F&B outlets in CBD, tourist areas seeing slow recovery; businesses need to pivot online: Chan Chun Sing
SINGAPORE: Some segments in the food and beverage (F&B) sector are still seeing slow recovery amid the COVID-19 pandemic, Trade and Industry Minister Chan Chun Sing said, reiterating the need for F&B companies to transform and diversify their revenue streams.
“Recovery remains slow for some segments, including outlets in the Central Business District and tourism-focused areas, as well as catering companies,” he said in prepared remarks on Monday (Nov 30) after visiting the Swee Choon dim sum restaurant in Jalan Besar.
Despite this, Mr Chan highlighted that many food services companies are “on a path of steady recovery”, with revenues back to around 70 to 80 per cent of pre-pandemic sales.
“To seize business opportunities in the new operating environment, F&B companies must embark on transformation efforts to diversify into new revenue streams,” he added.
“Companies need to accelerate their efforts in digitalisation, productivity, innovation and internationalisation to remain competitive.
“They also need to continue to build their human capital capabilities through, for instance, training and job redesign efforts to support their business transformation needs.”
Companies that have done better are those that have "quickly" pivoted from a physical store concept to adopt digital strategies, compared to others that "perhaps are slower" to do so, Mr Chan told reporters.
"Those who have done well are not waiting for COVID to blow over. Those who have done well are establishing the foundations now in the midst of COVID for their recovery," he said.
"Use the COVID crisis, turn it into opportunity, ask ourselves: How can we continue to serve customers? Because if we can serve customers during a COVID situation, then we must certainly be able to serve customers even better after the COVID situation.
"And when the rest of the world are playing defensive and consolidating, we are constantly on the lookout, to see how we can expand our market presence and service more customers even beyond Singapore, beyond COVID."
This comes as total F&B sales fell by almost 30 per cent year-on-year in September, mainly due to low demand for event catering. The food services sector contributes to 1.1 per cent of Singapore’s gross domestic product, and employs about 5.5 per cent of its workforce.
COVID-19 has accelerated digital adoption in the F&B sector, Mr Chan said, with companies using digital tools to operate more efficiently and effectively. For instance, more businesses have turned to online food delivery services, he said.
The percentage of online F&B sales out of total industry sales had increased from 9.8 per cent in January to 44.6 per cent in May, when the “circuit breaker” was in place, he said. The current figure remains higher than pre-circuit breaker levels, at 20.4 per cent as of September.
The F&B sector has also shown “strong interest” in adopting IT solutions under the Productivity Solutions Grant, Mr Chan said, with more than 2,700 applications from January to October. This is four times the number of applications in the same period last year.
“Companies like Swee Choon that adapted quickly have been able to reap the rewards from being an early-mover,” Mr Chan said, highlighting that it quickly pivoted online after profits fell by about 40 per cent during the onset of the circuit breaker.
“Swee Choon ramped up on digital marketing and tapped on additional food delivery platforms, such as FoodPanda and Deliveroo. Enterprise Singapore has also supported Swee Choon with its Food Delivery Booster Package to subsidise delivery costs.”
The package has helped more than 13,000 F&B establishments reduce business costs of listing on food delivery platforms to diversify revenues and build capabilities.
These efforts helped Swee Choon increase sales from food delivery “significantly”, Mr Chan said, from less than 1 per cent to around 60 per cent of its existing average monthly revenue during the circuit breaker.
“With the increased revenue from food delivery sales, Swee Choon boosts its overall revenue to pre-COVID level, amidst seating capacity restrictions due to safe management measures,” he added.
As F&B companies digitalise and automate their processes further, Mr Chan said there is an opportunity for them to redesign jobs and make these roles more attractive for locals, reducing the sector's reliance on foreign manpower.
The minister pointed to how Swee Choon’s digitalisation of its procurement and inventory systems through a cloud-based platform helped simplify processes and create job redesign opportunities.
“Chefs and kitchen assistants, for instance, no longer need to manually call or text various suppliers to make orders, as orders can be sent digitally through the mobile apps, where purchase orders would be automatically consolidated,” he said.
“The man-hours saved have allowed their employees to dedicate more time for research and development in their core work and provided more favourable working conditions. The back-of-house employees would have otherwise experienced a high workload.”
As of mid-November, Mr Chan said more than 1,100 workers from more than 30 companies have completed or are undergoing reskilling through Workforce Singapore’s Job Redesign Reskilling Programme for Food Services, which started in April.
SkillsFuture Singapore also provides improved course fee subsidies and absentee payroll for short-form or modular courses on culinary arts, process innovation, cost and quality control, as well as digital marketing.
NEW BUSINESS MODELS
Beyond tapping Government schemes on building digital marketing and digital technology capabilities, Mr Chan encouraged F&B companies to test out new business models, innovate and capture growth opportunities.
This includes setting up in central kitchens around Singapore as a mode of expansion, and innovating products to diversify revenues and create opportunities for export, he said.
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For example, Swee Choon uses a cloud kitchen to serve more customers and reduce delivery, and it has developed a new line of frozen dim sum products to be sold on its website and e-commerce platforms.
Mr Chan said F&B companies can tap on FoodInnovate, a multi-agency initiative led by Enteprise Singapore, for knowledge and infrastructure resources to drive food technology and innovations.
“This shows that there are still growth opportunities for F&B companies that are willing and able to adapt, transform, relook their business models and product offerings,” he added.
While Mr Chan acknowledged that the F&B sector’s road to recovery could be challenging, he said companies, regardless of size, can seize new growth opportunities.
“By transforming, innovating, building up new capabilities, I am confident that our F&B sector can remain competitive and emerge stronger when the situation gets better,” he stated.