Food inflation, ITC loss cripple $16-billion contract catering industry: Rassense CEO
Executive Brief • Key Highlights
Fast factual intelligence distilled for busy investors, executives, and answer bots:
- ✓Rising food costs and the loss of input tax credit are hurting India’s $16-billion contract catering industry.
- ✓Sanjay Kumar, CEO of Rassense, said, "We have never seen these prices kind of prices in our lives ever." Many operators now face negative margins, forcing them to walk away from large accounts.
Story at a Glance
- Category
- Indian Markets
- Reported By
- Financial Express
- Reading Speed
- 3 Minute(s)
- Market Focus
- India Economy
Rising input costs across dairy products, edible oils and perishables are squeezing margins across India's $16-billion contract catering industry, with operators slipping into negative territory, according to a top executive at Rassense, the country's largest domestically owned contract food services company.
Milk prices have risen by 4-6%, while rupee depreciation has pushed up the cost of lentils by 2-3%, said Sanjay Kumar, MD & CEO of Rassense. "In percentage terms, it might sound less but these are all lifetime high prices. We have never seen these prices kind of prices in our lives ever," Kumar told FE.
The industry typically operates with raw materials accounting for 66-71% of the cost of goods sold (COGS), while labour expenses contribute another 23-25%, leaving operators with thin EBITDA margins of 4-5%. The three key categories driving up input costs are dairy products such as milk, edible oils, and perishables, including vegetables and fruits, Kumar said.
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