Eating out gets costlier

12% service tax to be levied on A/c restaurants.

The much speculated and debated Union Budget 2013 has finally arrived! Eating out at air conditioned restaurants also gets expensive. A/C restaurants that do not serve liquor come under the 12 per cent service tax umbrella.The F&B industry is extremenly unhappy about this announcement. Customers too are unhappy as they will have ultimately have to bear the brunt of this increase in tax. 

"Venu Madhav A, COO, CCD says In the cafe segment, price points are highly competitive and this increase in service tax will only add to the burden. It is also a hit to the youth who have only a fixed pocket money to spend." 

Virag Joshi, CEO & President, Devyani International says, "The service tax of 12.36% will now be applicable on 40% of the bill in AC restaurants (that don't serve alcohol) so an effective increase of 4.956% on the  total bill.  Like all others, Costa Coffee, KFC and Pizza Hut will all be adding the additional 4.956% service tax on the bills from 1st April 2013, when this new rule comes into effect.  We expect that restaurants across the spectrum may see a fall in transactions in the short term owing to poor consumer sentiment." 

Manu Mohindra, MD, Under One Roof Consulting said, "This is an increased burden on the industry. This will also discourage new enrants in the field. The government ahs followed a typical tax regime. The customer will also be discouraged as prices will go up." 

Prosenjit Roy Chaudhary, CEO, Barbeque Nation shares, "This is a bad news for the F&B industry as well as customers. This will hit the top line of a retailer but the sufferer will be a customer. A customer is already taxed in so many areas, that this implication seems rather harsh." 

Vijay Abhimanyu, Founder, Billionsmiles Hospitality says, "This will a challenge for Fast Food Restaurant operators. In this format, prices is important and will become a challenge for a retailer to maintain prices. I am very dissapointed." 

Manish Mehrotra, Executive Chef, Old WOrld Hospitality says, "For the common man it is not good news. But the type of category we operate in, I do not think thatthe customer will mind the price rise."