Singapore

More F&B outlets close down as Covid-19 continues to pummel industry

Last month saw 159 cessations in the sector, as experts predict more casualties

Almost two months ago, former DJ-turned-restaurateur Daniel Ong went on Instagram to make a public plea to landlords for additional rental waivers for struggling tenants like him in the food and beverage (F&B) industry.

But the Rookery Group owner has now thrown in the towel after suffering staggering financial losses and has had to cut about half of his 60-strong staff due to the Covid-19 outbreak.

The business - which he set up in 2014 with three Rookery outlets at Capital Tower, Hong Leong Building and China Square - saw an 85 per cent drop in revenue over the last three months.

While that was a huge blow, having to let go of 28 employees caused him more pain.

Mr Ong, 45, has streamlined operations to just the China Square outlet in order to curb operational costs. He told The New Paper: "I don't mind losing money, but I feel most terrible having to say goodbye to the staff who have put their heart and soul into the business.

"It is impossible to stay open but bleeding at the same time. The one at Capital Tower will definitely be closing because the Central Business District crowd won't be back soon. Everyone is in survival mode now."

TNP reached out to at least five shuttered restaurants, but all declined to be interviewed and were adamant about not being mentioned in this article.

According to The Business Times, there were more than 7,500 business cessations over the last two months, with 159 from the F&B sector last month.

Modesto's in Tanglin Road and Teochew City in MacPherson Road were among the casualties.And more are expected to shut in the coming months.

Mr Edward Lim, owner of pizza restaurant The Peel 1889 at myVillage in Serangoon Gardens, will call it quits when his lease ends on July 15 as he can no longer afford rental costs. "We are barely making ends meet with just takeaways and deliveries. There are so many uncertainties with Covid-19. We don't know how long it'll last or what new measures might come. So we decided to stop," he said.

Business experts told TNP the nature of F&B is extremely competitive and volatile even when the economy is doing well, and the pandemic could bring the industry to its knees.

Singapore Management University's professor of marketing Kapil Tuli said the industry is high cost, competitive and saturated with consumers who are "variety-seeking in their eating patterns".

And although restaurants have tapped online delivery services, such strategies slash profit margins due to packaging costs and payments to third-party delivery companies, he added.

Mr Ram Prakash, programme chair of Republic Polytechnic's diploma in restaurant and culinary operations, said F&B businesses should not expect a sustained recovery even if dine-ins are allowed after the circuit breaker - because consumer behaviour might have changed as people become more comfortable with home deliveries.

He added: "The economic downturn will result in people spending less on non-essentials like dining in."

A spokesman for the Restaurant Association of Singapore said the industry will be seeing more revenue declines as safe distancing measures will likely continue post-circuit breaker, adding: "Challenges and hardship are not expected to go away even if dine-ins are allowed as the capacity will be halved."

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