Koufu to charge stallholders at least S$200 more in monthly fees on higher electricity costs

FOOD court operator Koufu Group VL6 will be charging its stallholders in 85 per cent of its more than 60 branches an additional S$200 to S$300 in monthly miscellaneous fees in a bid to share the costs of electricity for the public dining area, as the firm battles soaring electricity costs.

This hike in fees, which was first reported by Chinese daily Lianhe Zaobao, comes after the company's electricity bill skyrocketed 80 per cent, which amounts to an additional S$500,000 in monthly expenses.

Koufu issued a notice to its stallholders this month informing them of the higher monthly fees, which started from Mar 1.

In response to queries from The Business Times, Koufu said on Friday (Mar 18) that these additional fees collected would cover about 30 per cent of the increase in electricity costs.

"This means that Koufu still has to bear 70 per cent of the incremental costs after the additional collection. Koufu estimates the total increase in electricity costs to amount to at least S$3 million for 2022 after passing-through part of the costs to the stall tenants through additional miscellaneous charges," said a spokesperson.

In addition to sharing the costs of the public dining area, the fees would cover other services, including waste management, cash handling and banking, staff management as well as managing customer feedback. The miscellaneous charges will be reviewed on an ongoing basis.

Koufu also said that the company faced difficulties securing fixed price electricity contracts after its earlier one expired on Jan 31 this year, as many generation companies were not able to provide fixed rates owing to price volatility in the wholesale electricity market.

The earliest fixed price electricity contract it managed to lock down only begins from Jul 1, and it is priced 30 per cent higher than the current regulated tariff.

Even though the food court operator managed to secure another fixed price contract from February to April under a temporary government scheme, whereby plans are re-priced every month to reflect the prevailing global gas prices, it still costs 80 per cent more than the regulated tariff after taking into account transmission and market charges.

This temporary electricity contracting scheme was launched by the Energy Market Authority in December last year to allow generation companies and electricity retailers to offer fixed price plans to large electricity consumers, so that they are able to secure contracts that provide greater price stability in the midst of a major global energy crunch and record gas prices.

Large consumers had been facing difficulty in renewing or obtaining new contracts amid the global energy crisis, which have sent electricity tariffs in Singapore rising for 4 straight quarters. Four electricity retailers have had to exit the city-state last year due to volatility in the energy market.

To manage the higher miscellaneous fees, some stallholders told Lianhe Zaobao that they have submitted applications to Koufu's management to increase their food prices by 20 to 50 Singapore cents, and their drink prices by 10 to 20 cents.

On top of electricity, they lamented that prices of gas, cooking oil and food ingredients have gone up since the beginning of this year. While they initially chose to absorb the higher costs temporarily, they decided to hike prices as they are becoming unprofitable.

Koufu is not the only food and beverage chain facing higher costs.

Hong Qiqiang, chief executive of coffee shop chain Kim San Leng, also said that the electricity costs of its common dining areas have tripled.

However, he has no plans yet to charge its stallholders extra fees and will absorb the higher electricity costs for now.

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