Minister Lim Hng Kiang at the Singapore Food Services Productivity Conference 2015

​Speech by Mr Lim Hng Kiang, Minister for Trade and Industry (Trade), at the Singapore Food Services Productivity Conference 2015, Friday, 30 October 2015, 9.10am, One Farrer Hotel & Spa

Distinguished guests,

Ladies and gentlemen,

Good morning.

1.            I am pleased to join you this morning at the Singapore Food Services Productivity Conference 2015.

Update on the 1st Food Services Productivity Plan

2.            We launched the 1st Food Services Productivity Plan in 2011 as part of a nationwide movement to raise productivity. I am happy to note that our efforts have gained traction. To date, close to 3,700 establishments have received support on 940 productivity improvement and service upgrading projects.

3.            While the sector’s value added (VA) per worker growth over the past few years has been less than ideal at 1.3 per cent per annum, the enterprises that were supported by SPRING Singapore achieved average productivity growth of 3.4 per cent annually. The Government will continue to provide assistance to companies willing to come on board this productivity journey with us.

Outlook of the Food Services Sector

4.            The Food Services sector plays a vital role in Singapore’s economy as it meets a basic domestic need and supports the vibrancy of the tourism industry. The sector is a competitive one. Year-on-year sales growth has slowed from 14 per cent in 2011 to 1 per cent in 2014. On the other hand, net firm formation over the same period has almost doubled from 520 in 2011 to 910 in 2014.

5.            Another key trend which we have noticed is the sector’s continued heavy reliance on manpower. Over the period 2004 to 2014, the sector’s workforce grew at 8.5 per cent annually, slightly more than double that of the nation’s workforce growth. Moving forward, the labour market will continue to tighten and evolve. This reliance on manpower, especially on rank-and-file workers, is not tenable.

6.            The Government recognises the difficulties that food companies face in remaining competitive. This is why we have provided support for raising productivity, and will continue to do so. We also introduced greater support for innovation in Budget 2015, which would allow companies to remain sustainable over the longer term.

7.            Innovation can benefit our companies in various ways. It allows them to find ways of doing things better, thereby improving operational efficiency. It also allows them to develop new products and services, thereby growing topline. These require companies to constantly look at new ways to prepare and serve food.

2nd Food Services Productivity Plan

8.            The 2nd Food Services Productivity Plan will support the industry in innovating and transiting towards a leaner workforce. Allow me to share some key initiatives of the plan.

Improving front-of-house efficiency: Digital service

9.            One  important initiative to improve front-of-house efficiency is to further drive the adoption of digital service solutions such as mobile apps, kiosks, and tablet ordering. These solutions facilitate self-service and reduce the manpower needed to take customers’ orders and payments. For example, Five Bar recently opened its fifth outlet housing offerings such as tapas, a whisky bar and a wine shop. This food court-like concept features a self-ordering and self-payment system which is projected to help the outlet achieve manpower savings of 50 per cent.

10.         To date, over 600 establishments have adopted digital service solutions, with about half of them coming on-board within the first five months of 2015. I am glad that the industry is becoming more receptive towards harnessing IT to improve efficiency.

Improving back-of-house efficiency: Automation, centralised dishwashing

11.         Another initiative is to improve back-of-house efficiency through automation and centralised dishwashing. To date, 560 establishments have been supported for these projects.

12.         We will continue to encourage the adoption of these initiatives. Automation is not just for companies with scale and central kitchens. Companies with smaller footprints can also tap on such equipment and redesign their workflow to improve productivity. An example is Jew Kit Chicken Rice, which has 6 outlets. With the Singapore Productivity Centre’s assistance, the company recently automated its chilli processing and cooking of chickens in its central kitchen. By doing so, Jew Kit has reduced the time taken to cook 50 chickens by 80 minutes.

New business models: Grab-and-go, food vending machines

13.         Beyond improving operational efficiency, it is also important for us to look at new, innovative dining formats. This is the third key initiative of the plan. In recent years, we have seen innovative formats emerge locally and globally. In addition to providing more choices for the consumer, companies that adopt these formats also stand to increase their profit margins.

14.         Take, for example, grab-and-go formats. Traditional food services formats are often limited by the number of seats in the outlet and how fast it can turn its tables around. Grab-and-go, however, is able to circumvent these constraints. Each employee in a 24-hour grab-and-go kiosk can serve two and a half times as many meals as an employee in a 24-hour limited service cafe.

15.         Grab-and-go formats are also a natural extension for enterprises venturing into ready-to-eat (RTE) and ready-to-cook (RTC) food, which opens up new business opportunities. The Soup Spoon, for instance, has embarked on the production of RTC food in the form of packaged soups that are sold in its outlets as well as in various Cold Storage supermarkets islandwide. The company also intends to branch further into technological developments to improve the shelf life of their products, which would allow them to export overseas and internationalise.

16.         Another innovative format is food vending machines, which are commonplace in Japan. A typical vending machine can hold 80 to 120 meals, almost equivalent to what a coffee shop stall sells in a day. However, it only requires a fraction of the manpower to run, and can operate round-the-clock in a much smaller space. There are already a few companies, like JR Foods, selling various hot meal options through vending machines. Some of these also offer our favourite hawker food.

SkillsFuture

17.         As we move towards more innovative, manpower-lean business formats in the Food Services sector, we would need to equip our local workforce with skills to take on emerging job functions and support the sector’s transformation. This is where the nationwide SkillsFuture effort comes in. SPRING has been working with various agencies such as the Singapore Workforce Development Agency (WDA) and other industry and training partners to equip our workforce with relevant skills.

18.         Company support is crucial to skills deepening as it provides the main platform for individuals to develop themselves and in turn, contribute to their companies. We welcome companies to come on board the SkillsFuture initiative in various ways, such as providing internship and training opportunities, as well as developing competency-based career progression pathways.

Conclusion

19.         The Food Services sector is one that touches our lives on a daily basis. As we work together to transform the sector, we as consumers can also look forward to more efficient and innovative business models. In fact, our openness to trying new concepts will play a large and important part in encouraging companies to adopt new business models.

20.         On this note, I wish you a fruitful conference ahead. Thank you.