When Singapore entered the circuit breaker phase, survival became a serious problem for many companies.
Strict measures, such as closing nonessential jobs and banning eating in restaurants, have resulted in a significant reduction in visitor numbers – exactly what we need to curb the spread of the virus, but not exactly great for businesses.
An almost empty Hawker Center / Photo credit: Chris Loman
But help for F&B owners came quickly. As the government highlighted in its Enterprise Singapore Food Delivery Booster Package, the solution is to help restaurants digitize.
For example, Enterprise Singapore finances 5 percent of the commissions that are charged by food delivery platforms and 20 percent of the delivery costs that are charged by third-party logistics providers.
The Covid 19 situation shows that digital skills must become the norm.
For some companies, the pandemic can be an opportunity to take the first step towards digitization. It could lead them through the current challenges and make them even stronger once this crisis is over.
However, an optimistic result will not apply to everyone. While it is ideal that going online saves livelihoods, we also have to consider the reality that it is not a one-size-fits-all solution.
Older street vendors face the biggest barrier
One group that is obviously difficult to adapt to is the older business owner.
For a large part of the older street vendors, the traditional recipe for a successful stand is to do hard work every day to cook good food.
For them, it's an understatement that technology is a steep learning curve. It can be so daunting that it scares them overall.
Ng Bee Choon, a street vendor in the sixties we spoke to said she never thought of taking online orders.
Indeed, we have learned that she does not know how food delivery services work, nor does she know that the government subsidizes platform fees.
For them, the struggle is not only associated with digital competence, but also with a language barrier to surpass it.
She shares with us in Mandarin:
These companies usually write about their services in English. Aside from the younger street vendors, many of us were Chinese in our fifties to sixties and don't speak fluent English.
It would be very difficult for us to contact these platforms in English.
Ng Bee Choon, owner of Kaya Kaya
While some experienced street vendors manage to incorporate technology into their business, they're only a handful.
Many others are still completely dependent on their stationary sales stands, without an online presence such as a website, a Facebook page or even an official location on Google Maps.
You may never be exposed to the benefits of digital services such as the delivery of food unless someone speaks to you personally.
Although some vendors like WhyQ make such an effort to reach retailers one by one, it remains a matter of luck for retailers.
Short end of the floor for local Kopi stands
Bee Choon also faces another limitation because it operates a beverage stand.
"All the time, I never noticed that platforms for the delivery of food come by and grab hold of drinks stalls like mine," she says.
Ng Bee Choons Stand Kaya Kaya in the Old Airport Road Food Center / Photo credit: Kaya Kaya
Most of the time, we don't find any beverage stalls online. Of course, this does not apply to beverage chains such as Toast Box, Starbucks or Bubble Tea brands. Restaurants that mainly sell food with drinks also have no problem.
The difference is that local Kopi stands rely almost exclusively on drinks that are only available at around $ 80 to $ 2.50. With such small orders, it is simply not worthwhile to offer a delivery.
In addition, the take-away packaging they normally use is not suitable for delivery, and higher upgrades are not affordable if the business is already going badly.
After earning just $ 30 in six hours on the first day of the breaker, Bee Choon decided to close her stand for the time being.
It is not even enough to pay the water and electricity bills. We would operate at a loss.
If I open my stand every day, I will only wait in vain.
Ng Bee Choon, owner of Kaya Kaya
While she refuses to share how much she is likely to lose by closing the booth, she says this will matter.
Ambience and experiences cannot be transferred online
On the other hand, as street vendors, some restaurants struggle to go online because they cannot offer the same dining experiences that have led customers to their physical outlets.
Two wheels Good / Photo credit: SgCafeHopping
Alan Lee, who previously founded Banquet Food Court, now runs a two-wheeled bike-themed café outside of Jurong Point.
His café was created as a comfortable meeting place, and live music was one of the reasons why crowds came.
“When the circuit breaker started, our sales immediately went down 95 percent,” he says.
Needless to say, ambience and experiences are even more important for upscale restaurants.
Rishi Naleendra had to temporarily close its two upscale restaurants, Cloudstreet and Cheek Bistro, until the dine-in ban was lifted.
In Cloudstreet, the two-hour experience includes seven courses, five snacks, wine pairings, cover and service.
"You can't put that in a snack box and send it out," says Rishi.
Cloudstreet / Photo credit: Robb Report Singapore
Even if he tried to deliver, consumers would cut spending in the face of this economic uncertainty, and forgiveness would be the last thing people think.
Rishi is also prepared for more conservative spending to continue to impact his business beyond the breaker.
The majority of the workforce would have suffered in some way, be it cut wages or job losses.
Probably 50 percent of our customers came from business entertainment and international guests, but it will take some time before they take someone back to dinner.
Rishi Naleendra, owner of Cloudstreet and Cheek Bistro
However, Rishi was at least able to turn quickly – he wanted to open a third restaurant that sold casual Sri Lankan cuisine, but had moved the opening due to the circuit breaker.
He currently cooks Sri Lankan food in Cloudstreet's kitchen and offers take-away and delivery via the online ordering platform Oddle.
Still, it only accounts for about "40 to 45 percent of the revenue needed to keep business going".
“Cash flow is my main concern. I don't know if I will have a restaurant by the end of this year, ”he says.
Problems maintaining high delivery costs on low orders
Even if companies access online sales, there is no guarantee that they will be able to increase their orders.
Despite using food delivery platforms, third-party drivers, and participation in Facebook groups like Hawkers United to promote his food, Kevin's Fu Ji fish soup restaurant only gets "two or three more orders a day".
"We may not get delivery orders on some days," he adds.
Fu Ji fish soup at Clifford Center / Photo credit: Fu Ji
In addition, it's a combination of low orders and expensive platform fees that makes it a bad compromise for F&B owners.
After facing a backlash, Grab recently stated that only about 5 percent of the commission is charged and uses the rest to incentivize the delivery staff.
Although F&B owners can understand the split, it is still a high price to pay regardless of it.
"GrabFood and Deliveroo charge us 33 percent (28 percent after subsidies), which is almost our profit margin," says Kevin.
Alan also tried apps for food delivery and third-party senders when the business was strong before the corona virus broke out.
“After looking at delivery sales, it wasn't enough – an average of $ 150 a day from delivery orders (before COVID-19) can't get us to hire drivers,” he says.
Two Wheels Good earns a margin of around 10 percent, but delivery platform fees are only 25 percent.
In other words, the more we sell, the more we lose (if we rely on online food delivery).
That is why we decided to close the shop and use this time for maintenance work so that we are ready when the circuit breaker is raised.
Alan Lee, owner of Two Wheels Good
What happens to these companies left behind?
F&B companies do their best to survive against adversity. For some companies that cannot access online sales, all they have to do is close the shutters until the dine-in ban is lifted.
Many will count to the end of the circuit breaker, hoping that they will have enough sales or savings to stay afloat until things return to normal.
The recent circuit breaker extension until June 1 also adds uncertainty to them, as this could mean that the end date can be extended again if the coronavirus situation does not improve.
Like the rest of the country, they are waiting every day to find out what will happen next.
Unfortunately, going online cannot save everyone. Hopefully these street vendors and restaurants can get through, but at some point we can expect some failures.
Selected image source: Roots.sg, 123rf