As F&B sales in Singapore fall by 53pc in April amid circuit breaker, some restaurants choose to close shop for good

F&B sales tumbled by 53 per cent in the month of April as compared with the same period last year, after dropping 23.7 per cent in March. — TODAY pic
F&B sales tumbled by 53 per cent in the month of April as compared with the same period last year, after dropping 23.7 per cent in March. — TODAY pic

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SINGAPORE, June 6 — Nicholas Lim, owner of La Cantina in Venezia, a restaurant at Village Hotel Changi, said that it felt like he had “lost his child” when he had to close his restaurant in early April this year after 17 years in business.

The restaurant had originally opened in 2003, when Singapore was grappling with the Severe Acute Respiratory Syndrome (Sars) crisis, but the current pandemic is much worse, Lim said.

“I’ve been in business for so many years but this is so different. There is no playbook to follow, you just have to ask yourself what makes sense going forward.”

Lim is not alone in his plight as the pandemic has devastated Singapore’s food-and-beverage (F&B) industry in the last few months, as reflected in the latest data from the Department of Statistics Singapore (Singstat) yesterday.

F&B sales tumbled by 53 per cent in the month of April as compared with the same period last year, after dropping 23.7 per cent in March.

Compared with March, F&B sales plunged by 38.8 per cent in April, led by a 53.6 per cent fall in restaurant sales.

This is the steepest monthly drop in F&B sales since the Sars outbreak caused sales to fall by 22.9 per cent between March and April 2003.

Singstat said that overall retail sales also plummeted 40.5 per cent in April compared with the same month a year ago, to S$2.1 billion (RM6.43 billion), after sliding 13.3 per cent in March.

In its report, the department attributed the declines to the circuit breaker measures that restricted non-essential business activites and movement of people from April 7 to June 1.

Economists interviewed by TODAY said that these drops are unprecedented, and that while the numbers may have hit bottom, they expect F&B sales to continue to be weak for several more months yet.

For some, there is no recovery in sight for the short term. A list of restaurants that have reportedly had to shut down during the circuit breaker has been making the rounds on social media.

A check by TODAY found that while some of the restaurants on the list are indeed out of business, others are scaling down their operations or pivoting to new business models.

Xcel Yeow, the co-owner of Inspirit House, one of the restaurants on this list, will be shutting his restaurant down when its lease ends in August. He will not be extending his restaurant’s lease at Punggol Settlement, an F&B dining spot near the Punggol Point Jetty, because sales plunged by 90 per cent during the circuit breaker.

“It was a hard decision because emotionally, we are very attached to the brand that we have built from scratch. Many of our customers have asked us to stay but I’m afraid the overheads are just too high to sustain the business, especially with the challenging conditions,” he said.

Meats N Malts, a bar and diner near Tai Seng MRT Station that was also on the list, ceased operations on June 1.

A spokesperson from Strumm’s Holding, which owns Meats N Malts, said that most of its customers were office workers in the area and most of them have not returned to work since the circuit breaker.

Although the restaurant tried to take advantage of delivery platforms, Strumm’s Holding said that the commissions they had to pay were too high and the sales too low for it to continue with the business.

Lim of La Cantina in Venezia said that even before the circuit breaker, patrons had become more wary of dining out when the Covid-19 outbreak worsened in March. Just before the circuit breaker, business had already fallen by 60 to 70 per cent and he knew then that the restaurant would not survive.

Still, he has continued employing his two chefs and they are setting up a central kitchen so that they can pivot towards doing deliveries of some of their popular items, such as thin-crusted pizzas and lasagne.

Coffee Break, known for its traditional sock-brewed Nanyang Kopi, has had to make the same switch.

By March, before the circuit breaker began, its Science Park outlet had already suffered a 50 per cent drop in business, as office workers in the area began working from home, its co-owner Faye Sai said.

She and her two sibling co-owners had to close that outlet when the circuit breaker kicked in and their employees moved to work at a new stall at Hong Lim Food Centre, with 90 per cent of the sales there coming from deliveries.

“The F&B scene has changed... and we cannot be completely reliant on foot traffic. All three of us foresee that the new normal will be to put everything online, be it services, be it our products or merchandise. Even if we operate out of a hawker centre, we will be serving people at home and in offices and we cannot expect that same level of footfall,” Sai said.

Outlook for F&B still grim

CIMB Private Bank economist Song Seng Wun said that the drop in F&B sales in April is likely the worst Singapore has ever seen and reflects a sharp plunge in overall household spending.

“As online sales (of F&B businesses) get ramped up, we should see sales figures stabilising in May and June,” Song said, noting that F&B establishments were probably still adapting to handling deliveries in April when the circuit breaker started.

Data from Singstat showed that online sales made up 39.2 per cent of all F&B revenues in April.

Song added that there may be a net contraction in the number of F&B businesses in Singapore in the next several months.

Already, there were just 29 net formations of F&B business entities between February and April this year, as compared to 192 net formations a year ago, Singstat figures showed. This is the difference between the number of new F&B businesses created in the period and the number that shut down.

Irvin Seah, a senior economist at DBS bank, said that he was not surprised that the April F&B sales figures had fallen so sharply, given the prohibition on dining in and the decimation of tourism.

Even though restaurants were able to continue offering deliveries and takeaway during the circuit breaker, Seah said that this would not have been able to offset the loss in revenue from dine-in patrons.

When dining in is allowed in the second phase of Singapore’s exit from the circuit breaker, Seah believes that restaurants will still have a difficult time sustaining their businesses because they will have to continue to abide by safe-distancing regulations.

The Government has previously said that in this second phase, patrons will only be able to dine together in groups of five or fewer, and tables will have to be spaced 1m apart.

“The number of customers they can receive will be limited by the safe-distancing requirements and hence, the revenue generated may not be enough to cover their overheads,” he said. — TODAY

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