Sales tax not the sole cause behind bitter hit

The Star

a day ago

Strong pull: Ooi preparing coffee for customers at his shop in George Town. — CHAN BOON KAI/The Star
GEORGE TOWN: It is not just the sales tax; the prices of meals are rising because of surging rental rates, logistics charges and rising wage demands.
A check with many food sellers revealed that prices on the menus are rising even though the 5% sales tax since July 1 on imported premium foodstuff like salmon, cod and tuna, plus mushrooms, avocados and berries, is being absorbed by either importers or distributors.
Restaurant owner Frankie Tan, 38, said: 'It is a combination of factors: the cost of ingredients that might have the sales tax embedded, foreign worker permits, rentals and transport costs for special items we need.'
'Deboned chicken thighs for chicken chop used to be RM10.50 per kg in 2022. It's now RM17.50 per kg,' he said yesterday.
He added: 'Legally bringing in a foreign worker through an agent costs about RM10,000, not including renewal fees and other charges imposed by local authorities. Then we must provide proper housing, meals and uniforms.
'These processes, along with licensing requirements, have significantly increased the cost of doing business. So we must raise our prices,' he said.
Coffee shop owner Micah Ooi, 40, said he recently had to increase the prices of several beverages.
'The price of coffee powder increased from around RM400 to RM500 per 30kg last year.
'Both of my workers are requesting higher pay, and I now pay them about RM2,000 each per month.'
His 'kopi peng' now costs RM2.40, up from RM2.20, while 'Milo ais' has gone from RM3 to RM3.20.
'I have not increased the prices of simpler drinks. We make less profit just to keep them affordable for customers,' he added.
Rice stall operator R. Kesavan, 45, said he had not increased prices yet but might be forced to make adjustments soon.
'Since 2020, the daily cost of supplies like meat, vegetables, spices and other ingredients has gone up by RM100 to RM300.'
Despite slimmer profit margins, Kesavan said he was committed to continuing the business, which was started by his mother about 30 years ago.
'I'm trying to keep prices affordable for my customers, but I see that 30% of them have stopped coming or choose simpler foodstuff.'
With the cost of living continuing to rise, fancy restaurants and cafes are struggling to keep up, said Seberang Perai Coffee Shop and Eatery Owners Association chairman Lee Kok Yong.
Lee's association, which represents nearly 400 members, noted that some eateries increased prices only after they were hit by higher rental costs or the need to hire extra workers.
He said the situation is worse for newer restaurants.
'The older generation of eateries are more stable because they own their premises and operate on their own.
'But the newer generation, some of whom are facing over RM10,000 in monthly rent, are struggling.
'We see that about 40% of the newer restaurants are on the verge of shutting down because they cannot sustain operations,' he said.