A federal mandate warning the region’s restaurants and cafés against raising prices without prior approval has been issued by the Supreme Committee of Consumer Protection, part of the UAE Ministry of Economy, according to Subway development agent, Marwan Abdullah Al Hamar.
Speaking at a media roundtable on the expansion plans of Subway in the Middle East, Al Hamar explained that the mandate decrees that any restaurant price rises must be submitted to the Ministry of Economy for review, with any proposed rises capped at a maximum of 20%.
The mandate is an effort to support purchasing power for consumers in the face of rising commodity prices.
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However, the UN's Food Price Index hit a record peak last month of an average of 236 points, up 34 per cent from a year earlier, and it is taking its toll on the Middle Eastern F&B industry, according to Al Hamar.
“Food prices are at a record high,” said Al Hamar. “Everything from bread to meat prices have gone up. The biggest cost for us in sourcing tuna is the diesel that powers the tuna fishing boats. This really affects the pricing and we are going to have to adjust according to the conditions.”
Nevertheless, Al Hamar noted that the 20% cap on potential price increases would be more than enough to cover the extra costs.
“A medium-priced Subway sandwich is currently AED 15. If we were to increase the price by 20% that would make it AED 18 and I don’t envisage us going that high,” he said.
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