Pitfalls in the F&B journey


Business owners in the F&B world have three major hurdles to overcome. Find out what they are before taking the plunge yourself!

Labour

Firstly, it’s hard to just find people to work in F&B. A report from MOM in 2014 indicated that the job vacancy rate in the industry stood at 5.5 percent – one of the highest across all industries.

This is in part because within the local talent pool, most are not interested in the industry, perhaps because of the perceived long working hours and low pay. It is also difficult to find suitable part-timers – students come and go with their exam seasons and their high turnaround means time and money is wasted on training them.

Some F&B owners do look at the foreign labour market, but with tighter quotas, the number of workers in this sector looks to be constrained in the coming years.

But it is also because of the higher labour costs. According to the Department of Statistics, between 2009 to 2014, labour costs grew at 9.4 percent, and revenue could not keep up, growing only at 9.2 percent.

Cost of ingredients

A major cost for any F&B outlet comes from the raw materials: the ingredients you need to make each and every dish. Research has shown that the cost of raw materials is rising – already hawker centre dishes are being forced to increase – and the same cost pressure is eroding the profits for other F&B businesses.

Some might think that buying in bulk is a solution, but to do so, you will also need to consider the perishability of items, and if you have the storage space to accommodate the excess.

This cost is an important feature to consider when creating your desired menu. An exotic sounding truffle dish may appeal in theory, but price-wise, it might also be worth reconsidering.

Rent

How many times have we heard about Singapore being a land-scarce country? It is, and the competing needs for transport, housing… the list goes on… has drive up rental prices, especially in the prime areas of the country.

This cost is a major hurdle for F&B business owners who need sufficient space for seating, for the kitchen and storage of food – and especially as rent is the third largest component of their operating expenses.

 

 

These challenges aren’t to say that one should avoid the F&B industry entirely. Rather, with these obstacles in mind, it would do future business owners some benefit to consider innovative methods to improve labour intensive processes, manage space, and market to reach their desired customers.