How Can We Help Small Local Restaurants Survive? | Talking Point | F&B Business Closures - Part 2/2

Key Concepts:

• FnB (Food and Beverage) market saturation
• Restaurant closures and turnover
• Customer behavior changes post-COVID
• Competition from domestic and international chains
• Importance of food culture and heritage
• Social media marketing for FnB businesses
• Manpower challenges and foreign worker levy
• Productivity improvement and HR support
• Pivoting business models (e.g., frozen food)
• Customer Relationship Management (CRM)

1. Market Saturation and Closures:

• The FnB market is increasingly saturated, leading to a high turnover rate.
• In July 2024, 320 FnB establishments closed, and over 3,000 closed in total, the highest number in two decades.
• Burp, a restaurant, closed after 12 years due to falling demand and changing customer behavior.
• The video highlights the pain and challenges faced by small businesses forced to close.

2. Changing Customer Behavior:

• Post-COVID, customer spending habits have changed drastically.
• Per-head spending dropped significantly after international travel reopened, from $40-$50 to $15-$25.
• Consumers have more choices and are less frequent visitors to local establishments.
• Competition from cheaper options across the border in Johor Bahru (JB) impacts Singaporean FnB businesses.

3. Financial Challenges and Naivety:

• The owner of Burp invested seven figures into the business over 11 years.
• He admits to being naive initially, underestimating the challenges of the FnB industry.
• Rising costs and inability to compete with JB prices contributed to the closure.

4. Market Dynamics and Competition:

• The net increment of 700 restaurants opening often consists of domestic and international chains expanding.
• This expansion leads to the closure of smaller, independent restaurants and cafes.
• The market is not just about survival of the fittest; even well-established restaurants are struggling.
• Michelin-starred restaurants have closed shortly after receiving recognition due to rising costs.

5. Importance of Food Culture and Heritage:

• The video emphasizes the importance of preserving Singapore's food culture and heritage.
• There's a concern that the proliferation of chain restaurants will lead to a loss of diversity and unique culinary experiences.
• Family-run businesses and cafes create a community atmosphere and preserve family stories through food.

6. Maurice Lapis Cafe: A Case Study:

• Maurice Lapis is a 5-year-old cafe serving handmade Peranakan food passed down through generations.
• The owner, Chris, runs the cafe with his 83-year-old mother, who provides the traditional recipes.
• Despite selling a large kueh pie tee for $80, the profit margin is less than $8 due to high costs.
• Chris faces challenges such as staff turnover and increased competition from new Peranakan restaurants.
• He has invested heavily in the business, including selling his house and cashing out his CPF and insurance policy.

7. Social Media Marketing Strategy:

• Dylan Tan, a social media expert, provides a professional review of Maurice Lapis's online presence.
• He suggests focusing on the cafe's top three signature dishes to create a clear brand identity.
• The strategy involves creating short videos showcasing the cafe's heritage and signature dishes.
• Phase two includes engaging with customers, replying to comments, and launching promotions.
• After a year, the plan is to collaborate with influencers and host themed events.
• The goal is to increase brand awareness and translate likes into sales.

8. Results of Social Media Marketing:

• Maurice Lapis experienced immediate positive results from the social media marketing campaign.
• The cafe saw a 30-40% increase in sales and a surge in calls and reservations.
• However, increased demand put pressure on the business, leading to manpower challenges.

9. Government Support and Manpower Issues:

• Edward Chia, a member of parliament and former FnB business owner, discusses government support for local businesses.
• He suggests reviewing the foreign worker levy to reduce manpower costs.
• He also advocates for improving productivity and HR practices in smaller businesses.
• The idea of a "CHRO as a service" is proposed, where HR professionals serve multiple SMEs.

10. Pivoting Business Models:

• Cedric Tang, owner of Gasso, is closing his 80-year-old heritage restaurant but pivoting to a home-based business selling frozen fish soup.
• He is working with a business partner to refine the recipe and packaging for the new product.
• The goal is to reach a new audience while preserving the core product (the fish soup).

11. Notable Quotes:

• "Consumers have many choices but only one stomach."
• Chris: "We are not going to give up."
• Dylan Tan: "The proof of the zai is in the war." (The proof of the pudding is in the eating.)

12. Technical Terms and Concepts:

• FnB: Food and Beverage
• Per-head spending: Average amount spent per customer.
• CPF: Central Provident Fund (Singapore's social security savings scheme).
• Foreign worker levy: A fee imposed on employers for hiring foreign workers.
• Progressive Wage Model: A framework for wage increases based on skills and productivity.
• CHRO: Chief Human Resources Officer
• SME: Small and Medium-sized Enterprise
• CRM: Customer Relationship Management
• MC: Medical Certificate (sick leave)

13. Logical Connections:

• The video starts by highlighting the problem of FnB closures and market saturation.
• It then explores the reasons behind these closures, including changing customer behavior and rising costs.
• The case study of Maurice Lapis illustrates the challenges faced by small, heritage businesses.
• The social media marketing strategy demonstrates a potential solution for increasing brand awareness and sales.
• The discussion with the member of parliament focuses on government support and manpower issues.
• Finally, the story of Gasso shows how businesses can pivot to new models to survive.

14. Data and Statistics:

• 320 FnB establishments closed in July 2024.
• Over 3,000 FnB businesses closed in 2024.
• FnB sales in Singapore hit $962 million in June 2025, up 0.1% year-on-year.
• Over half of Singaporeans rely on social media to discover new restaurants (59% for Gen Z).
• Maurice Lapis saw a 30-40% increase in sales after implementing the social media marketing strategy.

15. Synthesis/Conclusion:

The FnB industry in Singapore faces significant challenges due to market saturation, changing customer behavior, and rising costs. Small, heritage businesses are particularly vulnerable. While social media marketing can provide a boost, it's not a silver bullet. Government support, improved productivity, and innovative business models are crucial for survival. Ultimately, preserving Singapore's food culture requires a multi-faceted approach involving businesses, consumers, and policymakers.