Coronavirus: Livelihoods of 200,000 in S'pore's F&B at risk, closures possible due to dip in business

It's a tough time.

Mandy How| February 13, 2020, 05:07 PM

The livelihoods of some 200,000 people in the F&B industry are at risk, said Vincent Tan, President of RAS (Restaurant Association of Singapore) at a press conference on Feb. 13, 2020.

Since Singapore announced its first case of the coronavirus (Covid-19) on Jan. 23, there has been a significant dip in businesses for F&B.

For F&B outlets, the two biggest costs are rental and manpower, which account for about 50 per cent of operation costs.

Restaurants not well-prepared

57 per cent of restauranteurs indicated in a poll that they expect losses of more than 50 per cent over the next three months.

They also indicated that they are not well-prepared for the Covid-19 outbreak.

The current situation is different from SARS, as the incubation period for the virus is longer, and the symptoms are not as clear.

While there has been a slight growth in food deliveries, it is not enough to staunch the bleeding from physical stores.

This is because a lot of a restaurant's cost structures is centred around dining experiences, and not deliveries, Tan explained.

Possible closures

If the restaurants do not get any help from landlords or the government, it is possible that a number of them will close down.

And it will "not be an insignificant number, potentially," says Andrew Kwan, Vice President of RAS.

Depending on their resources or their specific circumstance, it will vary from restaurant to restaurant for how long they can survive.

Kwan likens it to a patient that is haemorrhaging from the arteries.

"Conventional wisdom suggests that there will be closures," he said.

Some restaurants have already taken the measure of reducing their part-time staff.

Tan added that the industry already has a very low profit margin, and a reduction in income of 50 per cent will impact businesses greatly.

How does it compare to SARS in 2003?

Tan revealed that during the SARS pandemic in 2003, business dropped about 70 to 80 per cent, if not higher.

However, a lot of restaurants managed to bounce back. Some were assisted by their landlords, who waived the rent.

If the losses experienced by a small F&B business are excessive during this period, they may either take a longer time to recover or choose to close down, Tan said.

Jewel Changi Airport has taken the initiative of reducing their tenants' rental for two months, with a third pending review:

https://mothership.sg/2020/02/restaurant-association-singapore-coronavirus/?fbclid=IwAR0QKUZLy_IvNlkaN7nyTUSMGYAclqAgH-pMCGz3SEQSCVCuMABPHqxlSGY

RAS has also reached out to major landlords, such as CapitaLand and LandLease, to ask for their support in doing the same for their F&B tenants.

Top image via Mandy How