Commentary: From Lotteria to Chick-fil-A, what keeps drawing fast food chains to Singapore?
Singapore can’t get enough of fast food chains, but the love for new and unique experiences cuts both ways in a crowded F&B scene, says SUSS marketing lecturer Dianna Chang.
SINGAPORE: Each time popular American burger chain In-N-Out ran one of its sporadic pop-ups in Singapore, eager customers queued for hours and burgers sold out almost instantly. Two fast food giants, South Korea's Lotteria and America's Chick-fil-A, will enter the market in 2025.
Singapore’s appetite for fast food is evident, and so is the competition. But with over 700 fast food establishments across the island, is there still space for more?
At the time of writing, McDonald's has over 135 outlets, KFC around 80, and Burger King 65. Regional brands have also made inroads, like Japan’s MOS Burger with 39 stores and the Philippines' Jollibee with 17. Homegrown fried chicken brand 4Fingers counts 25 locations.
New fast food openings typically attract significant hype, often boosted by intensive marketing efforts. Sustaining interest is the challenge for any player in our crowded F&B scene. Plenty have quietly downsized or even exited the Singapore market after struggling to maintain customer interest.
Then there’s the added competition from Singapore’s ubiquitous hawker centres, which offer similar selling points: Affordability, speed and taste.
So why is Singapore still so attractive to fast food chains, despite high rents and a tightening labour market?
SINGAPORE'S APPEAL TO FAST FOOD CHAINS
Despite Singapore's small market size and high operating costs, fast food businesses are the most profitable among F&B establishments, thanks to their superior operational efficiency. However, it's more than the efficiency that attracts international brands.
Beyond the well-known food culture, F&B operators are drawn to us for similar reasons to many international brands: Singapore is a strategic gateway to the sizeable ASEAN market.
With a richly diverse culture, Singapore offers global brands an ideal environment to test products and gauge consumer response, which can provide insights into neighbouring markets. Its stable political climate and business-friendly environment make it an ideal launchpad or regional hub for expansion into Southeast Asia.
For instance, Shake Shack debuted in Southeast Asia with its first store at Jewel Changi in 2021, later expanding to the Philippines, Thailand and Malaysia.
Moreover, as a prominent tourist destination, Singapore provides valuable brand exposure. For US and European brands, a presence here brings them closer to Asian consumers, broadening their reach. For well-known brands from regional countries, establishing outlets in Singapore signals a transition to an international presence in a developed market.
INITIAL HYPE NO GUARANTEE FOR LONG-TERM SUCCESS
Singapore has a well-documented penchant for new and unique experiences, but that cuts both ways. It’s relatively easy to attract people to try something new – and equally easy to lose them.
Fast food openings often generate significant initial excitement, with snaking queues for weeks – even months. This phenomenon is fuelled by a combination of factors: Motivated early adopters eager to be trendsetters and a pervasive FOMO (fear-of-missing-out) culture, amplified by the power of social media and internet influencers.
But even the long lines outside popular recent entrants like Shake Shack and Five Guys have since dispersed.
Only a small percentage of early adopters typically become loyal, long-term customers. Many move on quickly, seeking the next novel experience.
How, then, can brands counteract waning interest? Convenience and consistent product quality remain crucial – fast food is comfort food for many because it tastes familiar every time.
Yet, as in all competitive industries, innovation is essential for sustaining engagement. From product and menu development to creative marketing strategies – such as unique collaborations, fresh communication tactics, and engaging promotions – sustained success depends on the ability to keep consumers interested.
Attempts to serve up local delights like Nasi Lemak and Rendang in burger form always pique interest. McDonald’s limited edition Durian McFlurry was a notable marketing success. Following this trend, Shake Shack recently introduced locally inspired dishes, including the white pepper burger and coffee-glazed chicken, in a collaboration with Michelin-honoured hawker brand Keng Eng Kee (KEK).
DIVERSIFICATION VS FOCUS
What gives a fast food chain lasting power in Singapore’s competitive market? Jollibee provides a compelling example.
Best known for its flagship business of fried chicken, it recently acquired Tim Ho Wan, a popular Michelin-starred dim sum chain from Hong Kong. When this was announced, some were surprised to learn that the Jollibee group also owns other established F&B brands like Tiong Bahru Bakery, Common Man Coffee Roasters and even American chain The Coffee Bean and Tea Leaf.
This diversification strategy allows companies to reduce business risks by spreading them across different brands. There are also economies of scale in sourcing, staffing and management. When brands operate multiple complementary outlets nearby, they may negotiate more favourable rental terms – a strategy effectively employed by the BreadTalk Group, which owns BreadTalk, Din Tai Fung (in Singapore), Toast Box and Food Republic.
On the other end of the spectrum, some brands succeed through a focus strategy. It’ll be interesting to see what Chick-fil-A, for instance, will do in Singapore.
The American chain has built a profitable business by specialising in chicken dishes and maintaining a streamlined menu for decades, with strong operational efficiency and an extensive US market presence. However, this model may face obstacles in Singapore, where the market is small and saturated, limiting the potential for multiple outlets.
So, is there still room for more fast food businesses in Singapore? Our stomachs say yes.
Although the market is mature, there is always space – and a welcoming attitude – for newcomers. How long they stay and whether they grow depends on how well they adapt to local culture and keep consumers who are spoilt for choice coming back. For both early and later entrants, the recipe for success remains the same: Learn from customers and keep trying something new.
Dr Dianna Chang is a Senior Lecturer in Marketing at the School of Business, Singapore University of Social Sciences.