Yes… and no, depending on who you’re asking.
Having lived in Singapore for over eight years, I certainly agree with its reputation as a foodie’s heaven.
For consumers, pricey as it can be, you can pretty much get anything at any time. The international variety now is also greatly improved from that when I first arrived.
For suppliers however, current demographic and economic factors are not making it heavenly times for all players in the F&B game, in particular the higher end restaurants and hotels.
In relation to that segment, some of the headline dynamics are as follows:
– While the global financial crisis seems somewhat of a distant memory, multinational companies continue to aggressively cut expenses and the expat packages of old have been greatly reduced across most industries. In tandem, the costs of living in Singapore continue to rise. This generally means less spending money in the average pocket.
– As a result of the above, more travelling spouses are naturally now looking for work. However, at the start of this month, the Singapore government introduced a domestic job bank – whereby any job paying less than SG$ 12,000 (approximately NZ$ 11,000) per month, must first be opened to locals before employers can apply for a work permit for a foreigner for that role. While it is still too early to see the impact of this, from an employer perspective I am concerned and think this may place many foreigners living here under increased financial pressure.
– Greater restrictions on foreign workers are also making in challenging for many F&B providers to hire the necessary staff. With unemployment remaining low at around 2%, in general local Singaporeans do not have a strong desire to work in this sector.
– A lot of the growth Singapore has experienced over the last decade has been in the banking and finance sector. Again, related to the global financial crisis, increased compliance imposed on the sector has, in many regards, capped the good old days of free and easy corporate entertaining.
– Real estate pricing continues to rise, along with the population, on this small island state. As a result many (well known) restaurants have relocated and/or down sized, and a number been forced to close their doors of late. I know directly of a well-known chain which has closed a couple of its restaurants recently because of the exorbitant rents increases (close to 200%) demanded by the landlords. I’m not sure how restaurateurs are meant to make a buck by passing that onto consumers who, as mentioned above, are being squeezed themselves.
But, it’s certainly not all doom and gloom, and as long as the Asia growth story continues to play out, Singapore remains uniquely positioned to greatly benefit from this. Despite some of the current factors above, the population and economy of this small island state will continue on the upward trend.
What we are clearly seeing however is a drift to smaller and newer concepts, from all parts of the world, opening across the city. Tacos and tapas seems to be a hot play at the moment! A good proportion of the more sure successful ones are owned by rapidly growing chains or groups, with smart and proven operators behind them. Hence, it is now possibly more a case of identifying and selling to the level of these influencers in the market, rather than via traditional channels.
It’s food for thought.