Restaurants face pressure as SG60 vouchers shift spending: analysts

At-home dining and fast food see moderate growth.

SG60 consumption vouchers are expected to alter spending in 2026, boosting at-home dining and hawker meals whilst putting continued pressure on Singapore’s restaurant sector, according to DBS.

The report said restaurants are expected to bear the brunt of consumer downtrading, with vouchers usable at supermarkets and hawker centres until the end of 2026.

Overall food and beverage (F&B) sales excluding hawkers are forecast to fall 1.2% year on year in 2026 to about $11.8b, following a flat performance in 2025.

The restaurant segment was already weak in 2025, with sales down 4% year on year as of 9M25.

Consumers increasingly shifted spending to hawker centres, which accept SG60 vouchers, and to at-home dining, as reflected in stronger supermarket volumes. Fast food recorded modest 1.4% year-on-year growth, while other eating places declined 0.5%.

Overall F&B sales excluding hawkers are estimated at around $11.9b in 2025.

Catering provided some support, growing 16% year on year in 9M25 on the back of recovering corporate events, banquets and air travel.

However, growth is expected to slow to mid-single-digit rates in 2026 as volumes normalise.

Supermarkets are the main beneficiaries of SG60 vouchers. The 9M25 supermarket index averaged 129.7, up from 125.1 in 9M24, delivering 3.7% year-on-year growth and exceeding initial expectations.

The $1b in SG60 vouchers allocated to supermarkets—around 12% of estimated 2024 supermarket sales—drove higher volumes, mainly in 2H25 after vouchers were issued in July.

Full-year 2025 supermarket sales growth is now expected to be close to 4%, lifting sales to about $8.6b.

In 2026, a full-year annualised uplift of roughly $500m from SG60 vouchers is expected to push supermarket sales to around $9.1b, implying a strong 6% year-on-year growth and setting a high base for 2027.

Total retail sales in the first nine months of 2025 reached $37.5b, up 3% year on year, slightly ahead of inflation, which accounted for about one-third of the growth.

A slowing economy and softer labour market could weigh on retail growth, even as retail sales are forecast to rise 2.5% year-on-year in 2025, RHB said.

Retail sales grew 2.8% YoY in September, down from a revised 5.3% in August, while sales excluding motor vehicles slowed to 2% from 4.7 %.

Despite this, RHB expects retail sales to pick up in Q4 2025 and Q1 2026, boosted by festive and year-end spending during Christmas, Chinese New Year, and school holidays.

Tourism-related sectors will also benefit from higher visitor arrivals, including the F1 Singapore Grand Prix and rebounds in Chinese and regional travel.

Fiscal support through CDC vouchers and other one-off transfers, such as the $600 SG60 cash voucher, will further strengthen household purchasing power, driving spending on essentials, F&B, and retail.

Moreover, DBS said retail spending was supported by stabilising outbound travel, with residential departures now around 0% to 1% below pre-COVID levels, compared with about 3% below last year, aided by a strong Singapore dollar. However, overall consumption growth is expected to moderate as pent-up travel demand fades.