Businesses seek to entice price-savvy customers, manage labour crunch ahead of Chinese New Year

SINGAPORE: With Chinese New Year just around the corner, firms in the food and services sectors are heading into crunch time during what is expected to be a peak revenue period for many.

However, consumers are feeling the pinch from inflation and the recent Goods and Services Tax (GST) hike, leading to more muted spending compared to previous years, said businesses.

Manpower woes are also pushing some firms to change up their staffing requirements or look for alternative measures. 

BUDGET MENUS, CHEAPER INGREDIENTS

One such firm which had to trim costs is Fortune Court, a restaurant specialising in Cantonese cuisine located in the heart of Chinatown.

While it has seen a 20 per cent bump in customers compared to the same period last year, most have opted out of the eatery's seasonal Chinese New Year specials.

Instead, some 70 per cent of its patrons – especially corporate groups – have requested ala carte items or specially-curated budget-friendly menus.

“Our corporate clients this year are asking for a more affordable menu. They straightaway (state) the (budget) set by their company and see whether I can make a menu specially for them,” said the restaurant’s co-founder Connie Chee.

This has forced the restaurant’s chefs to get creative and seek out substitutes, such as switching out more premium items like sharks’ fin and abalone to less expensive fish.

At chain restaurant Yun Nans, reservations have fallen about 30 per cent in the past few weeks. The volume of sales for its Chinese New Year takeaway sets has also plummeted by half.

To entice customers, the eatery, which serves specialty cuisine from China’s Yunnan province, is keeping prices stable and offering promotions.

“Usually, we would bump prices up by 5 per cent during the Chinese New Year period, but this year we did not increase prices,” said Mr Tommy Lu, co-founder and Singapore CEO of the chain.

The restaurant has also partnered Citibank to dangle deals, and is looking to offer a discount for its takeaway customers closer to the festive period.  

Aside from the prices of ingredients and customers’ waning appetite for costly menus, Mr Lu said that businesses are also facing competition from hawker centres and coffee shops, where more vendors are increasingly replicating dishes traditionally served in a restaurant.

MANPOWER WOES

Some businesses are also facing a labour crunch this peak period, especially those with a significant number of Malaysian employees.

With less than three weeks until Chinese New Year, some employees are starting to take leave to return home and prepare for the holidays.

One hair salon with Malaysians filling about 40 per cent of its roster has extended shift hours for other staff to make up for the manpower loss.

This is in contrast to its approach last year, when the hair stylists were given pay incentives to take less leave and stay in Singapore longer.

Ms Cherie Adams, the general manager of Be Salon, which has two outlets in the central area, said the firm is unable to do the same this year because of rising costs.  

“Due to the lack of manpower, our working hours need to be extended in order to cater to the demand. Our hairstylists will also come back during their off days to serve their customers,” she said.

Bakery Bread Boutique is another business facing inadequate staffing, as a third of its employees are Malaysians.

Last year, the Bishan bakery decided for the first time to open during the holidays. It had to hire part-timers as most of its Malaysian workers went back home.  

But this year, its owner Ellen Wee has decided to return to shutting down her store on the first few days of the new year.

"This area is quite quiet during the new year. There are not many locals and it's a public holiday. Schools are not open as well, so turnout is low and it's not worth the effort,” she said.

INFLATION AND GST

Amid increased competition and consumers’ search for the best value, firms are facing pressure on margins.

One analyst said that the recent spike in the cost-of-living prices, including taxes and the higher inflation last year, is still raw.

“Right now, the GST just went up, so people are sensitive to the increase in price. Over time the effect will die off,” said Professor Sharon Ng, head of the marketing faculty at Nanyang Business School.

“Then it depends on where (consumers) think the economy is going. If they think that this is a short-term decline and the economy will go up, and that their jobs are secure and the future is good, then they will start spending again.”

Economists are optimistic on the outlook this year, with growth expected to pick up in the second half. Inflation is also likely to ease.

Singapore ushers in the Year of the Dragon on February 10.