Stronger recovery awaits F&B firms that act now, 'do not wait for Covid to blow over': Chan Chun Sing

FOOD and beverage (F&B) firms that have acted to transform their businesses - without waiting for pre-Covid 19 business conditions to return - are already on the path to recovery, said Minister for Trade and Industry Chan Chun Sing on Monday.

"Those who have done well are not waiting for Covid to blow over," said Mr Chan. "Those who have done well have experimented boldly and are establishing the foundations now, in the midst of Covid, for their recovery."

Mr Chan was speaking to the media while visiting homegrown dim sum restaurant Swee Choon, which opened its first cloud kitchen in Tampines last week. Housed in Tampines Food Co, the shared facility allows eateries to reduce overhead costs while expanding their delivery services to more diners.

Mr Chan commended Swee Choon for its rapid pivot to online sales. This, he noted, allowed the company to increase its food delivery sales from less than 1 per cent to around 60 per cent of its current average monthly revenues during the circuit breaker period.

According to the Food and Beverage Services Index, total F&B sales fell by about 30 per cent y-o-y in September. This represents an improvement since April, when circuit breaker measures were first imposed - leading F&B sales to plummet by about 53 per cent y-o-y that month.

Recovery has been uneven across segments. In particular, September's turnover for food caterers declined 78 per cent y-o-y, as demand for event catering remained low. The decline was gentler for restaurants (-33 per cent), cafes, food courts and other eating places (-18 per cent), and fast food outlets (-14 per cent).

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Online sales have contributed to the recovery. The percentage of online F&B sales out of total industry sales has doubled to about 20 per cent as at September, compared to 10 per cent in January. This figure peaked at 45 per cent in May, and has held steady at about 20 per cent from July to September.

Mr Chan said F&B firms that are recovering well have been able to pivot quickly from dine-in to food delivery services, giving them "two engines" to drive revenues. Some, he said, have adopted new data analytics capabilities enabled by digitalisation to strengthen their long-term growth strategy and prospects. They are also investing in automation and job redesign.

He revealed that Enterprise Singapore has supported over 2,700 applications for its productivity solutions grant this year, which supports the adoption of information technology (IT) solutions. The number of applications received from January to October this year, he disclosed, has more than quadrupled compared to the same period last year.

Acknowledging that the food services sector contributed only about 1.1 per cent of Singapore's gross domestic product (GDP) as at 2018 but employs a larger 5.5 per cent share of the workforce today, Mr Chan said the government hopes to grow the sector's value-add to the economy beyond its current levels.

He added that Enterprise Singapore was committed to help all F&B enterprises grow, including micro and small establishments. Such enterprises could ride favourable trends for expansion, such as greater consumer desire for convenience and food safety, as well as the digital wave that allows companies to expand their market reach.

To succeed, however, Mr Chan emphasised that such enterprises will need quality food products, a bold vision to grow their brand, as well as the willingness to act now.

"Do not wait for Covid to blow over to start making new business plans," he stressed. "Ask ourselves how we can serve customers during a Covid situation. If we can serve customers during a Covid situation, then we must certainly be able to serve them even better after a Covid situation.

"While the rest of the world is playing defensive, we must be on the lookout to see how we can expand our market presence and serve more customers, beyond Singapore, and beyond Covid."