directly affect consumer behaviour, with dining-out frequency declining by 8 to 10 per cent and average customer spending dropping by 6 to 8 per cent, resulting in a measurable slowdown in industry throughput,” the report quoted Sagar Daryani, President, National Restaurant Association of India (NRAI), as saying.
Beyond Operational Challenges
Beyond operational and financial challenges, the disruption also raises concerns about employment stability across the sector. The restaurant industry directly employs over 8.5 million people, making it one of the largest job creators in India’s service economy.
Prolonged supply disruptions could therefore result in five to seven lakh potential job losses, alongside hiring freezes and delayed expansion plans, particularly among small and medium-sized operators who are more vulnerable to cost and supply volatility.
“The restaurant and hospitality sectors remain heavily dependent on LPG for commercial kitchens, and the current supply constraints highlight the risks of relying on a single energy source. While alternatives such as piped natural gas and electric kitchen infrastructure exist, transitioning to these systems requires significant capital investment, regulatory approvals and infrastructure support, which makes rapid adaptation extremely difficult for most operators,” Surendra Kumar Jaiswal, President, Federation of Hotel & Restaurant Associations of India (FHRAI) highlights in the report.
PHDCCI Tourism and Hospitality Resilience report highlighted that in addition to operational disruptions, the crisis has broader social implications. Restaurants play an essential role in providing daily food access to millions of people, including students, migrant workers, office employees and travellers who rely on food service establishments for regular meals. Any prolonged disruption in restaurant operations therefore affects not only businesses, but also food accessibility for a large segment of the urban population, it added.
Industry Expectations
Industry leaders across aviation, hospitality, travel services and the restaurant sector emphasise that stabilising India’s tourism ecosystem in the current global environment will require coordinated policy interventions addressing cost pressures, connectivity risks, infrastructure gaps and supply chain disruptions.
“Ensuring uninterrupted supply of commercial LPG and accelerating the rollout of alternative energy solutions such as PNG will be essential to safeguard restaurant operations and the millions of livelihoods supported by the food service sector,” Daryani adds.
Industry stakeholders recommend ensuring priority allocation of commercial LPG to restaurants, cracking down on LPG black marketing and supply diversion, fast-tracking PNG approvals for food service establishments. Report also calls for supporting transition to alternative kitchen energy systems.
