Last week, people all over TT were licking their chops as they couldn’t wait to get their hands on their favourite fast foods after months under lockdown.
Some were surprised that at least one quick service restaurant, KFC, raised prices by just over $2 and adjusted their menus. But fast food overall is set to cost more, according to leading franchise holders in the quick service industry. Some franchises are now looking at their menus to see how they can still bring value for money while maintaining profits at a time when most businesses are struggling to survive.
The bottom line is, soon, people will have to fork up a little more dough for their on-the-go meals.
Why? The short answer is covid19. Financial shocks due to restrictions resulted in a rise in costs along the value chain. However, there are many factors that affect the way fast food franchises set prices and as these factors change so does the price.
KFC announced upon its re-opening on July 19, that it increased the prices of some items on their menu among them the Boss Meal, up from $40 to $42, and the Big Deal, increasing as well by $2.05 from $29.95 to $32.
Roger Rambharose, KFC vice president, admitted that KFC, and by extension franchise holder, Prestige Holdings Ltd (PHL), was not immune to the effects of covid19.
“It has had significant impacts on all our financials,” he said.
In 2020, PHL lost $18 million, even with a record start of more than 50 per cent growth in profits in the first quarter.
“If not for the pandemic it would have been an excellent year.”
PHL in the first half of 2021 incurred a loss of $20 million, with only one month of the lockdown included in the accounting.
“As we look forward to the end of our financial year in November, it is going to be tough,” said Rambharose.
But KFC, which has 60 branches, is not be the only PHL franchise looking at its prices. Other PHL franchises such as Pizza Hut and TGI Fridays are considering similar adjustments. TGI Fridays has an even greater challenge as it is heavily dependent on in-house dining and bar but is now limited to a takeaway service.
[caption id="attachment_903950" align="alignnone" width="1024"] Delivery driver Nigel Pariag cleans his bike at Pizza Hut, La Romain, on July 17 ahead of the reopening of the food sector on July 19. - FILE PHOTO/AYANNA KINSALE[/caption]
Simon Hardy, CEO of PHL, which employs over 3,000 people, said the global demand for raw materials, and higher prices for them, led to higher costs locally.
For example, with a greater demand for clean energy, products such as biodiesel are becoming more desirable. With a rise in the demand for corn, a key element in biodiesel, there is less supply for feed manufacturers.
“That would carry up the price for feed and grain and thus carry up the price of chicken,” Hardy explained.
According to the Ministry of Trade and Industry, the average price of poultry per pound went up by just under 20 cents in the past month, with the price being $7.14 in May, and $7.33 in June; and just under $3
