‘Big collapse’ of F&B businesses in Singapore looms; landlords should slash rent like Jewel Changi Airport, say industry players

Dining outlets on the fifth floor of Jewel Changi Airport. To support the livelihood of restaurant owners and employees, Jewel approached its tenants to give them a 50 per cent rebate on rent for two months. — TODAY pic
Dining outlets on the fifth floor of Jewel Changi Airport. To support the livelihood of restaurant owners and employees, Jewel approached its tenants to give them a 50 per cent rebate on rent for two months. — TODAY pic

SINGAPORE, Feb 14 — As food and beverage (F&B) businesses take a hit due to the Covid-19 outbreak in Singapore, Jewel Changi Airport is now offering a 50 per cent rebate on rent for its F&B tenants for the months of February and March. 

The Restaurant Association of Singapore (RAS) revealed this during a press conference yesterday and calls for other landlords to follow suit to help them ride through this crisis. 

Jewel, a retail and leisure complex, opened less than a year ago.

On Monday and Tuesday, the association sent out letters to 24 landlords — some of them major mall developers such as CapitaLand and Asia Malls — requesting that they offer rental rebates of up to 50 per cent for the months of February, March and April. 

RAS has more than 450 members representing close to 700 brands that operate more than 4,000 outlets.

Based on a snap poll the association conducted among its members from Monday to yesterday, 57 per cent of the 302 respondents said that they expect revenue to drop by more than half over the next three months. 

Close to 60 per cent said that they are not prepared or equipped to deal with the abrupt nature of the virus outbreak. 

Respondents also said that measures to address wage and rental costs were their top two areas of concern.

The novel coronavirus, now known officially as Covid-19, originated in Wuhan of China’s Hubei province, and has now spread to 28 countries, including Singapore. 

Yesterday, the Ministry of Health announced eight new people who were infected with Covid-10, bringing the total number of diagnosed cases to 58, the highest number in the world outside of China. 

RAS’ president Vincent Tan said that the F&B sector has reported a 50 to 80 per cent decline in business since the virus outbreak, with more shoppers staying home and avoiding malls or other crowded places. 

“If we don’t do something to help the industry, there will be a big collapse,” he said. 

Landlords need to be ‘socially responsible’ 

As rent makes up a high proportion of operational costs for restauranteurs, RAS is calling on landlords to be “socially responsible”. 

Andrew Tjioe, president adviser of the association and also chief executive officer of Tung Lok Group, said that they are trying to avoid a situation where they have to ask their employees to go on unpaid leave. 

“I think we really want to avoid this. This is the time that landlords and tenants have to be in good partnership and landlords have to do the social responsible thing to help us protect jobs,” Tjioe said. 

“You can see how our landlords are performing financially, and there is an imbalance of distribution of income. It’s a very, very heavy burden on F&B operators,” he added, saying that both landlords and tenants need each other to survive. 

The association said that restaurants are starting to engage fewer part-time workers and some have even started asking full-time staff members to go on unpaid leave. 

While there are no closures yet, Tan said that many restaurants are now quite empty as shoppers avoid malls. 

Referring to how the sector suffered back in 2003 when the severe acute respiratory syndrome (Sars) disease struck, Tan recalled that business bounced back only six months after the outbreak ended. 

“So we need to help (restaurants) these three to six months. Let us overcome the situation. We are not asking for long-term rental rebates. We are asking for help to ride through this very difficult time,” Tan said.

The Restaurant Association of Singapore told reporters at a press conference that it is appealing to landlords and the Ministry of Trade and Industry for support to tide through the slump during the Covid-19 outbreak. — TODAY pic
The Restaurant Association of Singapore told reporters at a press conference that it is appealing to landlords and the Ministry of Trade and Industry for support to tide through the slump during the Covid-19 outbreak. — TODAY pic

In Hong Kong, reports have emerged that landlords of major malls are cutting rents for the month of February by as much as 60 per cent to help tenants through the coronavirus outbreak. 

When asked whether RAS have received any response from any of the 24 landlords, the association said that some have replied by saying that they wish to understand the situation more and speak to the individual tenants directly. 

While RAS recognises that landlords are trying to help tenants by bringing in more shoppers, such as CapitaLand launching a S$10 million (RM29.7 million) marketing campaign, Tan said that these efforts do not help them immediately. 

A rental rebate would have a direct impact on the bottomline of the restaurants, he added. 

‘Haemorrhaging from arteries’

As for the likely impact if landlords do not agree to reduce rents, Andrew Kwan, vice-president of the association, said that restaurant closures would be likely because it is “just untenable”. 

“It’s not something where you can kind of wait it out over a few months without any sort of assistance.

“I liken this to a patient that is haemorrhaging from the arteries. We don’t have time to say that, ‘Let’s assess and let’s decide what’s the next measure’, and then slowly stop the bleeding. It’s something that is happening very rapidly,” Kwan said. 

During this period, some F&B outlets have reported an increase in food delivery orders, but the association said that this increase is not enough to cover the drastic drop in business at the physical outlets. 

RAS has also written a letter last Sunday to Trade and Industry Minister Chan Chun Sing, asking for help in these areas.

First, it hopes that the Government can help reduce labour costs by temporarily waiving foreign worker levies and providing wage credits. 

Second, it is appealing to government agencies such as the Housing and Development Board, National Parks Board, Singapore Tourism Board and industrial estate developer JTC to get them to offer rental rebates to their tenants as well. — TODAY

Related Articles