Restaurants set to mark up prices as diesel hike triggers domino effect

Restaurant operators are almost certain to raise prices after Putrajaya scrapped blanket subsidies for diesel, causing the fuel widely used in the logistics sector to rise to an all-time high of RM3.35 per litre.

Restaurant owners contacted by MalaysiaNow said teh tarik, Malaysia's most popular drink, would be among the items affected as ingredients such as tea dust and condensed milk have become more expensive.

A spokesman for an association of Indian restaurants said the diesel price hike, which came into effect on Monday, had had a domino effect from logistics to raw materials and food prices.

"Some of our vendors and suppliers are increasing prices," said N Shanmugam, secretary-general of the Malaysian Indian Restaurant Operators Association.

"But we have not received anything in black and white yet," he added.

Shanmugam said restaurants would not increase prices as long as suppliers maintained theirs.

The price of diesel in Peninsular Malaysia has risen to RM3.35 per litre since June 10, as part of the Anwar Ibrahim government's plan to end blanket subsidies on some basic items.

The government has also announced the introduction of the Budi Madani programme, where eligible users can receive RM200 per month as compensation for the diesel price hike.

Also read: Wholesalers, suppliers raise prices after diesel surges 56% under new subsidy scheme

The diesel hike sparked an explosion of memes and clips on social media lambasting the government, with familiar reminders of Anwar and Pakatan Harapan's earlier promise to bring down oil prices by redistributing the country's oil wealth back to the people.

Yesterday, Anwar admitted that the decision to increase the price of diesel would lead to an increase in the price of goods.

"I am not saying that prices will not go up. But sometimes people say in conversations that 'Anwar says prices won't go up'. That is not the case," he said.

The food and beverage sector has already been hit by inflation and the Covid-19 pandemic as well as other geopolitical factors, leading to an increase in chicken prices and supply problems for eggs, rice and onions.

The Kelantan Malay Restaurants Association said most eateries were in a dilemma when it came to the price of goods.

"How are we supposed to absorb the price increases? Our profit is barely enough. The prices of other ingredients have also risen sharply," the group's chairman Nik Hassan Mohd Zain told MalaysiaNow.

Nik Hassan said many restaurants in his association had been informed of price increases by their suppliers.

He said restaurants had reported having to pay RM200 for the same amount of raw materials used to make roti tempayan, a local bread dish similar to naan, compared to RM120 previously.

A restaurant owner in Subang Bestari, Selangor, said the price hike in raw materials had already materialised.

Syawaludin Zainal cited the price of frozen boneless chicken, which has risen from RM26 for 10 pieces to RM31 since Monday.

"At the moment, we have not raised the prices on our menus, but we may have to do so if the suppliers also increase their prices because they are using diesel lorries to deliver the raw materials," he said.

He said one way for suppliers to raise prices was to increase the minimum amount for an order.

Meanwhile, local coffee brand Kopi Hainan has also announced a price hike.

The new price – up by 50 sen for a menu set of 22oz Original Hainan Coffee – will come into effect on July 15. 

The company was however quick to clarify that the decision had nothing to do with the diesel price hike.

"The cost of raw materials such as milk, plastic cups and, more recently, coffee beans from our suppliers has been rising for a long time," it said.