Why Some F&B Businesses Survive While 9000 Others Fail

Cat And The Fiddle

Pic: Cat & The Fiddle Facebook Page

Some 9000 new F&B businesses are incorporated each year, and some 9000 close shop too. Thus the total number of F&B businesses in Singapore is kept constant at around 31,000. This is what Mr Yeo Guat Kwang, Assistant Secretary-General of the National Trades Union Congress (NTUC) told a group of F&B business owners recently.

At a sharing session jointly organized by NTUC’s U SME, Singapore Bakery and Confectionary Trade Association (SBCTA) and Food Innovation & Resource Centre (FIRC), Mr Yeo shared that it’s because the barriers to entry are low that competition is fierce, which results in the perception that the industry is a tough one to be in.

If you own a bakery, for instance, it is very easy for (new) competitors to replicate your products and price them lower than yours. Take BreadTalk’s floss bun for instance.

Competition aside, not everyone is equipped with the skills to run an F&B business. Chef Daniel Tay from Cat & The Fiddle also shared about that 1 million dollar mistake he made at the start of his journey…

Chef Daniel Tay

Chef Daniel Tay is the founder of Cat & the Fiddle Cheesecakes, Foodgnostic Food Solution and Old Seng Choong. “Seng Choong Confectionery” was the bakery founded in 1965 by his father. It folded in 1996.

“I came on board to expand my father’s business in 1995 but didn’t succeed in doing so then. I’ve always regretted that. Now, after spending the past two decades further honing my skills as a baker and sharpening my business acumen, I’m ready to revive the Seng Choong brand in his honour. And this time, I will do him proud,” says Daniel.

Back then, after some training in Bangkok and not really knowing about business very much, Daniel tried helping his dad to expand the business, and the factory they invested 1 million dollars in folded within a year. Daniel shared that the business was undercapitalized, and that he had been too proud, with no experience in doing business, yet expected overnight success. Daniel is heartened, however, that the brand has been revived and that it was done just a few months before his father’s passing, so the late Mr Tay got to see it happen. While Old Seng Choong sells its confections online right now, Daniel has plans to set up a cafe and gift shop for tourists to purchase these local creations.

Daniel also told the audience of F&B business owners that his companies have a ‘Glocal’ approach which stands for ‘Think Global, Act Local’ as the local market is just too small. He is even sending a container-load of cheesecakes to China, in a bid to enter the market there! When queried on why he didn’t just set up a factory in China to produce the cheesecakes, he says that he is leveraging on Singapore’s stellar reputation, rather than deal with public perception of what a “Made in China” cheesecake would be like. He is also franchising his production method so as to earn royalties.

Chef Daniel Tay’s 5 Tips For F&B Business Owners:

  1. Join an association. In the confectionery line? Join the Bakery Association. Together, there is a “stronger voice” for liaising with government agencies and getting the necessary assistance in a timely manner.
  2. Focus on only ONE product. Develop different flavors later. Improve your own product instead of copying someone else’s. Tai Cheong Egg Tarts at Takashimaya are selling 4,000 eggtarts a day just by focusing on one product.
  3. Use technology to be the best. Chef Daniel bought a $400,000 cheesecake blender, robotic cake slicing machine etc, because he wants to “be at the top of the industry”. (*He did this with the help of grants :D)
  4. Marketing must be done right. Brand must be strong, not boring, e.g. “Old Seng Choong” instead of “Seng Choong Confectionery”. Have a good storyline and a good PR company. Daniel says his business spends some $10,000 every month on online marketing. He also shared that they sold 3,000 Fickle Feline cakes in 2 days via qoo10’s website. Fickle Feline
  5. Be smart about grants: If you are known, it is much easier to get funding (and in larger amounts too). Your brand, your person, your business must be known. If you and your business are known to the public (and the government), you may get faster approval for your grants, and in a larger quantum too.

At the same event, we also heard from Joel Chan of the Food Innovation & Resource Centre (FIRC) which is located within Singapore Polytechnic. FIRC was set up in 2007 in a partnership between Singapore Polytechnic and SPRING. At the FIRC, business owners can receive assistance with everything from product innovation to process automation to sensory evaluation. FIRC can help with product reformulation, and also aspects like how to extend shelf life of the product, how to increase efficiency so you produce products cheaper, better, faster.

For instance, they are working on a machine which can produce kueh lapis, which is highly labor-intensive when done by hand.

Kueh Lapis

Image: harrianns.com

What was most memorable about this segment by the FIRC were Joel’s questions about the local fast food scene. He said that McDonald’s is raising the game with things like their curry sauce and how customers can go about customizing their own burgers. He commends them on the constant barrage of new and innovative additions to their menu. He asked the audience to name (off the top of their heads) items on McDonald’s menu, and it was evident that many people could name quite a few. When quizzed about the menu items of McDonald’s competitors, many people were stumped. It was clear that the point he was trying to make was that innovation and responding quickly to consumer trends is key to McDonald’s success. And this is what local SME bosses in the F&B industry ought to do too.

Finally, Mr Yeo from NTUC encouraged SME bosses to take advantage of what the Lean Enterprise Development (LED) Scheme offers in terms of helping SMEs:

  1. Become more manpower-lean
  2. Develop a stronger Singaporean core
  3. Build a quality workforce

Also, with the Industry Transformation Map that has just been released, there is a Limited Period Grant for 2018-2019 from SPRING, which small businesses can tap on for their ‘transformation’. As Chef Daniel Tay was quick to add, it is necessary transformation not just to survive, but to thrive.

29 thoughts on “Why Some F&B Businesses Survive While 9000 Others Fail

  1. I love eat the cupcake especially twelve cupcake and open at amk hub now .if matches with KOI milk tea will be perfect.yummy yummy 😋

    A&W closed
    KOI blomming

  2. – Cheesecake Cafe (unfortunately closed)
    – Arnold’s Chicken (consistently booming)
    – liked/shared via FB, comment on blogpost ☺️

  3. Boon Lay Raja Resturant for Chinese Cuisine (Closed)
    Res Star Restaurant for yummy delicious Dim Sum

  4. One F&B outlet closed is Wendy’s and I miss it 😦 a booming business right now 4 fingers!

  5. A&W and their root beer float has closed. Whyyyyyy???? Oh wait, you can still find them in Batam though. 4 Fingers is till booming and going strong. We’ve just been to their West Gate branch in fact! I’m addicted to their soy chicken! FB: Ester Em

  6. I miss Ponderosa Steak & Salad…

    And I’m loving Krazy Salad Bar now with their all-you-can-eat salad bar buffet! They’re at Block 190 Toa Payoh Lorong 6!!

  7. Zhen Zhou Dao (closed). I think you should know that this eatery in Katong by Moses Lim serves very good porridge but unfortunately, it closed down in 2014. Can’t find another such nice porridge eatery in the east anymore.

    4 Fingers (booming). Definitely one of my favourite places right now!!!

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