News: LPG Shortage Hits Restaurants, Rent Talks May Follow-13-03-2026

A shortage of cooking gas is constraining kitchens in the food and beverages sector, with many outlets reporting disruptions to production and delivery orders. Real estate experts say tenants can cope for a few weeks, but a prolonged shortage could reduce revenues, force menu cuts, temporary closures or relocation, and lead to requests for rent deferment or renegotiation.

Restaurant and hotel associations that spoke to Hindustan Times Real Estate said the situation is manageable for now and supply disruption is not widespread.

Niranjan Shetty, chairman (legal), of Mumbai’s Indian Hotel and Restaurant Association (AHAR), said a restaurant has to manage cash flow, salaries, electricity bills, taxes and loan repayments. Business is coming in, he said, though disruptions have led some restaurants to optimise operations. If supply problems last weeks or months, owners and the government would both lose. Only a few days have passed, he said, and real estate transactions involving leased restaurants and hotels would be affected only if the problem persists.

The Bangalore Hotels Association said in a March 9 statement that the sudden stoppage of gas supply was a major setback, coming despite earlier assurances from oil companies that LPG availability would not be disrupted for at least 70 days. It warned that hotels across Bengaluru may have to shut temporarily if supplies are not restored soon. PC Rao, president of Bengaluru Hotel Association, told Hindustan Times Real Estate that hotels and restaurants run on thin margins and must still pay rent, electricity charges, GST and salaries whether or not they are fully operational.

Manpreet Singh, Honorary Treasurer of the National Restaurant Association of India (NRAI), told PTI that many Delhi establishments are not getting regular LPG supplies and several have switched to piped natural gas and induction cooking. Restaurants are promoting dishes that need less gas or cooking larger quantities on induction appliances. If this continues, he said, rising costs will affect wages and employment, particularly in the unorganised sector, and menus may shrink.

Rentals in prime retail corridors of cities such as Bengaluru and Hyderabad are largely stable, but experts warn that could change if the US-Israel-Iran conflict escalates or persists. G Ram Reddy, president-elect of CREDAI, told Hindustan Times Real Estate that he does not see an immediate change in commercial rentals, but business activity will certainly suffer. If sales decline and the situation drags on, some shops may have to close temporarily, creating employment challenges.

In some pockets the shortage is already compounding the problems of outlets facing slowing sales. Experts say tenants may seek deferments or temporary relief if it lasts several months, but outright waivers are unlikely because the situation does not qualify as a force majeure event. Operators facing margin pressure could eventually consider moving to lower-rent areas, downsizing formats or renegotiating leases. For now the industry is in wait-and-watch mode, since such moves usually happen only when several tenants act together.

Rao said the situation is somewhat reminiscent of the COVID-19 pandemic, when prolonged disruption forced many businesses to vacate premises, and noted that hospitality has only recently begun recovering. He does not expect a crisis of that scale if the disruption is resolved quickly.

A real estate expert said that, unlike COVID, when many restaurants shut completely and landlords often waived rent and charged only maintenance, the shortage is expected to cause short-term operational difficulties lasting a few weeks. If it persists, limited order fulfilment and weaker consumer demand amid rising food prices and inflation could hit sales, which would affect the revenue-sharing arrangements common in high-rent retail and food-service contracts.

Ground-floor restaurant space is among the costliest in commercial real estate. Prime retail in Bengaluru commands around Rs 500 per sq ft (carpet area), depending on the micro-market, and rentals in Mumbai can reach Rs 1,000 per sq ft in high-demand areas. Khan Market in Delhi can go up to Rs 1,500 per sq ft, Cyber Hub in Gurugram is typically Rs 500 to Rs 600 per sq ft, and Connaught Place generally Rs 750 to Rs 900 per sq ft.