Restaurants in India Brace for Supply Chain Disruptions Amid Worsening Gas Shortage

India's Food Delivery Platforms Face Uncertain Future Due to Cooking Gas Shortage

Swiggy and Eternal, India's two largest food delivery platforms, may experience a decline in order volumes due to the recent limits on cooking gas supplies triggered by the West Asia war. Industry stakeholders have expressed concerns that the shortage will impact restaurants' operations, leading to a potential decrease in order volumes.

Initially, the situation did not appear to warrant concern for Swiggy and Zomato (part of Eternal). However, with the recent instruction by Oil Marketing Companies (OMCs) to supply commercial cylinders only to hospitals and educational institutions, the situation has changed. This move has temporarily halted sales to hotels, restaurants, and other commercial establishments.

Eternal's shares ended the March 9 trade session down 1 percent at Rs 229.55 apiece, while Swiggy's share prices were flat to trade at Rs 301.40 each on the BSE. Industry executives are cautious, acknowledging that it is too early to assess the exact impact on order volumes.

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The shortage comes as the ongoing Israel–Iran war has affected LPG shipments from the Middle East, a key source of cooking gas imports for India. Restaurant kitchens across several Indian cities are scrambling to keep their stoves running, with operators warning that if the shortage persists, restaurants may have to scale down operations or temporarily shut kitchens.

The longer the wait, the larger the damage, with even a temporary resolution to the war situation expected to take 30-60 days to go back to normalcy. In an inflationary environment, spending on discretionary items like outside food, including ordering in, is expected to take a back seat. An increase in gas prices and eventual rise in the cost of raw materials due to higher transportation costs will also be passed on to the end consumer, further deterring people from ordering in and eating out.

Key Figures:

• Rs 229.55: Eternal's share price on March 9
• Rs 301.40: Swiggy's share price on March 9
• 30-60 days: Timeframe for restaurants to return to normalcy after resolution to the war situation

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