Why is food in Colombo so expensive?

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Over the past few years it has been made quite clear to me that I’m somewhat of a “workaholic” It started with my friends, family and situations where our customers started messaging me on Instagram “Hey, you should probably cut down that caffeine, we need you alive”.

The good thing with you being a dysfunctional workaholic is the fact that you can get a lot done in a relatively short amount of time, but of course it comes at its own cost. One of which is the fact that I don’t remember the last time I’ve had a home-cooked meal. I schedule out my day in a way where it’s usually a series of meetings with the team at Surge, or customers. Weekends and Dinners are usually then turned into situations to meet people, and have conversations. Of course that means you end up eating out.


Understanding the cost of eating out, a breakdown on how I spend.

For those of you that know me, I used to weigh a fair bit more (50kgs heavier) I managed to lose it by switching up my diet and moving things around a bit. Ever since then, I’ve been relatively healthy with the food that goes into my body (besides the absolute gallons of coffee and red bull). This process now, has turned into a relatively expensive lifestyle. In Colombo, for a 24 year old I’d go so far as to say its extravagant.

TimeDescriptionWeekdayWeekendWeekly Cost
BreakfastSkipping breakfast with a cup of coffee.$4.00$0.00$20.00
BrunchBrunch meeting
(2-3 People)
$0.00$22.00$44.00
Post-BrunchCoffee shop coffee$0.00$10.00$20.00
LunchUsually something light,
like a salad.
$7.50$20.00$77.50
Post-LunchCoffee/Redbull$4.00$10.00$40.00
DinnerUsually a meeting or date$20.00$35.00$170.00
Total $35.50$97.00$371.50

I’ve been fortunate over the years to be able to put myself in a situation where this is actually viable. I currently live with my parents, so rent isn’t an actual cost for me (that’s normal if you live in this part of the world). I don’t spend much on clothes, usually black tees, shorts/sweatpants and a couple of jeans i’ve been refreshing. I don’t really foresee that changing anytime soon.

The restaurant scene in Colombo has started absolutely booming, from the high-end specialized eateries like the ministry of crab, to the 100s of Coffee Shops in Colombo demonstrating nash equilibrium in absolute full-force.

TED-Ed – Nash Equilibrium

The real estate market and its effect on food & beverage pricing

If you look at the economics of your average restaurant and bistro, it’s a bit weird. It’s weird because Colombo seems to be a bubble-like expensive urban civilization. LankaPropertyWeb, the current largest real-estate marketplace has some astounding numbers.  

What’s jaw-dropping is that when you realize these numbers are averaged across the country, not Colombo. With a GDP Per Capita of $4,100 it means that the average person requires 200 years of saving 100% of his/her earnings to generate enough income to be a home-owner.

I’ve been called biased/clueless for calling the whole thing as a bubble. The punters revolve around the fact that Sri Lanka is an Island with limited space and that Property is a stable asset class, and of course these purchases are being made without significant debt on it.

If you really look at the property market from an investors point of view, if you’re not flipping it, you’re looking at generating rental income from the asset. In the other parts of the world, you’re really looking at 12% in terms of rental income as a “decently performing residential asset class” where as if you look at Sri Lanka, it’s really just a 3-4% if you’re lucky (Slightly higher for commercial property). But, that being said the rental market isn’t necessarily cheap either.

There’s a stark contrast from Colombo to the rest of the country, but it’s still evident. Central colombo real-estate space goes anywhere from 250-500 Rs per square foot depending on the location, amenities and terms of the agreement. Meaning, if you want to set up a restaurant with 1,500 SqFt and parking for 5-10 people, you’re looking at dishing out about Rs 1,000,000/month on a long term rent ($5,700).

Budgeting in about Rs.1,000/sq ft for interior and upgrades, fit out and equipment you’d easily spend over $30,000 decking out your restaurant. What does this all mean?

If you’re serving 150 customers per day, that’s about $20 of depreciation and $190 of rent costs alone. With the cost ambience, service staff you’re adding $2.00 of overheads to a dish you eat. Add Taxes on all of that, with the diverse menus, meals just become in-effecient. You’re paying for all of these inefficiencies whether you’re dining in or it’s just a takeout order.

There’s still a case for restaurants, it’s not all bad. You need family dining from time to time. I wouldn’t want to just order take-out on date night, or have dine-in meetings at the office. I personally enjoy different atmospheres in different coffee shops, family dinners and just having a place to escape from it all now and then. There’s a time and place for everything, but for the average guy who works at an office, spends the weekends at home and occasionally dines out, it sure does look like stacking rent on top of each other.

Colombo skyline is slowly becoming absolutely beautiful. There’s a highrise wherever you look, most under construction and people moving in. I’m fairly concerned to understand whether infrastructure can handle the population increase, but there’s another interesting thing happening.

There are large amounts of empty plots of land in Colombo owned by individuals waiting for massive payouts from large construction companies to set up highrises. This is partly why I don’t believe the cost of these condos and apartments are necessarily justified. But if things progress in the way it does, we’re looking at an unprecedented growth in population density, traffic and people who don’t necessarily have the time to cook.

Several months ago, SeedingAlpha took a six-figure position in a business trying to tackle the growing demand for affordable food. Phantom kitchens aren’t uncommon around the world. Basically, restaurants with distributed kitchens, no dinning areas and relying on third party services similar to do fulfillment whether it’s UberEats or a Dabbawalas.

The World’s best delivery service

Ghost Kitchens and the case for shared economies.

An Amazon like philosophy focused on growth and efficiency really helps you look at the food & beverage process in a whole new light. Restaurants generally allocate 20-30% of its space for their kitchen, half of the staff and management revolves around service and staff. All things that add up to cost.


GhostKitchen looks at an approach to centralize kitchens around Colombo where you don’t need premium retail space, service staff and use the economics of scale to have 100s of restaurant back-ends running in a centralized shared model to bring down the cost of food. Currently, the team has begun a pilot process catering to three cuisines, Chinese, Generic and Sweets.

With an objective to grow market share, willingness to take little to no margin and sophisticated procurement and logistics chain Ghost Kitchen is looking at streamlining the process of your everyday lunch to give you good food that’s actually affordable.

About the author

Bhanuka Harischandra

1 Comment

  • I didn’t read the whole article but to quote you “1,000,000 a month” figure for a 1,500 sq.ft is inaccurate! One Coffee shop that operates on Barnes Place pays Half of that price and has about parking for more than 4 Vehicles at one time! – Dhiran De Mel Colombo Property Web (Pvt) Ltd