As I write this, we’re almost half of the way through the government announced and enforced “circuit breaker”. For some, this period of semi-isolation has not been that bad. When I look at social media, I see quarantine cocktail hours being broadcast over social media; videos of young adults whipping instant coffee into frothy viral memes; fit hipsters innovating home workouts and encouraging their followers to get “prison fit”. Some people have taken to public whining that they don’t know what to do with all their free time. Personally I have no idea what they are talking about. Between working from home and Home Based Learning, I have less time now than ever before.
But my problems, and the problems of every prison fit poseur, every tuxedo-clad home mixologist, and every single person with the time to make a Dalgona coffee, are really quite insignificant in comparison to our friends and fellow residents working within the food and beverage industry.
The F&B sector — along with other related hospitality businesses — has been decimated by the effects of COVID-19. Even before the “circuit breaker”, restaurateurs were suffering. Worried about viral infection, many consumers were already staying away from crowded restaurants. Then came measures which essentially asked restaurants to cut their seating capacities in half. Then with the lockdown, restaurateurs were told they could stay in business but they had to operate as takeaway or delivery businesses.
Let’s take a quick step back to pre-“circuit breaker”. I’m not sure most people understand just how difficult it is to run a profitable restaurant in Singapore. And yes, if you do things right, are both supremely talented and incredibly lucky, and also work yourself to the bone, you can be successful. And famous. But for every celebrity chef, there are a hundred overworked and underpaid cooks. For every rock star restaurateur, there are a hundred that are having a hard time just staying open. The reality, once you get past the glitz and glam of food television and awards like Michelin and the World’s 50 Best, is that a life in F&B is hard and perhaps one of the worst investments someone looking for a return should ever consider making. Even in normal times, 30% of F&B businesses in Singapore fail annually.
In Singapore, rent constitutes approximately 30% of a restaurateur’s budget. In cities like New York, Paris or London, that figure is closer to 10% or 12%. Once one has to factor in human capital (usually the second biggest operational cost), food costs and other expenditures, restaurateurs are left looking at a 5% to 10% pre-tax profit margin. Most operate at the lower end of that scale, hovering around 5% to 6%.
So, what happens if a restaurant’s possible sales are effectively cut in half – because of social distancing measures? It would immediately go into the red. Which is exactly what happened over the first quarter of the year. By the time the
lockdown, sorry, “circuit breaker” was announced, restaurants all over the island would have been losing money for months.
The only viable ways for restaurateurs to lower costs have been laying off staff or through reductions in rent. And sadly, most of our landlords have been, shall we say, less than generous. It is sad that the government actually had to make it clear to property owners that rebates they were receiving due to the current economic crisis, were not meant to be pocketed, but are meant to be passed onto their tenants. And clearly, these rebates are not enough. Most recently, restaurateurs have put forward an online petition asking landlords to reduce rents even more.
Globally, layoffs are putting so many talented and passionate people from this sector out of work. Danny Meyer, perhaps America’s most respected restaurateur, laid off 2,000 people in March. David Chang, celebrity chef and TV personality, who has recently let go 800 employees, said during an interview this period has been the hardest and lowest in his professional career to date.
Numbers have yet to emerge on local layoffs. But I know they are happening. And I know restaurateurs are grappling with the question of repurposing personnel in hopes of retaining them even though revenues are dropping.
The transition from full-service restaurant to delivery/takeaway business has been tough. I recently spoke to Oddle founder Jonathan Lim, who told me, “Most (restaurateurs) were not as prepared as we had hoped they would be. Before the circuit breaker, many restaurateurs believed they were ready as they were already delivering through various apps.” But the reality is that most weren’t prepared. Food delivery companies charge hefty commissions, upwards of 30%. Most also limited delivery zones, making consumer choice limited and the ability for F&B businesses to reach customers difficult.
Many operators have taken to using social media platforms, like Facebook groups, to reach consumers directly. They’ve also found alternative and independent couriers. They’re working with solutions-providers like Oddle to build online delivery services onto their own websites. They’re doing basically whatever they can to survive. But, frankly, many won’t. No matter what they do, this crisis is going to leave many restaurants shuttered.
We can play our part. And we should. If we can afford to purchase takeaway or delivery, we should. And not only from our favourite restaurants. I’ve made it a point the last week to order from small mom and pop shops that I have never previously patronized, only because I want to make sure that small operators get their fair share of patronage too. Consider also purchasing gift cards. Every gift card purchase is like a micro-loan that tells a restaurateur that you care, and that once, this terrible time is over, you’ll be there to dine in, and support, his or her business.
One of the good things that has come out of these tough times is the support that has been shown, by both corporates and members of the public. Foodies have taken to social platforms like Instagram to share what they are eating and give shout outs to favourite restaurants. Facebook groups have been very useful in helping restaurateurs and hawkers reach out and share that they are open for delivery and takeaway. Similarly, businesses have started curating and collating this and other useful offers so that Singapore residents can more easily access relevant information online. Tribal DDB’s I am a CCB site and the Dandy Collection’s Dine Inn Movement are great examples.
I work at Tripadvisor, the world’s largest travel guidance company. We have over 8 million businesses listed on our site, of which approximately 5 million are F&B businesses. Our own concern over our stakeholders has moved us to launch several initiatives, including US$1 million donated to support organizations serving vulnerable people and communities severely impacted by COVID-19 through our Tripadvisor Foundation. We’ve also begun rolling out other support mechanisms globally, all under the banner #LoveYourLocal. Just a few weeks ago, we rolled out the ability for every single restaurant listed on our site to be able to include a gift card link, at zero cost to them. We know that this small added functionality can actually help in a really big way right now. And we knew that the only conscionable route was to offer this free to all.
Here in Singapore, our local efforts are channelled through an advocacy campaign we’ve called LoveYourLocal Singapore. We’ve launched a microsite that pulls together content from media partners, gift card offers found on our site, special delivery and takeaway deals from partners (such as Chope and Burpple), and takeaway and delivery offers curated from our Tripadvisor site. An inclusion I am very excited about are what we’ve called Pay It Forward opportunities — social impact campaigns that support F&B establishments but also serve people in need. For those members of society that can afford to give, the ability to serve not just one, but two groups in need, is the kind of win-win that we need desperately right now.
Yet despite these efforts, we’ll definitely be seeing additional layoffs and closures within our F&B sector. There is, sadly, no way to save everyone. What each of us can and needs to do right now, is support the ones who have always been there to serve us. And hope to hell that helps.
Aun Koh is the Director of Brand and Content, Asia-Pacific, at Tripadvisor. He is well-known within the F&B space having worn multiple related hats: food TV host; restaurant guide publisher; operator and entrepreneur; lifestyle communications agency co-founder; Chubby Hubby food blogger; cookbook author and photographer; and lifestyle magazine editor.