It’s tough operating a restaurant in slightly upmarket areas in the Klang Valley. You can judge how stiff the competition is from the number of eateries that open and close shops within six months in some suburbs.
Restaurateurs pour in a substantial amount to renovate the shoplot first as ambience is crucial for the success of the restaurant. Renovation cost eats into the capital injected, and many operators make or break within six months as rentals are extremely high in areas with good walk-in traffic.
Overheads can be prohibitive, especially if the restaurant is located in a choice location. On top of manpower cost and utility bills, the operators have to worry about high staff turnover. That is why serving staffers are mostly foreigners now.
The drawing points of eateries are the quality of the food, hygiene, service and décor. If the operators manage to get the right combination and draw regular customers fast, they have found a lucrative source of income.
That is when food lovers make the eatery the talk of the town through word of mouth, foodie blogs and print reviews. If the restaurants manage to keep their clientele and draw new customers, they have it made.
But these are successful ones. The number of failures is high. Our hearts go out to those to put in their hard-money money to try set up a successful venture but failed.
No matter how difficult it is to operate a successful eatery, there is no excuse for profiteering. We have walked away from many restaurants feeling cheated and swearing never to patronise that place again.
Shortchanging by restaurants is rampant in many parts of the country that there are blogs and Facebook pages dedicated to pointing out the cheaters among them.
The problem is that mid- to high-end restaurants can set their prices arbitrarily. Coffeeshops are better regulated, but there are cases when you find wayward operators who over charge for their drinks.
Higher-end eateries charge stiffly on their drinks because this is where they can maximise profit. Diners are paying from 50 sen to RM1 for filtered water, which is a ridiculous amount to pay.
The operators get away with it there appears to be no regulation on the pricing. It has also become a standard practice for them to overcharge for drinks.
The chief executive officer of Kumpulan Secret Recipe Cakes and Cafe Sdn Bhd was fined RM45,000 by the Sessions Court in Shah Alam yesterday for profiteering. Datuk Sim Leong Thun, 57, pleaded guilty to the three charges made against him in his capacity as an individual.
A Bernama report said he was charged with raising the price of the Pepsi drink at the Secret Recipe Cakes and Cafe, Subang Parade branch, Subang Jaya, from RM4 to RM5 from Feb 23, 2015, based on the price tag exhibited.
It was profiteering as the price increase raised the net profit margin of the drink by 24 sen per unit, from 77 sen to RM1.01.
On the second and third charge, Sim was charged with profiteering over the price of a drink and a food item at the Secret Recipe Kuala Kubu Bharu branch, Jalan Mat Kilau, Kuala Kubu Bharu, near here, from Feb 23, 2015, based on the prices that were exhibited at the premises.
He was charged with increasing the price of Iced Caffe Latte from RM7.80 to RM9, raising the net profit margin by 13 sen, from RM1.76 to RM1.89 for each unit. Sim was also charged with raising the price of Lasagna Beef from RM16.50 to RM19 and was charged with profiteering by increasing his net profit margin from RM3.72 to RM4 a unit.
The charges were made under Section 14(1) of the Price Control and Anti-Profiteering Act 2011 which provided a maximum fine of RM500,000, and for the second and subsequent offences, could be fined a maximum of RM1 million, if found guilty.
This is just one case. There are so many cases of profiteering that are going unchecked. The authorities mustn’t let up on their fight against profiteering by restaurants. Consumer awareness and initiatives by individuals and groups to report cheaters would help prevent profiteering.