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Neo Group breaks ground on new high-tech HQ, to lease space to F&B startups

Neo Group’s new high-tech headquarters and catering hub
Artist impression of Neo Group's high-tech headquarters and catering hub. The upcoming 10-storey building will span 300,000 sq ft and replace the group’s headquarters at Enterprise Road.

NEO Group will be consolidating its operations in a new high-tech headquarters and catering hub, expected to be completed in the fourth quarter of 2020, it announced on Friday.

The company broke ground on Friday for an upcoming 10-storey building at 30B Quality Road that will span 300,000 square feet and replace the group’s current headquarters at Enterprise Road.

Through the new integrated facility, the group will consolidate its central kitchens, offices, warehouses, logistics and storage facilities, and other food and beverage (F&B) operations in one location.

This will result in “significant cost savings”, said Neo Kah Kiat, founder, chairman and CEO of Neo Group. The company told BT it was too preliminary to comment on the amount. 

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Mr Neo added that the improvements in operational efficiencies via automation would also boost production levels and "substantially reduce" demand for manpower. When asked how existing manpower will be impacted, a spokesman said there would be "no significant changes" as the new facility is larger and has a higher production capacity than the existing one.

"We will also increase our focus in skills redevelopment and training for both our corporate and operational crew to increase their productivity. Through the use of automation, we will be able to achieve a higher level of production. Depending on our operations, we may even need to hire new staff to cater to rising demand as we ramp up operations," the spokesman added. 

The consolidation of central kitchens will increase capacity five times to 250,000 meals per day from 50,000 meals per day.

Leveraging economies of scale, the hub will also provide co-working kitchen and office spaces, which will be available for lease. Neo Group said it will work with budding F&B startups on a flexi-rental scheme.

Said Mr Neo: “Many small-scale businesses with interesting concepts often find themselves between a rock and a hard place as they try to grow their business. This is mainly because the cost of setting up a licenced and fully equipped commercial-scale kitchen and office may not be a viable option. With that in mind, we will designate co-working facilities for our partners’ use, which will also benefit Neo Group through a steady stream of recurring income.

"Through this form of collaboration, we are able to forge a strong working relationship with our partners, which could present us with the opportunity to participate in their businesses as they grow.”

The new headquarters will also house the group’s corporate office and a new research and development (R&D) centre, which will have qualified experts and nutritionists focusing on healthy menu product development. Other features include offering dining facilities for social events accommodating over 500 guests.

Shares for Neo Group last traded at S$0.425 apiece on March 12.