Over 20 Chinese fast food chains will raise their prices tomorrow because of mounting raw material costs.

Senior officials of enterprises such as Malan Noodle, Hehegu, Lihua Fast Food and Daniang Dumplings gathered in Beijing over the weekend to discuss the measures to combat the surging costs, a Beijing Times report said.

Jiang Jianping, president of Lihua Fast Food, said the company will raise prices by an average of 15 percent. Hehegu will raise the price of pork dishes by 1 yuan, company president Zhao Shen was quoted by the newspaper as saying.

Skyrocketing prices of meat, the main raw material for Chinese food chains, has dealt the severest blow, said Bian Jiang, deputy secretary-general of China Cuisine Association.

Belly pork, for example, was yesterday wholesaling at around 22 yuan a kilogram in Beijing, according to www.foodqs.com, China's leading online food trading service provider, a year-on-year increase of 13 yuan.

Bian said the catering sector is a low-profit business in China. Although the gross profit rate reaches 45 to 50 percent, the net profitability stands at only 5 to 8 percent, after deducting rent, electricity, water and labor costs. "These enterprises cannot absorb the rising cost of ingredients any more."

He said supermarkets have already raised the prices of meat, eggs and cooking oil, and it is natural for catering enterprises to do the same.

The National Development and Reform Commission issued a circular yesterday, asking local governments to be cautious with intervening in the pricing of products and services not included in the government's price guidance, and allow the market to determine prices.

(China Daily July 31 2007)