COVID-19: Delivery and takeaway models unsustainable, say restaurant owners

COVID-19: Delivery and takeaway models unsustainable, say restaurant owners

(rp) Swee Kee Eating house
The Swee Kee Eating House along Amoy Street. (Photo: Cedric Tang)

SINGAPORE: For the first time in its 25-year history, Swee Kee Eating House has shut its doors. 

It was a poignant moment for its owner, Mr Cedric Tang. He had grown up running along the shophouses at Amoy Street. The staff, many of them in their 60s who had worked there since its opening, had been there to witness those carefree moments. 

Now, he has to send three of them home for a month on unpaid leave. 

"It's heartbreaking," he said. "They are long-time staff who have been working for us. They saw me grow up from a little kid playing around in the restaurant.

"To me, they are family, so it’s tough to know you can’t take care of them."

Like Mr Tang, many restaurant owners in the central business district had to brace themselves for the new reality that would hit them when Singapore’s "circuit breaker" measures began on Tuesday (Apr 7). 

READ: Essential businesses will stay open even as most workplaces are to close from next Tuesday

Last Friday, Prime Minister Lee Hsien Loong announced a set of "circuit breaker" measures to help curb the spread of COVID-19

Under the measures, there will be no dine-ins at Singapore's 4,800 restaurants and only takeaways and deliveries will be allowed from Tuesday until May 4.

To help the F&B industry, which had a turnover of S$11.3 billion last year, the Government said it will absorb five percentage points of three food delivery platforms’ commission costs - about 20 to 40 per cent of each order - during the period of the circuit breaker measures. 

But some restaurants, like Swee Kee at Amoy Street, have decided to halt operations.Mr Tang said it was "untenable" to run these self-service options from their CBD branch, in what has become a desert of empty skyscrapers.

Mr Tang, the director of Ka-Soh Restaurants, the group that runs the Cantonese family restaurant, said it would be pointless to keep the outlet open as there are too few residents in the CBD to sustain business.

READ: How F&B outlets, markets and food suppliers will operate amid COVID-19 'circuit breaker' measures 

Food supplies, staff and rental costs will outweigh whatever they make in deliveries and takeaways, he said, based on his experience of tapping on the platforms. 

The delivery platforms charge between 28 per cent to 30 per cent commission from his orders, he said. "Taking 30 per cent out of each ticket leaves for very slim profit margins, if we have to rely solely on takeaways."

At Ka-Soh’s two other outlets in Bukit Timah and Outram, deliveries and takeaways made up only 20 per cent to 30 per cent of sales, he said. 

Most of the employees who work at the restaurants are seniors, and forcing them to learn how to use delivery apps overnight would be unfair to them, said Mr Tang, who is also the founder’s grandson. 

Three members of staff at the Amoy Street branch have been put on unpaid leave, while six others have been transferred to the other two branches.

READ: Most workplaces to close for one month from Apr 7 to curb spread of COVID-19

Similarly, restaurant Grain Traders closed at the start of this week as deliveries and takeaways would not be enough of a bolster, said its general manager Joel Ong. 

Given the lack of residential properties in the area, in-person and online orders would be few and far between, he said, especially as these platforms only deliver within a 5km radius of the restaurant’s location. 

Using islandwide delivery providers like Lalamove and Carpal is not an option either, as each trip could cost between S$10 and S$25, he said. With each customer paying an average of S$19 per transaction - based on the last six months of sales - absorbing the delivery charge or passing it on to the customer would not make sense. 

The restaurant’s 15 employees will still receive their salaries, but with pay cuts, said Mr Ong.

Even a restaurant with two delivery-focused outfits under Deliveroo Editions is worried about the situation.

Deliveries only make up 30 per cent of sales, said Pho Stop’s co-founder Tomy Chen, while the remaining 70 per cent come from its dine-in spot at Downtown Gallery. 

Mr Chen plans to keep the outlet running for a week before deciding whether to close.

(rp) Pho Stop
Pho Stop at Downtown Gallery on Monday (Apr 6) night. (Photo: Tomy Chen). 

Two of the brand’s 15 staff members have been asked to take annual leave, while others will be transferred or kept at the Shenton Way branch. 

To keep the payroll running, he has stopped taking a wage “for the foreseeable future”, Mr Chen said. He and the rest of the shareholders have also ploughed in capital that will hopefully keep the business running for at least five more months.

THANKFUL, YET ANXIOUS

A slew of measures have been announced in Parliament to keep the economy running and jobs intact. A number of them would help prop the F&B industry up, from the 50 per cent wage subsidy - up to 75 per cent for the month of April - and the soon-to-be mandatory property tax rebate. 

Help from the Government has not gone unappreciated, and restaurant operators said they were grateful for all the assistance doled out so far. 

Measures such as the Jobs Support Scheme will help Mr Alexandre Lozachmeur pay his six employees their full salaries even as his restaurant Fleur De Sel shuts for a month. 

The chef and owner of the restaurant along Tras Street will not be doing any deliveries or takeaways because he wants to “make sure my staff are completely safe".

“They are my family," he said. "I'm responsible for them. They have kids, they have families of their own." 

He is also thankful to the patrons - many of them regulars - who chose to have their “last supper” at his French restaurant and support it while they could.

(rp) Alex the chef
Alexandre Lozachmeur, the chef and owner of Fleur De Sel Restaurant. (Photo: Rachel Phua)

To tide through April, Mr Lozachmeur will go without pay this month - as he did in March - he said. 

The future weighs heavily on him and other restaurant owners.Even if the COVID-19 situation stabilises or abates, dine-in restrictions may not be completely lifted, Mr Lozachmeur said.

READ: F&B, retail businesses in CBD feel pinch as people work from home amid coronavirus concerns

According to 2019 estimates from the Singapore Department of Statistics, rentals and remuneration account for more than half of their business cost. 

There may be no choice but to put employees on unpaid leave, or even lay off some of them if the measures continue, Mr Chen said. The weak economy has caused sales to steadily decline since last year, he said. By end-March, it was down by 85 per cent to 90 per cent. 

Competition on the delivery platforms will also stiffen as an influx of establishments vie for orders, he added. 

(rp) french restaurant
Fleur De Sel Restaurant will not do deliveries or takeaways as Mr Lozachmeur is afraid that working in the restaurant would jeopardise the staff's health. (Photo: Rachel Phua)

As much as the measures introduced by the Government have provided a lifeline for F&B players, many landlords have yet to say when they will pass down the property tax rebates, causing pressure on many establishments’ cash flow, said Unlisted Collection CEO Loh Lik Peng.

The company, which has 18 restaurants in Singapore under its belt, has not got word from its landlords about when they will receive their property tax rebates, he said, adding that F&B players operate on “single to low double-digit” profit margins.  

The industry urgently needs the rent reliefs to pay their workers, said Mr Loh, who started the #savefnbsg movement on social media.

READ: COVID-19: Here's how you can help save your favourite local small businesses

The Restaurant Association of Singapore, which has more than 450 members, echoed Mr Loh’s sentiments, urging landlords to provide “timely and prompt support” by passing down the tax rebates and supplementing it with two months of rental waivers. 

Landlords should also allow rentals to be based on gross turnover (GTO) for the next six months - at 15 per cent GTO for outlets in shopping malls and 10 per cent for the rest, the association said.

“Our objectives are clear - to ensure business sustainability, prevent closure of businesses and loss of jobs in the F&B industry.” 

READ: Tenants need ‘unprecedented’ rent relief amid COVID-19 outbreak, say retail and F&B groups

For now, there is little more restaurants can do except to wait for the grants and subsidies to be dispensed, and for the restrictions to lift eventually. None of them know what they will do beyond May, they say. 

“I’m just taking it one step at a time,” said Mr Tang. 

A month’s closure is hard to fathom, said Mr Lozachmeur, but he is optimistic about the nationwide hiatus. 

“Hopefully everything gets better, then our business can slowly get back on track.”

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Source: CNA/rp(mi)

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