Bucking the trend, some F&B businesses open new outlets despite COVID-19 downturn

Bucking the trend, some F&B businesses open new outlets despite COVID-19 downturn

Porkypine signboard
Porkypine opened in September along Telok Ayer Street despite COVID-19 taking a great hit on the food and beverage industry in Singapore. (Photo: Rachel Phua). 

SINGAPORE: It was a lively scene at a new eatery in a Telok Ayer Street shophouse.

A man in a red polo T-shirt walked in, declaring he was craving a sandwich. The same man told a story about getting a heart attack two years ago outside the shop, as other customers listened in awe. Meanwhile, four employees at work yelled over one another behind the counter.

Curry Boom Boom opened for business earlier this month, sharing the space of a ground-floor unit with Cuban sandwich restaurant Porkypine, which launched in September.

The two food concepts are run by a co-op – team members get equity on top of their salary.

Owner Abhishek C George said he decided during the COVID-19 "circuit breaker" to open the place as a way of keeping cash flowing even during hard times. 

hospo coop team
Abhishek C George (middle) roped in Nick Olinik (left) and Kley Dhillon (right) to be the first two employees of his co-operative venture. (Photo: Rachel Phua)

“As an organization, we have a little bit more runway. So the obvious choice is: Do we use the runway to cut costs and be conservative, or do we use the runway to make sure that the revenue base increases, so that by the time the runway is about to expire, we will have cash from the other revenue base,” said Mr George, who also runs The Spiffy Dapper, Sago House and Oriental Elixir. 

Getting a huge discount on the rent for the first 12 months was what sealed the deal. He said he went around “lowballing” about 50 properties around June and July when many restaurants began to close, and the opportunity to open up a joint at Telok Ayer Street came up.

curry boom boom porkypine
Curry Boom Boom and Porkypine, two food concepts on the ground floor of Hospo - Mr George rented the entire shophouse with hopes of turning the upper two floors into a business-to-business space. (Photo: Rachel Phua)

He is not the only one opening a food and beverage outlet despite COVID-19 and the resulting economic fallout. Vacancies around town have allowed Brewerkz to move forward with its expansion plans. 

The microbrewery will open a new restaurant at One Fullerton in November, taking over from The Pelican. 

READ: For F&B outlets, COVID-19 is a wake-up call. Here are seven changes they can make

Mr Tan Wee Tuck, who acquired Brewerkz with his two brothers about four to five years ago, said they had always been on the lookout for “sought-after locations”. When a spot opened in the Marina Bay area, they jumped at the opportunity.

“We have been looking at it for years … in a normal environment, it would have been difficult (to rent it) because nobody wants to get out,” he said. 

brewerkz riverside
Brewerkz's Riverside Point outlet. The microbrewery is set to open another outlet at One Fullerton in November 2020. (Photo; Rachel Phua)

For other players, plans to open a restaurant were already set in stone before the pandemic hit Singapore. 

Dumpling Darlings’ second branch opened in September at Circular Road. The tenancy agreement was signed in the beginning of the year, said co-owner June Tan.

Collin’s founder Collin Ho said the company was locked in on their Great World City and Jurong Point outlets in December. They opened in the third quarter of this year.

Both Collin’s restaurants - their 10th and 11th - have been doing well so far, Mr Ho said, particularly because they are in suburban neighbourhoods where many of their customers are working from home.

It is the four downtown outlets that have taken a hit. 

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

Similarly for Ms Tan’s Circular Road outlet, business has not been doing as well as they had envisioned because of COVID-19. The restaurant made a loss in September - "but barely so" - although she thinks they will break even in October. 

The outlet changed its opening days from Monday to Saturday, to Tuesday to Sunday, to draw the weekend crowd. 

READ: COVID-19 Budget measures 'welcome', but may not be enough to save F&B sector: Business owners

For these establishments, having favourable rental conditions were helpful.

All of them did not want to reveal how much they were paying in rent, but Ms Tan said her landlord gave her a “substantial” rent-free period.

Mr Ho said that they got a preferential rate for their lease at Great World City as the mall developer was trying to draw tenants after the shopping centre’s renovation.

jurong point collin's
Collin's newest outlet at Jurong Point. (Photo: Iron Chef F&B)

Arrangements to launch Japanese tempura chain Tenya’s first Singapore branch had also been in the works since last year, said Bhakt Yap, its administration manager.

Its 68-seater outlet at Orchard Central has been reduced to a capacity of 50 people after taking into consideration safe distancing measures. 

“We are adapting as we go and finding the best way to maximise the space,” Mr Yap said.

While there are concerns about what business would be like amid COVID-19, such as worries over whether it can make enough to pay the rent, Brewerkz’s Mr Tan said his new venture is part of an investment to the brand. 

“We’ve taken a calculated risk … we are prepared to lose money,” he said. 

READ: Some diners still breaching COVID-19 rules, but F&B operators say situation has improved

Avenue 87, which opened along Amoy Street in September, has not been profitable so far. But its head chefs Glen Tay and Alex Phan said they would be satisfied if they can break even. Opening a restaurant has always been a dream for both of them. 

“(COVID-19) is here to stay, so (you just) have to move on and work around it,” Mr Phan said. 

Preparations are under way to re-launch Neon Pigeon, a restaurant previously at Keong Saik Road under hospitality group The Dandy Collection.

The restaurant’s lease ended during the circuit breaker, and it was not a good time to renew it as dine-ins were banned then, said Mr Rohit Roopchand, the co-founder and chief executive of The Dandy Collection. They had also been thinking of moving it to a bigger space. 

“The past few months have indeed been challenging for the industry but since going into Phase 2 … we have witnessed an upward trend in dining out across the board … so we felt it is now a perfect time bring Neon Pigeon back,” Mr Roopchand said. He declined to reveal the opening date.

F&B STILL IN THE DOLDRUMS

Despite some optimism, figures show that Singapore’s F&B scene is nowhere near the end of the tunnel. 

Latest data from the Singapore Department of Statistics showed that overall F&B sales fell by 28.6 per cent year-on-year in August. Year-on-year sales in restaurants fell by 32.2 per cent, while turnover at cafes, food courts and other eateries declined by 17.6 per cent.

High-profile closures recently include the iconic 43-year old Prima Tower Revolving Restaurant and local patisserie chain Bakerzin.

Prima Tower
Prima Tower Revolving Restaurant. (Photo: 8world News/Guan Meiling)

Restaurant bookings provider Chope said that so far, 30 per cent more restaurants have delisted from its platform year-on-year due to closures.

From January to September, there were 180 restaurants that delisted as they had shut down, compared to 139 restaurants in the same period in 2019.

At the same time, 105 new eateries listed on Chope from Jun 18 to Sep 30, compared to 163 in the corresponding period last year. Chope noted that these might be new to the platform and not necessarily a new restaurant.

READ: Prima Tower Revolving Restaurant closes after 43 years, felled by impact of COVID-19

READ: Singapore's retail sales fall again in August, but at slower pace amid demand for cars

“At the current moment, businesses are still affected due to the reduction of seating capacity in order to adhere to safe distancing measures,” said a spokesperson from the Restaurant Association of Singapore, an organisation that represents 5,000 F&B outlets.

“Many have also tried to compensate for this loss of dine-in revenue through food delivery which has hollow margins as F&B operators still have to pay full fixed rentals as well as high commissions to delivery platforms. Clearly, this is not sustainable or tenable in the medium to long run.”

READ: No Michelin Guide Singapore 2020 because of restaurants’ prolonged closure

Overall, observers were a bit more optimistic, although they noted that recovery has been uneven. 

Chope’s Singapore general manager Jean Wee said that based on its reservation numbers for Singapore, it is seeing a rebound that matches pre-COVID-19 numbers. 

But this pick up has not been equally distributed among all restaurants, she said. The app had 1,521 outlets using its reservation services.

Some restaurants, such as those with alfresco seating, are doing well, while the likes of those that cater to large dining groups or depend on tourists continue to suffer. 

Mr Alan Goh, the chief revenue officer of food ordering app Oddle said his system found some F&B groups launching “virtual eateries” where the menu is available only online and the food is either delivered or for pick-up since Phase 2 started. These include Tigerlily Patisserie by the Ebb & Flow Group and Grammi by the ilLido Group.

It is a new concept not seen before the circuit breaker, Mr Goh said. Oddle has 1,399 Singapore restaurants subscribed to its system. 

Instead of permanently closing their outlet, some F&B operators have chosen not to renew their downtown lease and relocate to a suburban site, the RAS spokesperson added.  

“The performance of a restaurant is dependent on many factors. One of the most important factors is naturally location,” he said. 

“As working from home continues to be the prevalent mode of work, F&B outlets in the once sought after central business district … are generally suffering a greater loss of revenue as compared to those outlets in the sub-urban areas which are now performing (at) 50 per cent to 80 per cent of pre-COVID sales.”

For the F&B stalwarts who opened new outlets, starting a business has always been about taking risks, and there is no turning back now. 

“The circuit breaker was basically a big hole. And we realised that to get out of the hole, the best way was to dig deeper,” said Mr George. 

BOOKMARK THIS: Our comprehensive coverage of the coronavirus outbreak and its developments

Download our app or subscribe to our Telegram channel for the latest updates on the coronavirus outbreak: https://cna.asia/telegram

Source: CNA/rp(gs)

Bookmark