To start off: is starting an F&B still a good business for investment in Singapore?
The F&B market looks like a Red Ocean, teeming diverse concepts of further varying scales. This sector is dominated by fragmented players on every level, from location, contractors, to food and equipment suppliers. When it comes to brand loyalty, consumers can jump onto the latest food fad and hop off faster than arriving at their next MRT stop.
However, data always comes first:
With more than 7260 F&B establishments serving the nation. That number alone has close to doubled in the last 15 years and certainly doesn’t seem to be slowing down. Slicing this pie are 2660 restaurants, 470 fast food outlets, 407 caterers, and 3723 F&B operators of varying scales. Of the 4 categories, restaurants led the growth, more than doubling within this time span.
Regardless of the ups and downs in F&B sectorial news, business goes on because people always have to eat. People still have birthdays, gatherings, family dinners, 3 meals a day and sometimes more. Changing economic landscape changes consumption patterns. Pop-culture and media can influence food trends. This drives innovative concepts that appeal to the evolving taste buds of consumers.
Just because innovations in the food sector sound less sexy than innovations in the tech scene, doesn’t make it any less worthwhile to invest in. From point-of-sale systems to full-stack delivery startups, and every part of the value chain offers opportunities for driving innovation. But sticking to the core of food businesses, taste and experience naturally matter most to consumers.
Does the fact that the number of restaurants doubling over the last 10 years indicate that it’s the most worthwhile business direction? Not necessarily so. Singapore’s developed economy and small land size poses certain challenges for our local F&B scene. Labour and cost of goods can be costly while space constraints translate to high property prices.
Down the years we notice a trend towards smaller setups. Space tight, small, and efficient kiosk setups with quick turnarounds, affordable and delicious foods are increasingly popular. A 100% delivery model may be one such way to mitigate rental costs. Yet food being food, operators would still need creative ways to market taste to its intended audience.
As brands mature, dominance and growth in the F&B vertical is largely a mastery of pitfalls and leverage over cost factors. The business is easy to start, but challenging to master. Down the years, we were able to distill the exciting journey of starting any F&B to these 8 steps. Yet it still requires tons of experience and business acumen to execute well. Entrepreneurs and investors got to be either really experienced, or talented. Otherwise, one would well to involve experts, advisors, and strong partners.
This is how Singapore’s homegrown F&B brands do well offshores, a move that the government has been pushing for. Having sharpened our skills in being small and lean, we are nimble with our resources with strong emphasis on operational efficiency and cost control. Everyone well understands that given the local market’s limitations, venturing abroad is the only way to secure long-term growth.
The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.
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After catching a whiff of the startup scene from his college days in Ireland, Isaac caught the entrepreneurship bug. Having spent some time with startups and a social enterprise, he is currently part of Chef At Work, which specialises in helping new and existing food businesses succeed in the marketplace with industry best practices. Isaac's passions lie in digital marketing, startups, tech, F&B, and things that make the world a better place.