Is it accurate to say that the F&B scene in S’pore is brutal? Yes

For every four restaurants that open each year, three will close down.

By Belmont Lay | December 29, 2013

Many people harbour a dream of becoming the chef-owner, or at least, the boss of a cafe or some food establishment at some point in their lives.

Some experience this feeling as a result of youthful folly, while others might be going through a mid-life crisis.

And if you happen to be one of them, well, you are better off taking that money you’ve saved up and about to part just so you can start your Food & Beverage business and bet it on any English Premier League match this weekend instead — because the odds of you winning in soccer betting is a lot higher.

Still not convinced?

Here’s the deal: Thousands of restaurants have opened in Singapore over the years, each believing it has found the formula to be inventive, fresh and a constant money-maker.

But the truth is, only less than 25 percent of them make it. And even for those that do make it for the longer term, they are not immune to hard times.

On the other hand, if Man United plays Man City this weekend, the odds that the match will end in a draw is one in three.

Think about that.

To convince you further that the F&B scene in Singapore is unforgiving, here are a host of other factors The Sunday Times reported today that you ought to consider and should know about:

 

1. Figures from the Accounting and Corporate Regulatory Authority show that 575 restaurants were set up between January and November this year.

That’s about 52 restaurants set up a month on average.

But in the same period, 435 restaurants closed.

This makes the nett increase 140 restaurants.

In 2011, the nett increase was 59.

In 2012, the nett increase was 149.

 

2. Wait a minute. More than 500 restaurants opened a year? How come you’ve never noticed so many of them around?

Well, that’s because some restaurants just find it difficult to last.

For example, Cera, a 48-seat vegetarian restaurant in Upper Thomson near Springleaf Road opened in July this year and closed in November due to manpower shortage.

 

3. But what is really killing some F&B businesses is the increase in rent.

Japanese-inspired cake shop Kki at Ann Siang Hill closed on Christmas Day.

Opened four years ago, it moved out of its premises because the rental was due to increase 140 percent: From $6,300 a month to $15,000 a month for 990 sq ft of shop space.

 

4. Gourmet burger restaurant Relish at Cluny Court — opened by Willin Low, 41, who is the chef-owner of Wild Rocket — will close due to a 40 percent increase in rent. It opened in 2007.

 

5. Italian and Mediterranean restaurant Gattopardo will move out Hotel Fort Canning at the end of this year, as rental has almost doubled.

 

6. The Fat Cat Bistro moved out of Jalan Riang in Braddel Heights estate in September due to a rent increase. It has relocated to Holland Village’s Lorong Liput.

 

7. Some other prominent restaurants that have closed this year for host of various reasons include: Wok & Barrel in Duxton Hill, Oversea Restaurant at Shaw Towers and Foodbar Dada at Robertson Quay.

 

8. So why are rentals getting higher? It is due to several factors.

Trendier places command higher rentals. Think Holland Village.

Malls managed by Reits (Real Estate Investment Trusts) tend to increase rents to grow revenue.

Rental properties within the vicinity of these Reit-managed malls will also raise rents in tandem.

Landlords do get greedy as they think it is a landlords’ market and they can command prices due to market conditions that are favourable to them.

 

9. Other factors contributing to cutthroat conditions include: Shortage of manpower as locals do not want to be in the F&B line.

Furthermore, small eateries cannot pay as much in salaries as bigger establishments.

Plus, the Manpower Ministry’s current labour laws stipulate that foreign workers can make up only 45 percent of staff in a restaurant. It used to be 50 percent.

So, EPL next weekend?

 

Top photo from here

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About Belmont Lay

Belmont can pronounce "tchotchke".

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