What's Killing Our F&B Businesses? | Talking Point | F&B Business Closures - Part 1/2

Key Concepts:

• FnB (Food and Beverage) business closures
• Rental costs and renewal caps
• Manpower costs and foreign worker quotas
• REITs (Real Estate Investment Trusts) vs. Private Landlords
• Heritage businesses and price sensitivity
• Automation vs. Human Touch in FnB
• Supply and Demand in FnB labor market

1. FnB Business Closures in Singapore:

• The video highlights an unprecedented number of FnB business closures in Singapore.
• In 2025, an average of 250 FnB businesses are closing every month.
• In 2024, over 3,000 FnB businesses closed, the highest in two decades.
• The video aims to explore the reasons behind these closures and their impact.

2. Case Study: Gaso (Fish Soup Noodles Restaurant):

• Gaso, an 86-year-old independent restaurant, is closing down due to rising rental costs.
• The owner, Dina, a third-generation owner, spent $150,000 on renovations but kept it simple to prioritize earning money.
• Dina works on the "middle line" in the kitchen to save on manpower costs.
• The restaurant faces a 30% rent increase upon lease renewal, from $12,000 to $15,000 per month.
• To cover the increased rent, Gaso would need to sell an extra 10-11 bowls of fish soup noodles per day, which is challenging given their current business level.
• Gaso is hesitant to significantly increase prices to remain accessible to longtime, price-sensitive customers.
• Dina expresses feeling "defeated" about ending the family tradition.

3. Rental Costs and Tenant Advocacy:

• Holland Village is cited as an area heavily affected by FnB closures due to rising rents.
• Terren, representing over 700 FnB and small businesses, advocates for tenant rights through "Singapore Tenants United for Fairness."
• A poll within Terren's community revealed that a majority of tenants reported rental increases between 20% and 49%.
• Terren proposes implementing rental renewal caps indexed to inflation (CPI) or GDP measures to provide certainty for FnB operators.
• The argument is that excessive rental hikes after tenants have invested in building their business are unfair.
• Increased investment in shophouses by local and foreign investors is driving up rental expectations.
• Rental data for the FnB industry is not publicly available, and Terren is pushing for greater transparency.

4. Landlords: REITs vs. Private:

• The video distinguishes between REITs and private landlords.
• REITs, which invest in real estate like malls, tend to have less volatile rental increases (single-digit percentages annually) due to regular payouts to investors.
• Private landlords have more flexibility in setting rents.
• A real estate consultant explains that rents during the COVID period were depressed due to high vacancy rates.
• Rent increases now may seem exorbitant but could be bringing rents back to pre-COVID market levels.
• Landlords also face rising costs, such as construction and maintenance, which are passed on to tenants.
• The consultant argues against blanket rental caps, citing the diverse range of trade types within the FnB sector.
• The consultant acknowledges that while some landlords may be perceived as greedy, rent is only one component of the costs faced by tenants.

5. Manpower Costs and Foreign Worker Quotas:

• Sarah and her husband, who are closing their restaurant in Bishan Park, cite rising manpower costs as a significant challenge.
• They highlight the difficulty in competing with larger companies offering higher salaries to chefs, especially foreign workers on work permits.
• Pre-COVID, a junior chef could be hired for $2,600-$2,800, but during the lockdown, salaries increased to $2,400-$2,500 due to a shortage of cooks.
• The couple chose to retain existing staff by matching salaries and offering better working hours rather than automating processes, as they value the "human touch" in FnB.
• They suggest relaxing work permit quotas to increase the supply of workers and manage wage inflation.
• The Restaurant Association of Singapore has also called for a review of manpower policies.
• Authorities view the manpower crunch as a result of the increasing number of FnB establishments.

6. FnB Sector Dynamics:

• Despite closures, more FnB spots opened in 2024 (over 3,790) than closed (over 3,000).
• The video questions whether the closures indicate a genuine crisis or simply a natural selection process.
• The video will bring in experts to give one struggling family business a new lease of life.

7. Other Rising Costs:

• Besides rent and manpower, other costs for FnB businesses are also rising, including goods, materials, and utilities.
• Overall expenses for FnB businesses are at their highest in over a decade.

8. Notable Quotes:

• Dina (Gaso owner): "Defeated because you know you have really worked so hard for so many years and then you realize somehow you just need to say we have enough."
• Terren (Singapore Tenants United for Fairness): "We are asking for fair increment."
• Sarah (Restaurant Owner): "The feeling to describe is really hitting a wall, being trapped in a corner and really running out of options at that point."

9. Synthesis/Conclusion:

The Singapore FnB sector is facing significant challenges due to rising rental and manpower costs, among other factors. While new businesses are opening, a concerning number of established businesses are closing, particularly heritage establishments. The video explores the complexities of the situation, highlighting the perspectives of business owners, tenant advocates, and real estate consultants. Potential solutions include rental renewal caps, relaxation of foreign worker quotas, and greater transparency in rental data. The video sets the stage for a deeper dive into the issue and potential interventions to support struggling FnB businesses.