Speech by Dr Koh Poh Koon at the launch of 'Turning Passions into Profits' Guidebook for food services sector

​SPEECH BY DR KOH POH KOON, MINISTER OF STATE, MINISTRY TRADE AND INDUSTRY, AT THE LAUNCH OF ‘TURNING PASSION INTO PROFITS’ GUIDEBOOK FOR FOOD SERVICES SECTOR, TUESDAY, 14 JUNE 2016, 3.20PM, AT TIMBRE PLUS

Good afternoon friends and partners,

1. I am pleased to join you today for the launch of the ‘Turning Passion into Profits’ Guidebook for the Food Services sector. This guidebook is published by the Restaurant Association of Singapore (RAS) with support from SPRING Singapore (SPRING) and the National Environment Agency (NEA). It is published with entrepreneurs like yourselves in mind, to help you start on the right footing and ensure success in your business journey.

Local Food Services Landscape

2. Singapore has a vibrant food culture. Ask anyone on the street what Singapore is best known for and food will undoubtedly come up tops. From the Hainanese chicken rice offered by our favourite hawker stall, to the Wagyu beef at a high-end restaurant, food has a special place in our hearts and reflects our rich multi-cultural heritage.

3. The Food Services sector comprises more than 5,000 enterprises[1]. It contributes 0.8% of Singapore’s GDP, and the Value Add to the economy continues to grow steadily[2].  SPRING has commissioned a recent study to better understand the trends in the sector. The study found that only 60% of Food Services establishments survived their first five years in operation[3]. In fact, approximately three in ten Food Services businesses closed down each year from 2010 to 2014[4]. The study also showed that the average micro and small food business runs at an annual operating loss of 8% and takes up to two and a half years to break-even. These figures are significant given that micro and small players make up about 85% of the 5,000 Food Services enterprises in Singapore.

4. Despite the challenging financials, the sector still sees a large number of new entrants annually, with an average of 24 new outlets opening every day between 2010 and 2014. This can be attributed to the relatively low barriers to entry, and the emergence of more entrepreneurs. With such intense competition, great food alone no longer guarantees business success.

Building a Strong Business Core for Growth

5. Against this backdrop, it is imperative for F&B entrepreneurs to be well prepared for the road ahead. The ‘Turning Passion into Profits’ guidebook being launched today includes guidelines on preparatory work which aspiring entrepreneurs should carry out before setting up the business. These steps include conducting market studies to assess demand and degree of competition, identifying target customer segments and profiles, and working out financial projections to determine the capital required, projected profit margins and break-even points.  Take this not as advice from me, but as advice from your fellow entrepreneurs who have contributed to this guidebook.

6. Entrepreneurs also need to be keenly aware of the operating challenges posed by Singapore’s tight labour market and changing aspirations of employees. You will need to assess the possible business formats, be it full-service, café or kiosk, and take into account the implications they have on manpower resources. I strongly encourage entrepreneurs to explore various manpower-lean formats that are compatible with your respective business concepts.

7. Many existing establishments understand this and are already going manpower-lean.  An example is Umisushi, a Japanese establishment under the Neo Group, which serves fresh sushi and bento sets at affordable prices. The food is served at ‘grab-and-go’ kiosks to meet the needs of customers who cannot afford long waiting times. A ‘grab-and-go’ kiosk requires only three to four staff compared to 12 to 15 staff in a typical sit-down restaurant, hence saving on manpower and rental costs. The small footprint has also allowed Umisushi to expand quickly and achieve a year-on-year revenue growth of 4%[5].  

8. Another example is our host for the event today – Timbre.  The implementation of e-menus at its outlets, service training and clear operational guidelines have resulted in higher process efficiency. Consequently, employees are able to dedicate more time and focus on delivering better customer service.

Tapping on Available Resources

9. Entrepreneurship is not an easy journey.  To help aspiring F&B entrepreneurs start right, I strongly encourage everyone to make good use of the ‘Turning Passion into Profits’ guidebook. This guidebook contains a number of tips and best practices, templates and benchmark data, to help newcomers understand the common pitfalls in starting and running a food business.  It provides a systematic approach to help entrepreneurs assess business viability of their ideas. This will shorten the learning curve for newcomers and improve the chances of success in the business.

10. Finally, I would like to take this opportunity to commend the RAS and other key partners such as the Singapore Productivity Centre on your efforts to support and provide advice to F&B entrepreneurs and business owners.  All of us have a stake in making our Food Services sector more competitive and more productive.

11. On this note, I wish everyone success in your entrepreneurial journeys. Thank you.

[1] Department of Statistics. (2014p). SPRING-defined F&B sector, referring to food services excluding hawkers & stall-holders (SSIC2010 56 excl 5614).

[2] http://www.spring.gov.sg/Developing-Industries/FBS/Pages/statistics-food-beverage-services.aspx​

[3] Based on SPRING’s study. This study involved face-to-face interviews with 216 smaller F&B companies, and was conducted from July to November 2014.

[4] National Environment Agency. (2014).

[5] The year-on-year growth of Umisushi is based on the comparison of the company’s financial results between the past two financial year, i.e. 2014/15 and 2015/16  

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