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Speech by Minister Chan Chun Sing at Swee Choon Tim Sum Restaurant

Speech by Minister Chan Chun Sing at Swee Choon Tim Sum Restaurant

1.  The food services sector is an important industry that contributes to 1.1 per cent of Singapore’s GDP and employs about 5.5 per cent of our workforce. We hope that with the 5.5 per cent workforce, we will be able to grow and value-add to the Singapore GDP much more than the current 1.1 per cent. Having said so, we want everyone to understand how we can achieve this.

2. Swee Choon is a very good example because it is an established historical brand. They have been working closely with ESG to see how we can scale up such a model going forward. Even before COVID-19, many of the trends that are affecting the food industry had already started. I am glad that some companies like Swee Choon have already begun to consider many of these trends. 

3. What are some of these trends going forward? First, people like to have convenience when ordering their food. Many of us do not like to spend a lot of time at the queues nor wait a long time for our food. Of course, convenience comes with accessibility. How does a restaurant like Swee Choon serve the whole of the Singapore market when they previously did not have other outlets beyond the Jalan Besar restaurant? The second trend that has become very important since COVID-19 is how do we assure consumers of the safety and quality assurance when you can buy such food anywhere around Singapore or beyond. Thirdly, how do we use the digital medium to expand the market size for companies like Swee Choon and other smaller players in the market? 

4. Considering all these factors, the food industry needs to go through a transformation. COVID-19 has further accelerated digital adoption in the F&B sector. For instance, we have observed an accelerated adoption of online food delivery services by F&B operators and consumers. The percentage of online F&B sales out of total industry sales increased from 9.8 per cent in January 2020 to 44.6 per cent in May 2020, when the Circuit Breaker was in place. It now remains higher than pre-Circuit Breaker levels, at 20.4 per cent as of Sep 2020. This is unlikely to go back to the previous 10 per cent because the nature of the market has changed, the demand, as well as the consumption patterns, have all changed. 

5. This is why there is a lot of interest in the IT or the solutions under the Productivity Solutions Grants (PSG) within the F&B sector. The number of applications from January to October this year is more than four times the number of applications last year over the same period.  We have supported over 2,700 PSG applications for IT solutions this year. There is a significant acceleration in the way companies are adopting the digital solutions to complement their conventional sales channels. Swee Choon is one of them. 

6. During the onset of the Circuit Breaker, Swee Choon’s sales dropped by about 30 per cent, with profits falling about 40 per cent. Then, it quickly pivoted online to minimise the losses from the lack of dine-in sales and continued to serve customers via food delivery service. They ramped up their digital marketing, tapped on additional food delivery platforms such as FoodPanda, and Deliveroo. Enterprise Singapore (ESG) has also supported Swee Choon with its Food Delivery Booster Package to subsidise the delivery costs. To increase food delivery sales, Swee Choon also added new menu options in their delivery menus to make it easier for their customers to hit the minimum spend required for more affordable island-wide delivery. 

7. I must commend Swee Choon.Actually before COVID-19, they were already thinking along this line, and that is why they were ready to go into some of these new solutions. These efforts helped Swee Choon to increase their sales from food delivery significantly – from less than one per cent to around 60 per cent of their existing average monthly revenue during Circuit Breaker. While dine-in has resumed, food delivery sales continue to contribute to about 25 per cent  to 30 per cent of their monthly revenue. Overall, Swee Choon’s overall revenue has gone back to pre-COVID level, but the different segments' contribution has changed significantly. The most significant change is that digital platforms have allowed them to provide online delivery options around the island. 

8. Then, the question is, what else have they done, and what can we learn from this whole experience? For example, ESG launched the Food Delivery Booster Package during the Circuit Breaker period to support F&B businesses in onboarding to food delivery to diversify their revenues. To date, more than 13,000 establishments have benefited from this booster package.

9. To help companies reach out to a wider group of customers, companies have been given Digital Marketing Support through the Enterprise Development Grant. They can also tap subsidised digital marketing courses to improve their digital marketing capabilities. 

10. However, to scale up beyond the digital platform, Swee Choon has started thinking about the next step because as the demand increased, they have to ask themselves, with the current shortage of manpower, how can Swee Choon deliver a higher volume to meet the customers’ demand all around the island? To prepare for the next phase of growth, Swee Choon has set up a new central kitchen to ramp up its production volume. It has also opened a Cloud Kitchen in Tampines recently, which increases its ability to serve more customers in a capex light model and helps to reduce delivery costs for customers. 

11. One of the interesting things that Swee Choon has shared with me is that as they embarked on ecommerce, they are also able to gather data insights on the locations from which most of their orders are coming from. This allows Swee Choon to make a more informed decision on where they should open their next outlet or kitchen. 

12. It is the entire system – the data and a combination of cloud kitchen distribution and central kitchen that they have embraced to overcome the space and geographical constraints of serving their customers from their restaurant units in Jalan Besar. So today, even if you do not have time to come down to Jalan Besar, you can also enjoy Swee Choon dim sum through food delivery services or purchase it from one of the cloud kitchens around the island, which they intend to set up more in time to come. 

13. Another interesting idea that Swee Choon has is to expand its product range to frozen items, which are not so simple as it requires some tweaking of the recipe. 

14. Various initiatives have been rolled out to support our F&B players. For example, other companies, such as Le Rainbow, a catering company, are also partnering with the Food Innovation and Resource Centre (FIRC) to develop Ready-to-Eat products targeting dormitory workers and the elderly to increase revenue streams amid restrictions on buffet-style food services. Companies can also tap on FoodInnovate, a multi-agency initiative led by ESG, which provides resources  to Singapore food companies to drive foodtech and innovations. There are still growth opportunities for F&B companies that are willing and able to adapt and transform. 

15. Next, I will go into the importance of investing in human capital capabilities. One of the big challenges for this sector is how to attract people to come into this sector to learn the trade and expand the business. As F&B companies digitalise and automate their processes further in their transformation process, there is an opportunity for them to embark on job redesign to increase the attractiveness of these roles to locals and reduce the sector's reliance on foreign manpower. This is a work-in-progress task, and it is not easy because there is a finite number of Singaporeans who are prepared to come into this line. However, we are exploring all the different ideas to see how we can attract more younger people to come in and learn the skills required and set up their business in time to come. 

16. Today, in this industry, it is not just about learning how to cook. If you look at the experience of Ernest Ting, the third generation owner of Swee Choon, it is also about managing the entire logistics chain, supply chain, and digital network so that we can expand the offerings beyond the limitations of a physical restaurant itself. These are actually exciting opportunities for many of our people if you are prepared to come in and learn the trade. 

17. Pastamania is another company that has re-examined its business structure and reskilled their workers during the downtime due to COVID-19. To support companies in the process of job redesign, as of mid-November 2020, more than 1,100 workers across more than 30 companies have undergone or are undergoing reskilling through WSG’s Job Redesign Reskilling Programme for Food Services, which was rolled out in Apr 2020 to support the sector’s transformation.

18. To ensure businesses and workers are sufficiently supported to upgrade their skills, we will continue to support companies through schemes such as SSG’s Enhanced Training Support Package for the Food services sector and increase the number of tracks relevant to Food Services sector under the Professional Conversion Programme (PCP). 

19. To conclude, let me pull together a few threads and summarise why we showcased Swee Choon as one of the examples. In the past few weekly sectoral updates, we have talked about many companies, and maybe people will think that many of our efforts are focused on helping big companies to grow. That is part of our effort, but there are also good prospects in the food manufacturing industry and even for smaller players like Swee Choon. 

20. The most fundamental issue is that you must have a good product. If you have a good product, we can think of ways to help the company or restaurant scale up. This will require us to have a bolder vision of where we want to be eventually. Like Swee Choon, they aspire to serve the whole of Singapore beyond Jalan Besar. Then, they start to dream bigger, do some R&D on the product mix, set up a central kitchen to increase production volume, redesign job roles to enhance productivity, set up a cloud kitchen to have more distribution points, and leverage digital platforms for people to access their food services beyond the confines of a physical restaurant. Once you have established a good base in Singapore, it will allow you to expand into other countries, like how Old Chang Kee, and other food establishments have successfully expanded overseas with a strong Singapore branding. 

21. I think we have every confidence that the trusted Singapore brand will put our food industry in good stead. To seize new growth opportunities, especially for a growing Asia market, we must ensure that we maintain the quality of our food products in Singapore. The Government will continue to support our companies to automate, redesign their jobs, and attract more talents to cater to the new generation of consumers and serve even more people. 

22. These are some of the initiatives we are committed to helping our small, medium, and micro-enterprises. Hopefully, amongst the many food establishments in Singapore, those with good branding and quality products will be able to scale up and serve customers in Singapore and beyond.

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