Smaller food and beverage businesses face strong competition, labour constraints and high rental costs, amid a recent surge in the number of cafes and eateries in Singapore.

Smaller food and beverage (F&B) businesses such as cafes and eateries have seen a recent surge in Singapore. Facing challenges such as strong competition, high rental costs and labour constraints, these businesses have found it difficult to survive.

At an event organised by the Singapore Productivity Centre for smaller F&B business owners on Monday (Jul 27), it was found that lean workflow, menu engineering and financial management are some of the ways such owners can turn passion into profits.

Smaller businesses make up 85 per cent of the food services industry, and the average smaller F&B business operates at a loss of 8 per cent annually. These businesses range from cafes to eateries, and almost nine in 10 of such F&B owners only operate one outlet.

According to a study by SPRING Singapore, business owners found success by focusing on core business operations, instead of ancillary areas such as branding and store design.

The study, which covered 216 smaller F&B companies from July to November 2014, including restaurants, cafes, coffee houses, and snack bars, also identified several factors that have helped businesses turn a profit. These included relying on automation and technology to enable owners to simplify labour-intensive or inefficient processes.

Successful businesses also engineered menus to better influence consumers’ decisions and eliminate less popular items. In addition, strong financial management has enabled these owners to manage working capital and cash flow more efficiently and sustainably.

Mr Vikram Natarajan, CEO of Indian restaurant Copper Chimney, said streamlining operations to reduce reliance on manpower has allowed him to grow more outlets with fewer additions of staff. Optimising the menu has also improved his revenue by 10 per cent, he added.

In response to these findings, Singapore Productivity Centre is offering solutions to help smaller F&B businesses improve productivity and develop business capabilities. Further assistance may also be obtained under SPRING Singapore’s Capability Development Grant.

Mr Sim Choon Siong, Director, Food Division of SPRING Singapore, said: “Only 60 per cent of the smaller F&B businesses survive the first five years of operations, while the others are constantly being replaced. It is thus crucial for business owners to focus on enhancing their profitability to stay sustainable.”

Source: http://www.channelnewsasia.com/news/business/singapore/how-smaller-f-b/2010364.html