Speech by Second Minister S Iswaran at the RE&S Building Opening Ceremony

Ambassador Ta-ke-u-chi,

Mr Lim Ho Seng, Chairman, RE&S Enterprises,

Mr Hiroshi Tatara, President, RE&S Enterprises

Distinguished Guests,

Ladies and Gentlemen,

It gives me great pleasure to be with you today for the official opening of the RE&S Building.

This event marks an important milestone in RE&S’ history.  In 26 years, RE&S has expanded to more than 50 outlets¹ with 18 brands, and established a presence in Malaysia.  This growth reflects the commitment of RE&S’ management and the company’s sustained focus on innovation, productivity as well as talent management.

This new building heralds the next phase in the growth and development of one of our leading, home-grown food services companies.  And, I hope that other food services companies will also be inspired to emulate RE&S, and create their own success stories.

Importance of the Food Services Sector to Singapore’s Economy

The Food Services sector plays an important role in Singapore’s economy.  In 2012, the sector grew 10.2% year-on-year, generating $2.7 billion in value-added.

Demand for food services is projected to grow with population increase, changing lifestyles, and tourism.  Singapore is well-known for our lively food scene which is also a strong draw for overseas visitors.  For the first three quarters of 2013, tourism spending on food and beverage rose 4% year-on-year to reach $1.7 billion².  Between 2011 and 2012³, the operating receipts for the sector increased by 8.1 per cent to $7.8 billion, and the total operating surplus⁴ for the sector increased by 7.7 per cent to $568 million.

Continuous Innovation Important to drive top-line growth

In response to the growing demand, more firms are entering the food services sector resulting in greater competition.  Diners are also more discerning about where they spend their money, and the quality of their dining experience.  Meanwhile, in terms of resources, our companies need to address challenges in attracting manpower, as well as optimising their use of space.  This was reflected in the SME Development Survey 2013 by DP Info, which showed that manpower and rental ⁵ feature among the top three cost components of concern to SMEs.

To continue to grow, our food services companies must count on innovation and technology as their allies, to optimise their processes and better serve their customers.  Such efforts will help to drive top line growth through the introduction of new products and concepts which provide distinctive customer experiences.

One approach to developing new business concepts is through the use of methodologies like design thinking and RE&S is a good example.  Prior to the launch of its ‘Ichiban Bento’ dining concept, RE&S used design thinking to create different customer archetypes, such as busy executives, and identified their desire for fast, yet wholesome meals.  Combination ovens were then introduced to prepare food quickly and keep it warm.  Since the launch of ‘Ichiban Bento’ in November 2011, these hot and nutritious meals have greatly contributed to the popularity of this dining concept.

Technology offers food services companies the opportunity to provide innovative customer service while improving productivity.  One company which serves as an international benchmark in this regard is Wagamama, a pan-Asian restaurant chain headquartered in the UK.  Wagamama, which has over 100 outlets in 17 countries⁶, has redefined the way customers are served through technology innovation.

Customers can use Wagamama’s iPhone app to locate the nearest branch and browse the menu to place orders, which in turn will be transmitted directly to the kitchen for preparation.  The app also allows users to choose a convenient pick-up time and make secure online payment.

Operational Excellence Key to Continued Growth

Besides growing the top-line, the other key business need is to control costs through greater operational efficiency and better supply chain management.

RE&S’ new HQ building is a good example of this.  It houses a 60,000 square-foot central kitchen featuring a fully automated rice production line, and salmon processing line.  This kitchen also utilises advanced food freezing technologies to ensure freshness and consistent quality of food products.  When the kitchen is fully operational and running at full capacity, RE&S expects to save about 3,000 man-hours per month.

RE&S has made use of data analytics to improve its procurement and supply chain management capabilities.  In 2013, RE&S implemented an integrated supply chain management system that forecasts sales and procurement by capturing data online.  Such data analytics has enabled managers to make informed decisions on stock replenishment.  This supply chain management system, along with the streamlining of procurement processes, is expected to save up to 1,400 man-hours per month, and boost the bottom line of RE&S by more than $1 million per year.

For long-term success, companies need to attract and retain good people. With strong systems for developing employees and helping them to grow with the company.  RE&S has established a good reputation as an employer, and has leveraged SPRING’s human capital initiatives such as the SME Talent Programme to place 11 young university and polytechnic graduates⁷ within its ranks.

Government’s Commitment to Help Businesses Build Capabilities for Higher Productivity

The Government remains resolute in its commitment to support our companies through various schemes as they restructure to increase productivity and competitiveness. Besides using SPRING’s Capability Development Grant (CDG), RE&S has also tapped on the Productivity Innovation Credit (PIC) to upgrade its food processing lines for this new HQ building.

Companies which are beginning the productivity journey can tap on the Innovation & Capability Voucher (ICV), which was enhanced in March this year to include solutions and consultancy, in four areas: Innovation, Productivity, Financial Management and Human Resources.  In Budget 2014, the government announced the extension of the PIC scheme to Year of Assessment 2018.  In addition, the PIC+ scheme was introduced to raise the expenditure cap for each of the six qualifying activities from the current $400,000 to $600,000 with effect from Year of Assessment 2015.  These enhancements will help companies make larger investments in productivity enhancements.

Given Singapore’s small domestic market, internationalisation is essential for the continued growth of our companies.  To support RE&S’ efforts to explore growth opportunities in South East Asia’s high potential markets, IE Singapore has provided the company with insights into the Indonesian restaurant landscape and market segments, as part of the Global Company Partnership programme.  For Singapore companies seeking to expand their overseas footprint, this programme provides customised assistance in the areas of capability building, manpower development, as well as market and financing access. 

Conclusion

Once again, I would like to congratulate the management and staff of RE&S on the opening of this new building. I am heartened by RE&S’ achievements, and the manner in which it has been able to benefit from various government programmes.  Your journey of growth and success is an exemplar for all, as we step up our efforts to transform our economy through innovation and higher productivity, while enabling our businesses to tap on international growth opportunities to become regional and global companies.

¹ RE&S runs a total of 60 F&B outlets (54 local and 6 overseas outlets).

² Tourism Sector Performance Q3 2013, Singapore Tourism Board, 17 Feb 2014.

³ Source: Department of Statistics. 2013 figures are currently unavailable.

⁴ Refers to amount of operating receipts less operating expenditure plus depreciation of fixed assets.

⁵ SMEs cited manpower (85% of respondents) and rental (38%) as cost components of concern. 

⁶ Currently, Wagamama has opened 141 outlets in 17 countries (101 outlets in UK alone) but has no presence in Singapore.

⁷ These talents comprise 9 university students and 2 Polytechnic students.