An unforeseen outcome of this Covid-19 pandemic in Singapore has been how answers to some pressing questions have been more forthcoming than usual.

A wide array of information have been surfacing in the press, partly owing to a general public that has had more time to themselves to question assumptions, ponder issues, and demand greater transparency -- because there is precious little else to do.

The following answers to three questions pertaining to the hot topic of landlords and tenants, mostly gleaned from the press, will reveal why it is almost a miracle that F&B businesses can survive in Singapore.

1. How much do landlords make from food and beverage businesses in Singapore?

Answer: Rental payments to landlords can take up more than one-quarter of the selling price of any sale from a F&B business.

This figure of how much landlords can extract from F&B tenants was revealed recently in a CNA article on May 21, 2020:

... about 26 per cent of the revenue made by an average restaurateur goes to rental payments, with the costs of manpower and goods accounting for another 65 per cent or so.

In other words, a bit of a back-of-the-hand math reveals this leaves a dismal 9 percent profit margin for eateries after all the sweat, toil and physical labour under backbreaking conditions.

Case in point: Two Italian restaurants closing down in Orchard reported profit margins of just 6 per cent to 7 per cent in 2019 before Covid-19 happened.

Worse, it was also revealed that profitability of some restaurateurs has been low at about 1.7 per cent.

And these figures more or less checks out as accurate.

As rentals do vary according to many factors, some F&B businesses do not mind the trade-off by renting in less accessible areas, which are definitely cheaper.

According to a group of restaurateurs in Singapore in an open letter to the government, the average cost of rental was estimated to take up about 13 per cent of each sale.

After all the expenses chipping away at revenue, F&B profit amounted to only 2 per cent -- once food delivery apps take a 25 per cent cut from the already very small pie.

2. Why are landlords now urgently called upon to completely stop collecting rent from tenants during this Covid-19 outbreak?

Answer: Landlords are almost morally obligated to absorb the short-term costs because of how they have been running their business.

Given the current circumstances, according to public reckoning, the onus of ensuring businesses don't all close down one by one lies with landlords, especially since the government is helping landlords to help tenants.

This is the sole argument for landlords to stop taking rent, and more partaking of the pain together.

By completely stopping the collection of rental payment, tenants can continue to survive by reducing losses or turning a small profit, if possible.

If tenants do not have to give up between 13 per cent and 26 per cent of revenue as rent each month, they can use that money to stay afloat and keep staff employed, and ultimately, not run out of liquidity.

Tenants that don't close down are also tenants that will be ready to restart as and when the economy reopens.

Tenants are the landlords' lifeblood.

If there are no tenants, there is no rentier economy.

Moreover, landlords have undergone years of churn with tenants, effectively signing them up and dropping them as and when they do not meet sales targets and become liabilities.

Landlords have tasked themselves with picking winners and dropping losers using financial considerations, almost exclusively, as a guide.

The existing tenant mix in any mall bought by real estate investment trusts can, therefore, be considered the money-making cream of the crop that were kept on the malls' rosters for being able to meet near-impossible sales targets month after month.

Landlords leaving tenants in the lurch now that times are bad is almost morally unjustifiable.

3. Which is more justifiable? Food delivery apps taking a 30 per cent cut of sales, or landlords taking up to a 26 per cent cut of sales?

Answer: Food delivery apps are redistributing money among people and allowing people to help themselves.

One commonly overlooked and misunderstood aspect of food delivery apps is that their services actually allow money to change hands quickly and transparently between regular people.

And the argument can be made that it does so in an egalitarian manner -- in other words, people, who are willing and able, can trade their labour for cash, and the platform is open to all and sundry.

Take a S$18 food order placed via a food delivery app as an example.

Food order price: S$18

Delivery fee: S$3.40

Platform fee: S$0.20

Total: S$21.60

How money is redistributed:

Restaurant receives: S$12.60 (70 per cent)

Delivery personnel receives: S$8.00

Food delivery app: S$1.00

Such a redistribution is clearly for services rendered in real-time, by people willing to carry out the menial labour.

The money becomes a lubricant for a fair exchange.

So, when business owners and customers complain that the cut that food delivery apps are taking is too much, what they are really saying is that the landlord's cut is also too much, as the landlord extracts up to 26 per cent of sales.

A major contributor to high prices of food in Singapore is rental, not the ingredients itself.

Moreover, the flow of money from tenants to landlords serves to prop up an opaque rentier economy -- quite different from the transactional nature of a food delivery app.

While the tenant works for the landlord, the food delivery personnel works with the tenant.

Granted, there is also the argument that money that goes into the landlords' hands do get redistributed to investors via real estate investment trusts, which are open to retail punters from the public.

But the fact remains that the distribution of dividends to investors is nowhere guaranteed or transparent because it is conditional on business doing well and a host of other financial accounting reasons.

What is going to happen to tenants and landlords moving forward?

The Covid-19 pandemic has enabled an extreme set of circumstances to come to pass.

Society ought to start to recognise who the real risk-bearing entities are: The small, plucky entrepreneurs and business owners who are frequently exposed to market forces and failure, versus the landlords that are quick to cover their downsides.

The onus, moving forward, should also increasingly fall on landlords to demonstrate the degree of value creation they provide and the sort of risks they undertake on behalf of the greater society that can justify their existence and rent-seeking behaviour.