You have been dreaming about starting your passion project in F&B for a long time. You finally decide to open your very own F&B outlet. You are super excited because you get to be your own boss, make your own decisions, do what you love, and work at your own time. However, in the midst of all this excitement, you might be feeling a little overwhelmed about how to start your journey as an F&B entrepreneur. Fret not, because we are here to clear your worries! In this article, we shortlist 5 top things that you need to know and ask yourself before starting out in the F&B industry.
The service style of an F&B business is vital as it is a determining factor for your restaurant's layout, menu, inventory, food prices, and the décor. In order to determine your service style for your business, the first thing that you have to figure out is the different types of service characteristics Singapore has. By doing this, it helps you to understand how these service styles are like in SG so that you can provide a wholesome experience for your customers.
Did you also know that the service styles used in different settings help to shape your customer’s perception of your brand and your restaurant as a whole? For example, if you are serving food in a fine dining restaurant and your service style mimics a coffee shop service style which is casual and your service staff speaks in a loud voice, it wouldn’t sit right for the customers and they might not return because of that.
Taking over an F&B business is commonly referred to as buying the entire business at an agreed rate from the previous tenant. It commonly includes the name, brand, logo, equipment, licenses, and the physical unit of the previous business.
Often, people are quick to judge that there must be something amiss with the business if the F&B owner decides to sell the business. However, in reality, some F&B owners sell their business due to them being at different life stages, and/or they might not be excited to work with their existing business model anymore. Instead, taking over a business may bring you more pros than cons such as not having to worry about your licenses, décor, the direction of operations.
For example, starting a restaurant from scratch requires lots of time and effort, trial and error to determine if you are doing things right for your business. Whereas, when taking over a business, all these problems are more or less settled as they have been established for a period of time.
Always remember that what is no longer working out for someone else might be a step to your entrepreneurial dream, so stick to your beliefs and go for it!
Before we get to the location that you desire, you have to know what you are planning to sell as different preparation methods might pose some restrictions on the units you consider. For example, a pop-corn stall only requires a pop-corn machine and a sink. There is no need for an exhaust hood and ducting, a stove and grease trap, as compared to a Chinese restaurant.
Next, remember to survey your neighborhood. If you happen to notice your neighbors selling similar food items as you, it is not necessary that you have to move or change up your menu. This could mean that your neighborhood has a high demand for the food items that you are selling, which is a bonus for your F&B business. For example, Tanjong Pagar is known to be the place for Korean food. Despite the saturation, it is still a popular spot because if one shop has too many people waiting in line, customers who are unwilling to wait will switch to neighboring shops.
Opening your F&B business in a strata mall as compared to a commercial shopping mall is very different, so do your homework before signing a tenancy agreement. Strata malls are commonly located near residential estates and are more welcoming to new, unproven brands. On the other hand, for commercial malls, there is the Gross Turnover (GTO) component to consider when calculating your rent. If you plan to open your F&B business in a shopping mall, be prepared and budget your operation cost and menu prices accordingly.
A very important aspect of a food business’ foundation is the people who work behind the scenes and they are known as your mobile team. They are the ones who you can rely on and support in order to build and grow your business along the way.
A starting team commonly consists of individuals who are able to make great decisions, build relationships, drive employee productivity, create a positive environment for their co-workers, and empower people. These are the people who will be capable of handling and planning the menu, setting up the Standard Operating Procedures (SOPs), and developing the culture for the staff in the restaurant.
It is always better to go ahead with a supplier who can consistently deliver fresh quality produce to you as compared to a supplier who offers you a lower cost in the price of the ingredients. Without a supplier that is consistent in their offerings, it may disrupt your business operations as you would have to source for a supplier when your ingredients have gone grim, resulting in higher cost!
One pro-tip that you can take note of is that before selecting the suppliers that you want to work with, you may visit them and observe how they operate. The differentiator between a good supplier from a bad supplier is the way they pack vegetables/fruits together. Some vegetables/ fruits release ethylene gas and some categories of ingredients are sensitive to such gas. For example, apples, blueberries, tomatoes are foods that produce ethylene gases and broccoli, garlic, cauliflower, and unripe bananas are ingredients that are very sensitive to the gas. By placing them together, it will result in your ingredients rotting. Hence, it is vital to see if your suppliers are storing the ingredients properly before selecting them as your food supplier.
All in all, there are many things you need to consider before setting up your F&B business, the 5 things mentioned above can be a good starting point for you. Opening an F&B business in Singapore is not the easiest but it can be very rewarding, and we have guides for just about everything you need to know. So remember to invest time and energy for it, plan your steps, do your research on your target market, location, to grow your F&B business!
Caroline Yap is the editor and intern at iCHEF Singapore. She manages iCHEF Club, a growing community of F&B owners in Singapore – organizing events, an online newsletter, and the F&B Entrepreneur Bootcamp, the only regular workshop on opening a new restaurant in the country. In her spare time, she loves drawing, painting, and creating new visuals. Her love for Korean food runs deep such that you can spot her at any famous Korean Restaurant in Singapore.
In the F&B industry, it is very often that the focus falls on placing customers' needs first and sometimes, we forget that suppliers are a vital part of our F&B business. They are crucial in bringing you your ingredients required to start preparing your dishes. Building a strong relationship with suppliers can not only help you to get preferential pricing and first-hand news on new products but also ensures smooth sailing operations (Guaranteed supply of goods, making emergency deliveries for your restaurant during peak periods) and managing expectations between both parties.
How do I find my suppliers?
When starting out in the F&B industry, everything from where to source for possible suppliers to assessing the quality of suppliers and managing them is no mean feat. Well, iCHEF’s got your back!
We spoke to 3 F&B owners to learn more about their ways and processes of managing and working with food suppliers, and they are namely :
Bruno, founder/owner of Bruno’s Pizzeria & Grill – he has been in the F&B industry for close to 20 years, with currently 3 outlets across Singapore
Gwern, owner of A Noodle Story – a hawker stall specializing in Singapore-style ramen at Amoy Food Centre and has been in the industry for 10 years
Vandana, co-founder of Capri Trattoria – an Italian restaurant specializing in Southern Italian Cuisine, from the coastal regions of Capri and a new F&B owner herself
Map out your dishes and categorize each of the dishes’ ingredients into perishables (Meat, Vegetable, Seafood, etc.) and non-perishables (Flour, Nuts and Seeds, Canned beans, etc).
By mapping your dishes out, you are able to plan & structure the number of suppliers you would need.
For a rough gauge for a new F&B business, A Noodle Story and Capri Trattoria each have one outlet in Singapore and they have approximately 10 suppliers for their ingredients.
2. Try to minimize your inventory by using similar base components for multiple dishes
This helps to cut down on the number of suppliers that you need to source for. In addition, it also helps to reduce your expenditure on ingredients which may go to waste because they are not used up quickly enough.
For example, Capri Trattoria uses potatoes as their base for 60% of their mains. Some of their mains with similar bases are Grilled Lamb Rack, Grilled T-bone Steak, Grilled Beef Tenderloin.
In order to determine which supplier brings you the best price and quality, it is advisable to speak with at least 3 suppliers to estimate which can quote you the best price for similar quantity It might be a good idea for you to meet the suppliers in person and get an idea of how their business operates to determine if it fits your criteria of a good supplier.
Using Social platforms to help source for your suppliers. Consider joining Facebook groups with F&B suppliers, such as Singapore F&B Business Network.
Through the word of mouth. Speak to your neighboring F&B restaurants and ask them about their suppliers. Of course, before you do that, you have to build a good relationship with your neighbors! Sometimes, referrals may bring you additional benefits such as lower costs for your ingredients or delivery.
Just like Vandana! Previously, she was from Pasta Fresca and she was able to tap into her existing contacts to look for suppliers when she started Capri Trattoria.
2. How can you differentiate a good supplier from a bad supplier?
After sorting out the number of suppliers that you need based on your menu, the next step would be to find a reliable source for your ingredients.
To differentiate a good supplier from a bad supplier, you have to look at:
What they are selling you and determine if they provide quality ingredients
The quality of ingredients is the most important factor to differentiate a good supplier from a bad supplier. Without having quality ingredients, customers would not be willing to come back to your restaurant. Each of our 3 F&B owners unanimously agreed during our interviews that good quality is their utmost priority when sourcing and using a supplier.
Gwern from A Noodle Story shared with us that if the quality of ingredients is sacrificed for a lower cost, no customer will show up and be willing to spend their money at your F&B business.The reliability of your suppliers
A good supplier will deliver the correct quantity of goods on time and in the right condition. Before selecting your suppliers, you may want to visit the supplier and look at the cleanliness of their vehicle, their carrier bags, the equipment used to transport your food.
When your stock has arrived, examine and weigh the goods that you have ordered and determine if they are still in the right condition. We have heard stories from F&B owners that they found cockroaches and other insects in the shipments from their suppliers! This results in having to throw away the entire stock as it is unhygienic and it cannot be cooked and served to customers.
It might be difficult to maintain the consistency and quality of your ingredients if your suppliers do not handle your ingredients properly during the delivery of your products.They can meet your last minute request
All three F&B owners mentioned that this is what they look for in a supplier. They shared that there are several periods in a year where their business is especially busy and they have to cater to an uptick of customers. At times like this, ingredients may run out right in the middle of the week and this is when you may require your suppliers to be flexible and deliver the goods needed on short notice so that business can operate smoothly.A good supplier is willing to accept criticism and feedback
They will be willing to listen to your input, change, and meet your expectations.
3. How can I maintain a good relationship with my food suppliers?
Pay your bills on time
This is the most important factor for a good relationship with your vendors. Ensure that they do not have to chase for bills that are past due. Once you have an agreed payment schedule with your vendors, do not avoid payment as this will affect your relationship with them over time. Most suppliers will not extend credit terms to new businesses as their trust has to be gained over months of prompt payment. Suppliers also blacklist businesses who do not pay for their orders, and this might make it difficult for a business to find alternative suppliers to work with.
Mr. Gwern from A Noodle Story mentioned that payment is definitely a very tricky subject and money should never be owed. He makes it a point to do his accounting every single day and pay his suppliers immediately when goods have arrived. He does not want to have any credit issues with his suppliers as it might spark unhappiness.Knowing what you need to order
Let us go back to our first point of knowing what is needed for the business and the importance of being precise when conveying the list and quantities required. This can be done through various methods such as manual stock-taking or by using a POS system with inventory management that keeps track of what you have purchased for the week.
iCHEF POS system provides F&B owners with the ability to track ingredient usage and determine if they need to stock up their ingredients. For example, the POS system is able to tell you the quantity of seafood, meat you left. From there, you can look at the inventory to stock up on your ingredients.Trust your suppliers
Share information with them regarding your business inventory and sales as it will help them to forecast orders and delivery dates and react quickly to changes. By doing this, your suppliers can help you to pre-portion your orders.Keep an eye for opportunities for your food suppliers
They will thank you for that! By introducing them to new contacts for their business, it provides a win-win situation for you and your business. At times, vendors might throw in freebies such as extra mushrooms, more flour, or let you sample new products. They might even charge you a cheaper price if you have a good relationship with them.
Be honest with your suppliers
Communication is key with your suppliers! Suppliers love honesty and feedback but remember to do it tactfully. Humans are prone to making mistakes and miscommunication happens occasionally. Speak to your suppliers politely, and work through things together with them if the quality of the ingredients is poor. It is vital to allow your suppliers to be part of the solution to your problem.
All in all, the F&B owner and the supplier relationship is a two-way street! No doubt, suppliers are essential to your business and similarly, they cannot do without you. Building good rapport will bring you a long way in the future as your suppliers will be more inclined to share the good stuff with you first.
Caroline Yap is the editor and intern at iCHEF Singapore. She manages iCHEF Club, a growing community of F&B owners in Singapore – organizing events, an online newsletter, and the F&B Entrepreneur Bootcamp, the only regular workshop on opening a new restaurant in the country. In her spare time, she loves drawing, painting, and creating new visuals. Her love for Korean food runs deep such that you can spot her at any famous Korean Restaurant in Singapore.
This article is written from the perspective of Ivan, the CEO and Founder of Hathaway.
When the iCHEF team visited Hathaway on their grand opening last month, we were impressed with the number of staff it had and the smooth efficiency of operations despite it being their first official day. So we began an interesting conversation with Ivan, about how he started the brand and built up his team of strong employees.
A little back story: Before Hathaway was born, Ivan started a cafe while he was studying at Singapore University of Technology & Design (SUTD) as he wanted to give back to his school.
The idea of opening a cafe piqued his interest in baking bread from scratch, and he managed to do this without any prior knowledge of baking bread. He very quickly mastered the techniques of baking bread through cookbooks, watching YouTube videos, and lots of practice of course! His breads were a success and won the hearts of his family, friends and his customers! Soon after, his family joined the business and started helping out at the cafe, which is now known as the well-loved Bread Yard.
Eventually, Bread Yard moved out of SUTD to Fusionopolis and the company went on to open a factory at Mandai a few years later, supplying bread to other F&B outlets. Fast forward to 10 years later, Ivan chanced upon a space at Dempsey Hill and opened a second cafe - Hathaway, that incorporated his handmade bread into his dishes.
Before we dive into his story, let’s find out…
A starting team refers to the people with whom you start your F&B business from the beginning. These team members have a say in the decision-making process (E.g., If your restaurant business has been open for a month, and you hire waiters or baristas to work as service staff, these new hires would not be considered as your starting team.)
A strong starting team should have the same vision and also help to set the tone for your business. Without having people with similar mindsets, it might cause unexpected problems to arise and put off your initial intentions of starting a business.
Coming back to Ivan’s story!
When we visited Hathaway, the first thing we noticed was that they were very well-staffed. Ivan shared that they had managed to put together a strong team of staff with 7 chefs in the kitchen, 6 service staff, and 1 dishwasher.
Through our conversation with Ivan, we learned more about his hiring process and how he built up his team. He mentioned that he used the Government portal MyCareerFuture.sg to post job openings. With that, Hathaway received tons of applicants for each position, and his starting team consists of Head Chefs from W Hotel, a Service Manager, leaders from Bread Yard, and also a Menu Consultant from Melbourne.
As we all know, due to Covid-19, several F&B businesses in Singapore have been facing issues such as difficulty in paying their staff and retrenching of staff. Interestingly, it was quite the opposite for Hathaway! While other companies were undergoing retrenchment, Ivan seized the opportunity and place alot of jobs on job portals. This worked and he was able to put together a large pool of applicants for Hathaway. The hiring process took approximately 2 months and they secured a strong team of 8 kitchen staff and 6 service staff for their start.
Hiring your starting team is vital and it cannot be thought of lightly as F&B is a fast-moving industry. The nature of work can run high so the people who get hired must have the same mindset, passion, perseverance, and goal that the business has, or else there might be problems surfacing after a period of time of them working.
One of the noteworthy things that Ivan shared with us was that having soft skills such as ‘people skills’, social etiquette, likable personality, and core values took precedence for him. He felt that having an employee with only hard skills such as cooking techniques is not as important as soft skills as hard skills can be taught and learned over time. We at iCHEF absolutely agree.
Here are some of the few soft skills that Ivan looked for when hiring his team:
Fit the culture of the job
Look for candidates that exude a positive attitude! People that exhibit positivity are more inclined to work their way through problems as they can objectively evaluate the issue and think of creative ways to solve it. Furthermore, they could strengthen relationships at work which can result in a lower turnover rate. However, Candidates with poor and bad attitudes may struggle to interact with their co-workers and or even possibly offend customers. The last thing that any F&B owner wants to see is customers leaving their restaurant in displeasure and leaving a negative review online. If you find a candidate with a positive attitude, and discipline, keep them, as these skills cannot be taught in books!When the candidate’s values align with the company’s values, he/she would be driven to complete the task as they believe they are aware that their contribution will bring a positive impact to the business. When candidates are inspired to perform their duties, it is often that teamwork, productivity, and commitment towards the business will increase.
Show Leadership qualities
A strong leader is someone who can empower people, make great decisions, build relationships, drive employee productivity, create a positive environment for their co-workers and communicate effectively with their team. Without a strong leader, there would not be a clear direction for co-workers to perform their duties.During the interview process, you may spot a good leader by his listening skills. People who have strong listening skills tend to react after internalizing and then ask great questions. In addition, a good leader can manage conflicts in the workplace and negotiate with the other party without creating more tension.
Able to withstand pressure and work in teams
With regards to testing whether an employee is able to handle the pressures of a restaurant workplace, Ivan shared with us that it isn't easy to measure or quantify how well his staff performs based on a test. According to him, performance judgement in the F&B industry requires observing staff on their job from day one.Being able to work in a team is important as effective teamwork helps to ensure that the F&B operations run smoothly. A lack of teamwork in a restaurant results in slower service, increasing mistakes, rude staff and these contribute to bringing a lousy dining experience for the customer.
Great Communication
This is the most important tip you have to remember when hiring a starting team member! You have to ensure that the hire understands the importance of great communication as it is a building block for creating good service. The person you hire must be able to provide staff with direction (E.g., Who is performing food duties, collecting used dishes, how to work together seamlessly during chaotic shifts.) Besides that, they must be able to be in control of the situation to understand and fulfill your customer needs.
Ivan mentioned that communication is a double-edged sword as he felt that excessive communication would result in the rise of internal conflict, whereas the lack of communication may result in staff feeling that there are insufficient directions to follow.
It is important to remember that if you are being too controlling, your staff will shun you as micromanaging staff at work would end up backfiring your initial plans. Providing balance was one of the key factors that Ivan mentioned and he emphasized that it is an important factor that employers always need to remember.
Giving too much free rein might allow employees to climb over your head and not respect you as their superior, or they might feel that you are not providing direction and guidance to him/her. In contrast, micromanaging might cause your employees to feel suffocated or even feel that they are not respected.
In Ivan’s case, he gave freedom and space for his starting team to grow and make mistakes. He allowed his head chefs from W hotel and his menu consultant from Melbourne to be involved in the decision making and design processes and gave them the outlet to be creative when developing the menu for Hathaway. His service manager was tasked with brainstorming ways to improve the service at the café. When employees get to make decisions and see the direct impact of their ideas, their morale is lifted significantly and this reduces turnover and also streamlines the working processes of each staff member.
In order to manage his starting team, Ivan does regular team meetings with his team. Discussions are open for his team to talk about the business and how to improve it. By having open discussions, it allows his team to voice out their thoughts, possess high self confidence and also be committed to their responsibility.
“Your Hand Fits In Mine Like It’s Made Just For Me”
To sum up our learnings with Ivan, it’s all about how to find the right person on the team. You have to ensure that your starting team fits the culture, has the leadership and communication skills so that he/she can be a source of direction for their fellow team members. There is no doubt that finding a great starting team takes lots of planning and responsibility but all this will be worth it once everything runs smoothly as you have anticipated! Don’t give up hope if you are unable to find one yet because there will be suitable candidates out there with the right attitude and values that fits just right for your business!
Caroline Yap is the editor and intern at iCHEF Singapore. She manages iCHEF Club, a growing community of F&B owners in Singapore – organizing events, an online newsletter, and the F&B Entrepreneur Bootcamp, the only regular workshop on opening a new restaurant in the country. In her spare time, she loves drawing, painting, and creating new visuals. Her love for Korean food runs deep such that you can spot her at any famous Korean Restaurant in Singapore.
Starting an F&B in Singapore is definitely an exciting journey that comes with tons of responsibility and is no mean feat. Lots of thoughts and considerations goes into planning out many aspects of your F&B establishments, such as the concept, the interior, menu, equipment, licenses and suppliers. Some of us may prefer to take over an existing F&B business instead , wanting to avoid worrying about the difficulties of starting one from scratch. If you find yourself falling under this category, read on to find out the important things to consider when taking over an existing F&B business!
Taking over an F&B business
According to Commercial Guru, taking over an F&B business refers to buying over the entire business at an agreed rate with the previous tenant. It commonly includes the name, brand, logo, equipment, shop of the previous business. In simple terms, it means that the business is switching its owner. (E.g.,Mr. Daniel Tay, Bakerzin owner sold his store in 2007 and Boga group took over Bakerzin).
In addition, it does not mean that you own the premises. Rent is still applicable, and you would still have to pay the rent based on the agreement with the landlord.
2. Pros and Cons of taking over a business
Pros:
Taking over the business allows you to be able to:
Save lots of time - You do not have to spend time drafting out business plans, worrying about your target audience, doing up your menu, finding your employees, getting the licenses etc. needed to open your F&B business. Some licenses are tough to get and have to go through change of use. (E.g. Nightclub license are tough to get and they have to get the permission of use from URA)
Attain foreign worker quota - There is a foreign worker quota that all F&B businesses in Singapore have to abide by. New F&B businesses have to start from scratch to hire Singaporean employees before they can hire foreign employees so this is one of the reasons why taking over a business is great as you are able to get the help required for the business.
Save money on your starting cost - Things like equipment needed to cook the food, kitchen piping, aircon piping’s costing, fixtures such as tabletops, chairs, licenses, etc. can be saved as the business is already equipped with all of these.
Save on your marketing costs - If the previous tenant has built a name on their own, you will be able to gain from the fame as there is a solid customer base. You do not have to start your marketing from scratch and this can help you to save cost and also think of other ways the money can be used. E.g. You can spend money on building your customer loyalty, engagement, etc.
Cons:
Be careful of hidden costs!
Some hidden costs such as unpaid rental fees, supplier debts, bank loans that are tied to the business, etc. will be transferred to your name after you purchase the business and you will be liable for these costs. Sometimes, the previous tenant might not reveal the debts for fear that their business might not be sold so it is important for you to check before agreeing and signing the takeover document.
3. Checklist of what you need to do before taking over a business
Performing your research before speaking to the previous tenant is vital as you might be able to find out more about the shop's reputation and potential problems that you may encounter in the future. The gathered information will then assist you in either finalizing or reconfirming your decision.
Some methods include going down to the location and observing its surroundings, speaking to your potential neighbour, or using Google, Social Media to see if the shop has been reported in any media before.
In addition, speaking to the boss of the business directly should not be forgotten as it will help you to find out why he is selling the business. Besides that, you would be able to better understand the business direction, strategies on how the business has become successful in the past.
Takeover fees refer to the selling price of the shop that you and the tenant have agreed to. Takeover fees commonly include the name of the business, the fixtures (Fans, table counter, shelving), fittings (mirrors, tables, and chairs), current reservations, employees, etc. You have to check that the business includes the name of the business as without that, you are not allowed to use the same name, or it might be deemed as copyright infringement. Takeover fees vary and are commonly negotiable from owner to owner. It depends on how much the owner is willing to let his/her shop go.
In addition, equipment, furniture and fittings are tangible items and they depreciate over time. (E.g, A pasta machine is valued at $1000 on first hand. 5 years later, its depreciation per year is $160.) With that, you have to ensure the amount you are paying for the restaurant takeover is reasonable and not overpriced!
Bear in mind to look through the types of licenses that the tenant holds to be sure of what you are allowed to sell. E.g., if you are taking over a restaurant that sells food along with alcohol, the business would require a Foodshop (Restaurant) license and an Alcohol license issued by the Singapore Food Agency and The Singapore Police Force respectively.
To know which type of license the shop owns, you may refer to the picture below.
To find out the expiry date of the license, you may refer to the top of your license.
Upon expiry of the license, you will have to renew the license to continue the business. Renewal of the license will be viable 2 months before the expiry date. (E.g. If your license expiry date is on 20 August 2021, you can prepare to renew your license in June 2021.)
A fee is charged based on the license that your F&B business holds. Remember to take note that once the license has passed the expiry date, you will have to apply for a new license.
Operating a food establishment without a valid food license can amount to a fine up to S$10,000 so make sure that your license is still valid before taking over.
Look at the Tenancy Agreement before taking over the business! If the TA states that a 2 + 1 year rental tenancy, this means that there is 2 years of fixed rental and 1 year of option that you can choose to renew or decline if it is mutually agreed by both tenant and landlord.
If the existing lease is near the expiry date, you have to speak to the landlord to see if he is willing to extend the lease and check how much it would cost to extend it.
This is an important step as you have to ensure that the previous owner of the business does not leave their debts behind for you to clear. (Unpaid rental fees for previous months, unpaid supplier payment, unpaid employee salary, etc.). To do that, look through the business account books or hire an accountant to help you ensure that there are no outstanding debts over the time he/she is handling the business.
When looking at the accounts, you cannot assume that the business is making a profit just because you see an increase in the cash from month to month as the cash flow includes the business operations cost, purchasing inventories, paying employees salaries. Thus remember, the cash flow is not an exact representation on whether the F&B business is making a profit.
Speak to the employees to determine if they are willing to stay or if they want to work for someone else. Your goal is to retain the existing employees(local and foreign workers) as getting staff to work in the F&B industry is a tough process and there is a foreign quota that all F&B businesses have to abide by to hire foreign workers. By letting go of existing employees, it might be difficult to find workers to work and operate the business.
All in all, being inquisitive of the business processes and accounts are the most important aspects as they are crucial in providing you a full overview of how the business is performing. This also protects yourself from being answerable for the bad debts that previous owners have incurred.
Caroline Yap is the editor and intern at iCHEF Singapore. She manages iCHEF Club, a growing community of F&B owners in Singapore – organizing events, an online newsletter, and the F&B Entrepreneur Bootcamp, the only regular workshop on opening a new restaurant in the country. In her spare time, she loves drawing, painting, and creating new visuals. Her love for Korean food runs deep such that you can spot her at any famous Korean Restaurant in Singapore.
After getting your concept and business plans down, it’s time to look for a suitable place to open your shop. While it's common knowledge that location is very important, the most desirable locales usually expensive, and high rental in Singapore can be a crippling factor in making your business profitable. It's also pertinent to bear in mind that Singaporeans, being food lovers, are willing to travel for exciting new cuisines or interpretations of food they cannot find anywhere else and also for ambiance even if a restaurant might be inaccessible. If your business is intending to use delivery platforms, the lack of footfall at your restaurant’s area might not be a major problem as you might be able to make up for it through delivery channels.
Identify your target audience
Other than obvious considerations, such as whether your target audience is office workers to decide on whether you should open in a location like the CBD, look at their age, and spending power as well. For example, local food concepts work better in the heartlands and people generally expect the food to be priced more affordably.
E.g., Generation X generally is more family-oriented and prefers family dining. If your target audience belongs to Generation X then you would require a larger area in your restaurants to accommodate the number of families in the restaurant.
It is important to estimate how much your target audience is willing to spend on a meal so that you know how much you can charge.
2. Physical aspects of your business/shop
Not all properties are suitable for F&B kitchens or certain equipment. You have to be clear about what you are planning to sell and their preparation methods.
Some aspects to consider:
What are the cooking methods used to cook the dishes? (E.g., 3-deck oven to bake bread, combi oven to roast meat, cooking hobs, and etc. )
Would most of your food preparation be done in a central kitchen or on the premises?
Do you require exhaust ducting and plumbing works to be done?
Is the existing power supply adequate for you to operate your kitchen equipment?
If the unit you are considering does not meet most of your kitchen requirements, there might be a considerable cost involved to fit it out accordingly. It is up to you to weigh if that cost is justifiable or if you would rather look for another unit.
Kitchen requirements
All food shops in Singapore (not to be confused with food stalls) must adhere to a minimum food preparation area of 10 SQM (excluding service area) stipulated by SFA. If your F&B business is a small one and you have a central kitchen to manage your food (E.g., Jelly Hearts cheesecake), opting for a smaller space would be sufficient for your business. For small snack items, you can consider renting a kiosk instead of a full-fledged shop. Small shops also work for takeaway and delivery concepts.
Taking over an F&B outlet vs a bare unit
Taking over an F&B outlet can be considered as a safer route as it probably has met the kitchen area criteria, and often comes with kitchen exhaust ducting, gas lines, and grease traps in place.
Whereas, taking over a bare unit requires more work as you/your F&B consultant may have to apply with URA for a change of use to the restaurant”. You can check the approved use for your unit here. Bare units are typically in new buildings, and ducting works for the kitchen exhaust may be required, incurring more cost.
3. Take a look at your neighbors
Nearby businesses might benefit yours through their customers and/or employees. According to 99.Co, opening your F&B business near tuition centers is good as parents tend to sit in a cafe/eatery while waiting for their children's classes to end.
If there are cuisines similar to yours nearby, fret not! Although they are competition, it could also mean that there is a high demand, which is a bonus for your business.
E.g., Tanjong Pagar is known to be the place for Korean food. Despite the saturation, it is still a popular spot because if one shop has too many people waiting in line, customers who are unwilling to wait will switch to neighboring shops.
4. Tenancy Agreement
Things to consider when opening your F&B business in:
Strata Malls
According to The Straits Times, strata malls refer to malls that do not have central management to oversee the tenant mix. Some possible downsides of opening in strata malls may be the lack of variety or a good tenant mix to draw in the crowd. Some strata malls include Bugis Cube, Queensway shopping center, Sun Plaza, City Gate, Sunshine Plaza, The Arcade, etc
Strata malls rarely have anchor tenants
Anchor tenants are shops that attract customers to the mall (E.g., Uniqlo, supermarkets, etc.). The downside of not having anchor tenants is that the businesses in strata malls have to rely on their own creativity and marketing to attract customers, rather than benefiting from customers who are there to patronize anchor tenants.
Also, strata malls have lower foot traffic as compared to commercial malls as they are often family-friendly and have a cheaper rental.Strata malls rent might be cheaper than bigger malls
On the other hand, strata malls are more financially accessible to new F&B businesses. Unlike commercial malls, which are particular about the F&B concepts entering the mall in order to ensure a good tenant mix, strata malls are also more welcoming to new, unproven brands.
E.g., the Queensway Shopping Centre shop rental rate ranges from S$5.29 - S$9.33 Per Square Foot Metre (PSFM). Compare this to 313 Somerset Mall in Singapore, the rental price of shops can range from S$9.39 to S$24.77 PSFM.
Businesses operating within a mall are bound by the mall’s operating times. Some malls will mandate opening daily (even if there is no crowd on the weekend, as is the case for places in the CBD) which means higher manpower costs. Other malls may switch off the central air conditioning by a certain time each night even if you are allowed to continue operating, which poses discomfort to your customers.
Commercial Shopping Malls
GTO (Gross Turnover)
Gross Turnover is a percentage of your monthly revenue charged on top of your rental. According to Mall Spaces Asia, malls typically charge between 15-20% Gross Turnover (GTO) and premium malls with luxury retail products may charge even higher than 20% GTO.If you plan to open your F&B business in a shopping mall, be prepared and budget your operation cost and menu prices accordingly. The mall management will require integration with your POS system to have access to your monthly revenue figures.
How GTO works: E.g., Your total rent costs S$100K. The mall charges 15% GTO, so you will have to pay S$15,000 on top of your rental.Look at the location within the mall
The more foot traffic there is within a particular spot, the more expensive the rental cost would be. Commonly, shops with a bigger frontage or near entrances are more costly.
E.g., the Basement level of shopping malls usually has a higher footfall. A study done by Knight Frank found that rents in basements are higher in Orchard Road malls as their basements are connected to the MRT station and there are underground links connected to other malls.Operating times
Businesses operating within a mall are bound by the mall’s operating times. Some malls will mandate opening daily (even if there is no crowd on the weekend, as is the case for places in the CBD) which means higher manpower costs. Other malls may switch off the central air conditioning by a certain time each night even if you are allowed to continue operating, which poses discomfort to your customers.
5. Look out for upcoming developments
It may be good to take a look at the URA Master Plan to determine if there are upcoming developments in the area. According to Singapore Press Holdings, smaller tenants' rental leases last for three years and they can be renewed after three years. If you are making a decision based on upcoming developments contributing to the footfall at your outlet, but the development is only going to be ready years later, picking that location to open your F&B might not be a wise choice (E.g., Woodlands Economic Hub, etc.).
All in all, when choosing the perfect location for your F&B business, keep your business model, information on the location, and how your neighbors in check so that you can have a rough gauge of the location you have selected. This will affect your cost and profits so you have to ensure that you are making the right choice. Remember, do not rush into settling one. Instead, put in the time and effort to find the perfect one for your F&B business.
Caroline Yap is the editor and intern at iCHEF Singapore. She manages iCHEF Club, a growing community of F&B owners in Singapore – organizing events, an online newsletter, and the F&B Entrepreneur Bootcamp, the only regular workshop on opening a new restaurant in the country. In her spare time, she loves drawing, painting, and creating new visuals. Her love for Korean food runs deep such that you can spot her at any famous Korean Restaurant in Singapore.
You may wonder how do great restaurants prosper, does it have to do with their menu design? Yes, having a clear, professional, and well-thought menu plays a huge role in bringing your business to greater heights as it can enhance your customer dining experience and stimulate your customer’s imagination and taste buds. There are tons of things to consider when creating your menu - Food Cost, How to categorize your food on your menu, How to change those dishes that are nonprofitable on your menu etc. After all, these considerations will help you to increase the profits of your restaurant. Remember, your menu serves as a form of advertising for your restaurant as such it is important to get your menu right!
1. What is Menu Engineering
Menu Engineering also known as menu designing, creation. Menu engineering refers to how popular and profitable items on the menu can affect how to place the dishes on the menu - More popular, profitable dishes are placed at the top, less profitable ones at the middle. (E.g. $20 Truffle Fries is the most popular item on the menu and it is very profitable so it is placed on the top of the menu ) and how it helps customers in their decision making process in choosing the most profitable items on the menu. It is important to engineer your menus as it will help you to understand what your food cost is which will help you to place your items on your menu. All these will contribute to increasing your profitability earned per guest through the sale of dishes in restaurants.
2. Food Cost
Calculating food costs is vital before categorizing your food and designing your menu. Food cost refers to breaking down the ingredients you use for each dish and determining how much it costs to create each dish. This can help to know how much every ingredient cost which will help you in pricing your overall dish to sell to your customers. Knowing each ingredient price is the first step to good menu engineering as it will provide you an insight on how and where to place your dishes at. (E.g. Placing your most expensive dishes first on the menu so it will be the first thing customers will see).
To calculate your food cost, you may use the formula below:
Food costing is time-consuming but it will help you understand which dishes you should price higher.
Click here to understand more about food costing.
3. Categorize your menu items
It is important to understand how to categorize your menu items as it will allow you to understand which food items should be priced higher and which food items will help you increase your profit margin. It will also aid you in improving those dishes that are lack-luster. We spoke to some F&B owners so you don’t have to and we will teach you how to categorize your menu using the menu engineering graph. You may use this model below to understand how to price your food.
Menu Engineering Graph
Plow horses: High popularity, Low profitability
Plow horses are commonly popular menu items that people love. The ingredients used here might be on the expensive side and it will result in breakeven cost or slimmer profit margins.
You may try to vary the days you are selling the dish to adjust to the food cost price, have different menus for different days (Weekdays, Weekends). For instance, selling expensive dishes only on the weekends when there are large crowds at your restaurant.
We spoke to Ms. Sandy from Common Chef bistro/Cafe and found out that the dish “Richman” is one of the most popular burgers sold and they are only served on weekends. “Richman” is a buttered brioche bun, chorizo patty, smoked cheddar, sautéed mushroom, caramelized onions, scrambled eggs & truffle mayo and is served with a side of melted cheddar sauce and tater tots. The reason behind this is due to them having more customers on the weekends so it is more worth it to serve the dish which allows them to earn a profit. Placing dishes on certain days makes the dish feel “special” and it serves as a form of marketing that can attract customers to come back as a repeating customer.
Stars: High popularity, High profitability
Customers love the dishes in this category. The ingredients used here are cheap but they are popular and profitable. Restaurant owners should maintain the standard of dishes under this category.
We spoke to Ms. Ivy, the owner of Yan Ji Gourmet Seafood where they sell seafood soup and they currently have 2 outlets in Singapore: Far East Plaza and Funan Mall.
Yan Ji Gourmet Seafood's most popular item on the menu is their Dory Fish Seafood Soup and the soups at Yan Ji Seafood do not come with any rice/noodles so customers usually pair it with a bowl of rice. We asked Ms. Ivy on how she determines the order of her dishes on the menu and she mentioned that it depends on the popularity of the dish and the price of the ingredients used for the dish. Dory Fish Seafood's purchasing price is relatively cheap however it is the most popular dish at Yan Ji Gourmet Seafood so Ms. Ivy has placed it at the top of the menu. When the most popular dish is placed at the top of your menu, customers are more inclined to purchase it as customers' eyes move in a zig-zag formation where they scan the menu from the top left of the menu to the bottom right. This is proven to be successful for menu designing which will result in an increase in sales for popular items. In order to be successful, you should place your most popular dishes at the first or the top of your menu!
Dog: Low popularity, Low profitability
It is bound to have dishes that customers do not order in your menu, these dishes are also known as “Dog” dishes. The ingredients used here are costly and people rarely order them. These are the costs that can be eliminated. Here, restaurant owners should discuss with their chef to remove the dish on the menu as it does not bring in money. Menu Engineering should be done from time to time to ensure that the menu is up to date and the most profitable.
If you are using a POS system, your POS would be able to show you a sales report that shows which dishes are not ordered as often
Ms. Lie Wei from CHICHI Japanese restaurant felt that 1. Their menu was too long which would result in customers not wanting to read the whole menu. 2. It was costing her money to allocate ingredients needed for that dish but it was not ordered by customers, so the owner of CHICHI and its chef have decided to remove their Cucumber mushroom salad and place more of their focus on their Chirashi salad.
Puzzle: Low popularity, High profitability
Dishes under the puzzle category have the potential of making money for the business however they do not get ordered. The reason why they do not get ordered might be due to the descriptions used for the dish and there might be a few misses to the perfect dish.
To move dishes in the puzzle category to stars, you can perform R&D.
Try different cooking methods
Use premium ingredients to elevate the dish
Use portion size creatively to gain more customers
Customers are more inclined to pay for premium ingredients as they perceive more value.
Ms. Ivy from Yan Ji Gourmet Seafood mentioned the House Special soup was initially not on her menu as it was a scaled-down (S$22.80 for 1 pax to consume) version of her Premium Seafood Soup (S$38 for 2 pax to consume). Many customers wanted to order her Premium Seafood Soup but were afraid that they would not be able to finish so Ms. Ivy took the chance and added on a new item. This item consists of 50% volume of the ingredients from the Premium Seafood Soup (Instead of having 2 crayfish, there is one, etc.) and it became one of her top-selling dishes.
Start by categorizing your existing menu into either one of these categories - “Plow Horses”, “Stars”, “Dog”, “Puzzle”. By understanding what each category does, it allows you to understand which are your popular dishes that can help increase profits and R&D those dishes that are lackluster to place them in “Stars”!
4. Designing of Menus
Here are some things to take note when designing menus:
1. Split menus into different categories
By placing your dishes into different categories, it allows customers to be able to see clearly what they want to eat. Remember a cluttered menu will confuse diners which may deter them from a second visit to your restaurant.
The owner of CHICHI mentioned that it is important to place food under different categories as it allows customers to specifically choose what they want to eat and it is also neat and clear for customers to see the menu.
For example, if customers are craving fried rice, they can look under the category of Rice & Noodles which is clear and simple to understand. Customers do not have to scan through the entire menu just to find the food that they want.
2. Placing high price dishes at the top of your menu
This has to do with psychology! Going back to the zig-zag theory as mentioned above, customers often look at the first and last dish on your menu as such it would be great for you to place your popular dishes at the top as they will earn you high profits. Sometimes, placing your high price dishes in bold and boxes helps too!
3. Taking out the dollar signs
Many websites shows that it is great for restaurants to avoid placing dollar signs on their menu as it reminds customers that they are spending money. However, it is important to consider your location (Where you are going to sell your food at? Is your shop located in a coffee shop, kiosks, cafe, restaurant?) and the concept of your business (Is your shop going towards the fine- dining route or the casual dining route?) .
If your shop flows towards the pricier route, leaving out the dollar sign feels more classy and it will allow customers to momentarily forget about the price and focus on the ingredients used in the menu when selecting their dishes. On the other hand, if you are selling your food in a coffee shop and you do not place your dollar sign there, people might be confused and some might even get angry as they are used to prices being displayed with dollar signs. It's a good rule of thumb if you fall into the fine dining category!
We realized that the Common Chef Bistro/ Cafe menu does not have dollar signs attached to the number as such we asked Ms. Sandy why she left it out and she mentioned that customers are usually more sensitive when they see the dollar sign and if customers are curious on what the numbers represent, they would ask and this brings in more interaction with their customers.
4. Consider using symbols, colors
Using symbols and colors may show the character of your business.
Elephant Room is a restaurant bar that is inspired by the streets of Singapore: Little India where they showcase their traditional ingredients and use Indian ingredients and spices to concoct drinks and dishes for their customers to enjoy. Elephant Room uses elephants as their symbol as they are a representation of Courage, Wisdom, Reliable and Loyal.
Besides that, Elephant Room plays with colors such as White, Brown and Orange on their menu as it showcases the character of their business of being pure, wholesome, inexpensive, bold and fun. Using White for their background enhances the legibility for customers to see the menu. The color Brown is associated with ingredients that are healthy and it tends to make dishes seem inexpensive on menus. Elephant Room being a restaurant that sells alcohol, has tons of quirky drinks which are bold and fun thus using Orange color for their price helps to further stimulate customers' appetite which increases customers' spending.
5. Consider using photos
Usually casual dining establishments come with photos on their menu, while fine dining establishments have a menu with no photos on their menu instead they have detailed descriptions of the ingredients used and the cooking technique used. This is done to provide consumers a high-end feel.
The owner of Yan Ji Gourmet Seafood mentioned that “Pictures make everything look and feel better”. Pictures help customers to visualize the appearance of the dish and it sets the expectation for the food. With that said, do not use low-quality photos as this may backfire your intention of helping your customers visualize better.
If your business falls under the casual dining F&B establishment, the rule of thumb is to never make price the focus of the menu, instead, make the pictures the star of the menu.
6. Use creative names and short descriptions to describe your food
A well-chosen name and description can help customers to imagine and make them curious and this will influence their purchasing decisions. Using short descriptions are preferred as it is easier to capture the reader’s attention.
During peak hours of their business, Elephant Room staff are unable to explain the iconic ingredients used in the drinks and dishes so it is important to place it below the name of the dish so that customers are able to imagine how the food tastes.
In a nutshell, no matter what the mixes are on your menu, Menu Engineering has to be performed cumulative from time to time as it is important to always think of ways to improve your restaurant - cut down on unwanted cost and to make your business more profitable while maintaining the quality and standard of your business.
Caroline Yap is the editor and intern at iCHEF Singapore. She manages iCHEF Club, a growing community of F&B owners in Singapore – organizing events, an online newsletter, and the F&B Entrepreneur Bootcamp, the only regular workshop on opening a new restaurant in the country. In her spare time, she loves drawing, painting, and creating new visuals. Her love for Korean food runs deep such that you can spot her at any famous Korean Restaurant in Singapore.
How you price your dishes on your menu can make or break your business. Price dishes too high, and customers won’t order them. Price dishes too low, and you won’t generate enough revenue to cover your expenses. By taking a deep dive into understanding your food costs, you can improve your chances for success. Lucky for you, we’ve got restaurant pricing down to a science. We’ll help you figure out how to set menu prices that will cover your expenses and ensure that your restaurant is financially healthy.
Sounds boring and stressful, right?
Don’t worry, and we got you covered!
We will go through step by step on how to calculate your ideal and actual food costs so you can price your menu ideally and even identify where you might be able to save money.
What Is Food Cost?
Before we go into detail, let’s understand more about what food cost means.
Food cost is the ratio of the cost of ingredients (food inventory) and the revenue that those ingredients generate when dishes are sold (food sales).
What is Food Cost Per Serving? And How Do I Calculate It?
Before you decide the price of your menu, you need to find out how much your food costs to make one serving of each item in your menu. To calculate your food cost per serving, find the sum of the ingredient cost per serving.
Example:
Uncle Yong of Havelock Road Fried Oyster Omelette wants to figure out his famous Fried Oyster Omelette cost per serving. The dish consists of 100 gm of potato starch, 20 gm of water, 70 gm of oyster, 2 tbsp of oil, 20 gm of fish sauce, 16 gm of light soya sauce and 1 egg.
Uncle Yong buys his ingredients in bulk and pays for S$30 for 10kg ($3 for 1kg) of potato starch. He calculates that 100 gm of potato starch for a single dish of Fried Oyster Omelette costs S$0.30. Uncle Yong does the same calculations to determine the cost per serving of the remaining ingredients in the Fried Oyster Omelette.
Why Is Food Cost Percentage Important?
By monitoring your food cost percentage (typically between 28-35% of your total operating cost) a restauranteur can know when to change prices, products and purchase quantities to improve his or her percentage.
The slightest change in the price of goods and/or the number of sales can affect a restaurant’s profit significantly.
There is no One-Size-Fits-All Number for Food Cost
A common misconception about food cost percentage is that every restaurant should aim for a perfect number. In reality, a healthy percentage can vary depending on the products you sell, food cost control, and the market you serve. For example, a steakhouse can run a food cost percentage close to 35 percent, because the cost of its ingredients is much higher. On the other hand, a restaurant that serves primarily oyster omelette like Uncle Yong, which is cheap to buy in bulk, might run somewhere around 28 percent. Both percentages are acceptable according to the context of the restaurant.
First, you need to have values for the following things:
Beginning inventory value: the value (S$) of the inventory you purchased at the beginning of the month.
Purchases: the value (S$) of the inventory you purchase throughout the month and wasn’t part of your beginning inventory.
Ending inventory: the value (S$) of the inventory left over at the end of the month.
Total food sales: the dollar value of your sales for the month, which you can find in your POS sales reports.
To calculate your food cost percentage, first, add the value of your beginning inventory and your purchases, and subtract the value of your ending inventory from the total. Finally, divide the result by your total food sales.
Let’s see how Uncle Yong would calculate their food cost percentage using these values:
Uncle Yong’s food cost percentage is 25%, meaning that 25% of his revenue goes towards paying for ingredients.
Average Restaurant Food Cost Percentages Can Vary by Meal
In the same way that food cost percentage targets can vary between restaurants, they can also vary within a restaurant. This is would usually happen if your restaurant serves both breakfast and dinner, or you have both a coffee bar and a sit-down restaurant, for example, breakfast foods, like eggs and bread, are much less expensive than seafood and high-quality meats you might serve at dinner. It’s essential to take these variations into consideration when calculating the overall food cost percentage and taking inventory of your ingredient costs. Now, do keep in mind that there are some ingredients that you can’t really measure and put that into your food costing system. For example, Uncle Yong’s famous Fried Oyster Omelette, dishes like that are made to order and things like soya sauce and water are hard to measure. So, Uncle Yong has to estimate those ingredients into his food cost.
How Your POS can Help With Your Food Costing
Mapping your recipes to your POS system menu items helps you understand and control your food costs. Recipe costing breaks down menu items to the details of portion size and individual ingredients, calculated to the penny.
Manually calculating menu item costing is error-prone and time-consuming. The usage and yield of each food ingredient determine recipe costs, but tracking this by hand on an inventory list can be unreliable. With a restaurant inventory management system integrated with your accounting and POS system, you can automatically track the yield from each food item on your menu by mapping inventory against sales.
Click below for the food cost template.
To sum it up, understanding your food cost might be confusing however it will will bring so much more pros as it helps you to determine the operational success and profitability of your restaurant - Knowing your base cost of your ingredients will help you estimate your finished product price at a higher cost so that you will be able to cover in the manpower/labor, utilities, operating expenses etc.
Caroline Yap is the editor and intern at iCHEF Singapore. She manages iCHEF Club, a growing community of F&B owners in Singapore – organizing events, an online newsletter, and the F&B Entrepreneur Bootcamp, the only regular workshop on opening a new restaurant in the country. In her spare time, she loves drawing, painting, and creating new visuals. Her love for Korean food runs deep such that you can spot her at any famous Korean Restaurant in Singapore.
Due to the current COVID’19 situation, Pubs/Bars are unable to open during Phase 2 and owners are worried about making ends meet. Some are considering waiting it out until Phase 3, while others are thinking of changing their Pub/Bar license to a Foodshop license in order to resume operations. However, changing an outlet’s concept from a bar to a restaurant is more complicated than getting an induction cooker and serving some dishes. What does SFA consider to be the difference between a Pub/Bar and a Restaurant, and what does it take to change your existing license?
Singapore is operating in 3 phases with regulations meted out. On 19 June 2020, Phase 2 of the circuit breaker was opened and dine-in services in F&B establishments are allowed. However, Pubs/Bars/Entertainment outlets are still unable to open.
To determine whether you can open your F&B business, you may look at your SFA license - Foodshop (Restaurant /Food Caterer/Snack Bar).
Examples:
Besides that, the government has imposed a time restriction on the sale and consumption of alcohol in all F&B establishments where it will be prohibited by 10.30 pm daily. Failure to adhere to the sale of alcohol regulations will result in facing a penalty of up to S$10,000, imprisonment of up to six months for first-timers and up to $20,000, imprisonment of up to 12 months for second offenders, and closure of your F&B establishment.
1. What is a Foodshop (Restaurant)?
According to the Urban Redevelopment Authority (URA), Foodshop refers to cafes, restaurants, coffee shops that sell food along with alcohol and do not provide live entertainment. The focus of the F&B business should be placed on the sale of food for consumption and not on the sale of liquor and alcoholic drinks. Most of the revenue earned must be placed on the sale of food and to sell alcohol, restaurants must obtain an alcohol license.
A restaurant cannot be used as a bar and the restaurant must:
Make food available to customers at all times
Be equipped with proper kitchen design else it would not be approved during the SFA Inspection.
Click here for the checklist of proper kitchen design.Provide adequate dining area with indoor seating for customers to consume their meals
Not convey an impression of a Pub/Bar like-concept in their shopfront, banners, and on social media platforms.
E.g. Dimly lighted, bar stools, Big alcohol posters in the shopfront, and on social media platforms.
2. What is a Pub/Bar?
Pub/Bar refers to premises used to sell alcoholic drinks for consumption. Finger foods are sold here but the focus here is placed on the sale of alcoholic drinks.
Pub/Bars are often accompanied by live music which might give off loud noises that would affect the community living in that area. Thus, proper soundproofing must be done to reduce noise disturbance and it must not be located near residential, commercial premises.
To open a Pub/Bar, you must obtain a liquor license. There are 2 different types of alcohol licenses (Class 1A and 2B) you can choose from and without the license, it is an offense to sell alcohol. Alcohol licenses are given based on the location you are opening at. A certain number of licenses will be given and this is based on the available slots on the location that you apply for. To apply for a liquor license, click here.
Pub/Bar owners must remember that after trading hours as stated on your liquor license, your staff will not be able to sell liquor/beer over the counter/on the premises. However, if your business has a license to sell it on an Online website, customers can still purchase them online.
3. How to get a Foodshop and Alcohol License?
You must have an SFA license to operate as an F&B establishment. If help is required in opening your F&B business, iCHEF can provide a POS system that is designed for restaurants (and pre-approved under PSG with 80% subsidy)
Foodshop (Restaurant) selling alcohol with the consumption of food
Food Shops that are approved for restaurant use have to :
Obtain a separate planning approval from URA to be able to apply to sell alcoholic beverages in the day/night. - If owners do not apply for a new planning approval from URA, their main business should remain as a restaurant and not the sale of alcoholic beverages. Alcoholic beverages should come off as an accompanying product to the consumption of food.
Food Shops need to obtain an alcohol license (Class 1A or Class 1B) to permit them to sell alcohol. Without the alcohol license, Foodshop owners cannot sell alcoholic beverages to their customers.
To be eligible for a Liquor license, you must:
Not have any suspended/canceled license by local authorities, not be under investigation/convicted under any offenses, and uncooperative with the Singapore Police Force in respect to any investigations conducted in relation to the liquor license/renewal of a license.
A Singapore citizen, Permanent Resident (PR). If you are a foreigner, you must possess a valid work permit or employment pass.
Be an involving party if you are applying on behalf of societies registered with the Registry of Societies (ROS)
E.g. Applying for an alcohol license for Teochew Lee Clan society, 1 of the members has to endorse it.Be the owner of the business/ A partner of the partnership
Register your business with ACRA. You are not required to register for ACRA if you are representing a society or applying for an alcohol class 2B license
Possess a valid hawker license issued by National Environment Agency if you are applying for a Class 2B license
Other than getting an SFA license, Pub/Bar owners have to obtain one of the 2 classes of licensing below in order to sell alcoholic beverages. The 2 classes of licensing differ from the sale of duration, to when and where they can supply and distribute liquor.
To find out more on the different types of extension to your trading hours outside of your liquor license, click here.
Pub/Bar Owners who do not abide by these regulations will be found guilty and be liable to pay a fine not exceeding S$10,000.
4. Opening a Pub/Bar during COVID’19
Pubs/Bars will not be allowed to open until Phase 3 as live performances include singing which holds a higher risk of the COVID’19 transmission in a constraint space. As such, under the current circumstances, if you want to apply and get approval to open a Pub/Bar, you would have to wait until Phase 3 when things resume back to normal.
Pubs/Bar owners have this misconception that as long as there is the sale of food in their F&B premises, they would be able to operate them. For Pubs/Bars to operate during Phase 2, the business must hold a new SFA license that says Foodshop (Restaurant/ Food Caterer/ Snack Bar).
To apply for an SFA license, iCHEF can help you reapply for an SFA license.
Changing from a Pub/Bar to a Foodshop(Restaurant)
A new application is needed to operate as an foodshop:
Change the business operation and the theme to suit the eatery - The primary sale must come from food and not alcoholic beverages. Alcoholic drinks may be accompanied along with the consumption of food- Shopfront, banners and social media platforms must not portray the look of a drinking place. E.g. No big alcohol posters placed in the shop, on social media platforms, no bar stools, no dart machines
Renovate to fit the foodshop theme - Pub/Bar Owners will have to renovate their shop to fit their theme. Simply adding equipment (Microwave, Airfryer ,etc) does not count and it will not work. E.g. (If the food sold is going to be Korean Fried Chicken, the equipment used and the setup of the shop should fit the theme) It is important to also take note of the kitchen/food preparation area must be at least 10 square meters.
Apply for a new license- Pub/Bar owners have to apply for a New SFA License and meet all the necessary requirements of SFA. Application will not be approved if the setup looks like a Pub/Bar.
* Refer to Point 1 for the meaning of a Foodshop
If you are looking to convert your Pub/Bar license into a Foodshop (Restaurant) license, iCHEF are the experts in helping F&B businesses to open where they can provide a POS system that is designed for restaurants (and pre-approved under PSG with 80% subsidy).
“Changes Made are Irreversible”
All in all, there is a significant commitment when deciding to change from a Pub/bar to a food shop as a substantial sum has to be pumped into the shop for its renovation cost. Renovations done have to provide a perception of a restaurant instead of a Pub/Bar. Besides that, once you change your license to a food shop, you are unable to change it back to a Pub/Bar. (E.g. If Phase 3 happens and you wish to operate your business as a Pub/Bar, you must reapply for an SFA license and an alcohol license). Remember that changes made are irreversible and it must be in line with the plans for your business.
Caroline Yap is the editor and intern at iCHEF Singapore. She manages iCHEF Club, a growing community of F&B owners in Singapore – organizing events, an online newsletter, and the F&B Entrepreneur Bootcamp, the only regular workshop on opening a new restaurant in the country. In her spare time, she loves drawing, painting, and creating new visuals. Her love for Korean food runs deep such that you can spot her at any famous Korean Restaurant in Singapore.
More than just PIC and ICV. Opening a restaurant is expensive – thankfully we have some government grants and subsidies that make it a little easier to bear.
"POS" stands for point of sale, the place or time where a sales transaction is completed.
POS systems simplify essential day-to-day business operations by performing order processing, billing, credit card processing, receipt printing, and more. POS systems today are widely used by both retail and food businesses.