What caused the reversal from Q4 2025 growth to Q1 2026 decline?

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The Middle East Conflict's Economic Fallout Drove the Reversal in F&B Sales

The significant downturn in sales for Malaysian cafes and restaurants in the first quarter of 2026, a stark reversal from the previous quarter's growth, was primarily triggered by the escalating economic consequences of the Middle East conflict. This geopolitical event led to a sharp increase in fuel prices, which in turn permeated through nearly every aspect of the food and beverage (F&B) industry's operational costs.
Soaring Fuel Prices Impacted Operational Expenses

Between March and June, the cost of essential fuels saw a substantial rise, with diesel prices in Peninsular Malaysia jumping by 45 per cent and unsubsidised RON95 climbing by 39 per cent. These increases directly affected the transportation of ingredients and packaging, as well as the daily commutes of staff and the logistics involved in food delivery services.
Industry Underestimated the Economic Shockwaves

F&B businesses had anticipated a modest growth of 1.9 per cent for the first quarter of 2026. However, the actual performance revealed a sharp decline of 4.6 per cent compared to the same period in the previous year. This outcome was far below the industry's projections and represented a significant shift from the 3.1 per cent growth recorded in the final quarter of 2025.
Broader Inflationary Pressures Exacerbated the Decline

The impact of rising fuel costs was compounded by a general inflationary trend. Consumer prices for "food away from home" experienced their sharpest increase in April, rising by 2.6 per cent. This broader economic pressure, coupled with the specific shock of fuel price hikes, created a challenging operating environment for cafes and restaurants.

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What caused the reversal from Q4 2025 growth to Q1 2026 decline?

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