COVID-19 Budget measures 'welcome', but may not be enough to save F&B sector: Business owners
SINGAPORE: Where there used to be crowds of office workers and tourists, lunch hour along Jalan Pisang was quiet on Friday (Mar 27), as fears over the spread of COVID-19 kept diners away.
Food and beverage (F&B) businesses, like Lina’s Cafe, have been hit especially hard, with customer footfall dropping by up to 60 per cent, according to Ms Marlinah Ahmad, who runs the social enterprise.
"If you look at the Kampong Glam area, you usually see mainly tourists and office workers. The streets around this area are pretty quiet nowadays, and with no more daily prayers (at Masjid Sultan), we have lost another source of income," said Ms Marlinah.
Lina's Cafe's revenue has fallen over the past two weeks, as the Government announced stricter safe distancing measures for F&B and retail outlets.
"We were already seeing a drop of about 40 per cent in revenue, but it got worse when the new measures came in. This week, it dropped even further," said Ms Marlinah.
On Thursday, the Government announced a slew of new measures to support businesses like Lina's Cafe through the economic slowdown. The measures included co-funding 50 per cent of local workers' wages for an additional two quarters and exempting qualifying commercial properties from having to pay property tax in 2020.
READ: COVID-19 Resilience Budget: ‘Landmark’ S$48 billion package to tide Singapore through ‘unprecedented’ crisis
While the measures may help stem losses for the F&B sector, it may not be sufficient to prevent businesses from going under, several business owners told CNA.
Ms Marlinah said co-funding is "definitely great" as it would help to minimise expenses. "Any amount of expense we can minimise at this time is really, really helpful," she said.
Mr Vincent Tan, president of the Restaurant Association of Singapore, also said that the wage support was "very much welcome and appreciated" as it would help alleviate "one of the main cost components in an F&B business".
“Hopefully, F&B businesses will be able to retain more of their staff during this period and continue to upskill and prepare them for the economic upturn although some businesses may not immediately recognise this as a supportive measure as many of the F&B operators are understandably trying to survive and keep afloat amidst this crisis,” he said.
Meanwhile, Mr Matthias Phua, who owns the bakery Pantler, pointed out that many F&B businesses rely on foreign workers.
“F&B is heavily reliant on foreign manpower … Probably they could have done more in that aspect, such as loosening their hold on the quota or something to help with the foreign worker levy,” he said.
GETTING LANDLORDS TO PASS ON RENTAL REBATES "FRUSTRATING"
But the biggest challenge for the F&B sector is negotiating rent with landlords, owners told CNA.
Managing director of The Soup Spoon Andrew Chan said negotiations with landlords had been “very unproductive”.
"From the Government's point of view, when property tax is reduced, landlords will pass the rebates down. Some have, but some are dragging their feet and others use different tactics, like 'I will give you this, but I have different conditions'.
"Even if they do give, I think it's not enough," he said.
"As a whole, it has been a frustrating experience," Mr Chan told CNA, adding that not all The Soup Spoon outlets have been offered rental rebates.
Mr Dylan Ong, who owns French restaurant The Masses, has not received any rental rebates from his landlord either, although he said they were "open" to negotiation.
"I have been actively trying to get them to hear me ... I'm glad my landlord is open to the idea. But they're not sure if the 15 per cent tax rebate is applicable to everyone. They're uncertain about the information they are receiving," said Mr Ong, adding he thought it should be mandatory for landlords to pass on rebates to their tenants.
"At the end of the day, the message is broadcast, but is anyone enforcing?" he said.
The total reduction of property tax would translate to 1.2 months of rental savings annually, said Mr Tan, who hoped that landlords would pass the savings "in full" to tenants.
"Hopefully, the increased rental waiver of two months for tenants of Government-owned properties will send a strong signal to all landlords to also waive rents.
“In total we hope to receive a total of 3.2 months in rental rebates over and above the half-month rental rebate we are currently receiving,” he added.
Mr Tan urged landlords to respond to the new measures “with urgency”, noting that the Restaurant Association of Singapore had to expend much effort to get CapitaLand to offer rental rebates. He said the association is still waiting for landlords such as Mercatus, SMRT and UOL to offer rental rebates.
“In order for this measure to be effective, the support from landlords in terms of reducing their rental during this period is critical,” he said.
MAY NOT QUALIFY AS F&B
Other places that serve food may not necessarily qualify as F&B and may not be eligible for the additional support.
Mr Andrew Li, chief executive officer of the Zouk Group, said that Zouk Singapore has also been "severely hit" by COVID-19 and the mandatory closure of all bars and nightclubs.
"This Government support may provide some relief but due to our official business classification, Zouk may not qualify under the tourism or F&B sector," he said.
"Hence very tough business decisions may still have to be made."
The Zouk Group runs several outlets, such as RedTail, which also serves food to customers.
“Overall, I would say that it is a very good Budget,” said Mr Chan.
“But I think the niggling thing is that you can’t help a dead man. You can have all the medicine in the world, but you can’t help him. Rentals may kill businesses.
“There are some businesses who will say that the help is too late, let’s just do some adjustment to the business in terms of closures. May as well cut your losses to a certain extent,” he added.