Food-services industry needs 'major makeover', says Tharman

Singapore

THE food-services sector is running out of manpower as ageing workers retire, and this calls for a "major makeover" to reverse the trend, Deputy Prime Minister Tharman Shanmugaratnam said on Thursday.

A blueprint entailing the adoption of innovative business models and technology has thus been drawn up to steer growth in the industry.

The Food Services Industry Transformation Map (ITM), the first of 23 industry-specific plans, was launched on Thursday by Mr Tharman, who is also Coordinating Minister for Economic and Social Policies.

The ITM is part of the S$4.5 billion Industry Transformation Programme announced in this year's Budget.

Speaking at the unveiling of restaurant chain Select Group's corporate headquarters in Senoko South Road and the launch of the ITM, he said: "We must develop a food-services industry that is highly efficient, with no loss in quality of food offerings, and with high-quality jobs. It has to be a major makeover."

In his speech, Mr Tharman laid bare the realities facing food businesses in the coming years:

"A significant part of the workforce in the food-services industry and the domestic industries comprises older, low-skilled workers.

"Many be retiring in the next five to 10 years, we have to do all we can to accelerate change in the domestic-oriented sectors."

The food-services industry contributes to 0.8 per cent of Singapore's gross domestic product, noted enterprise-development agency Spring Singapore. Yet, the industry employs some 160,000 workers - a "disproportionate" 4.5 per cent of the workforce.

To help Singapore businesses reduce their reliance on manpower, the ITM will work towards achieving an annual productivity growth target of 2 per cent - without needing more hands on deck - over the next five years.

Led by Spring, the ITM will also integrate the efforts of various government agencies and associations towards meeting that target.

A key strategy in the roadmap will be the introduction of innovative business formats. For instance, retailing ready-to-eat meals through existing distribution channels such as supermarkets and convenience stores will enable food businesses to expand their markets without needing to open more outlets or hiring more workers, Spring said.

Food-distribution machines represent another distribution channel for ready-made meals. Singapore's first food-vending machine cafe, called VendCafe, was launched in Anchorvale Drive last month; it served an average of 400 meals a day.

Spring, which facilitated its set-up, is assessing whether it should go ahead and install such machines in another 10 locations in the coming year.

The agency estimates that by 2025, three out of eight dining experiences in Singapore will involve new formats such as "grab-and-go" and vending machines.

Commenting on the implementation of the ITM, Sunny Koh, the deputy president of the Singapore Manufacturing Federation, told The Business Times:

"With so much disruptive technologies around, whatever you used to do - the normal way - may not be practical or usable today. Transformation is the only way forward."

But beyond introducing new business models, the ITM will also work on revamping existing ones.

Traditional coffee shops, for instance, are heavily reliant on manpower, and operators are finding it increasingly difficult to hire workers, Spring noted.

To tackle this, Spring and the Housing and Development Board have reviewed the tender requirements for bidders of new coffee-shop spaces. Those submitting tenders will have to show they can run these spaces productively; their rental bid will not be the only consideration.

For a start, the new tender system will be piloted in Tampines and Choa Chu Kang this month.

Spring will also offer time-limited grants in support of those who adopt productivity initiatives; the agency plans to have at least half the industry adopting technology-enabled operations by 2020.

Said Mr Koh: "I think for the food industry, a lot of the players are still very manual ... If they just adopt simple semi-automation, they can already grow, easily, by more than 10 per cent."