Too many cooks: Singapore’s F&B sector at risk of oversupply as openings outpace closures
Some form of regulatory control may stabilise the market, suggests Knight Frank report
[SINGAPORE] The local food and beverage (F&B) scene has become increasingly overweight as store openings outpace closures, pointing to a need for regulatory controls in the market.
“The high volume of F&B businesses is starting to do more harm than good for operators, diners and the entire food business landscape,” noted a Knight Frank report released on Monday (Apr 14).
It added: “In a small market like Singapore, the limited pie to share among all F&B businesses will make it harder for operators to remain profitable, given the current demand levels.”
In 2024, a total of 3,047 F&B businesses shut down, the highest annual figure since 2005, according to data from the Accounting and Corporate Regulatory Authority.
The spate of closures continued into the first quarter of 2025, with household brands such as Eggslut, Manhattan Fish Market and Burger & Lobster throwing in the towel. Chinese hotpot chain Haidilao also shuttered three outlets earlier this year after a period of rapid expansion.
Despite the F&B churn, local and international brands continue to set up shop, with some local entrepreneurs starting businesses in their own homes to mitigate occupancy costs, said Knight Frank.
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With experiential retail formats trending after the Covid-19 pandemic, F&B set-ups have been leading the charge, as a result of low barriers to entry, it added.
A total of 3,793 new brands entered the local F&B market last year, noted the consultancy.
With openings outpacing closures in 2024, Ethan Hsu, head of retail at Knight Frank Singapore, said: “The dining scene appears to be reaching oversupplied levels and measures to cool the market for a sustainable sector may be needed sooner than later.”
Potential measures could include limiting the number of F&B licences issued within certain geographical boundaries, or capping the percentage of net lettable area allocated for F&B and non-F&B units in a mall to a “reasonable stakeholder-reviewed ratio”, as well as the minimum size of the shop that will be set up.
The report also suggested that F&B chains could be taxed when they expand beyond a certain number of outlets within a short designated period of time.
“Rapid expansion that has led to just as rapid closures in recent years cannot possibly be healthy, when it has also led to a wastage of funds and material, especially when new fit-outs and equipment are abandoned when operations prove to be financially unviable,” Hsu added.
Knight Frank believes that the retail sector remains challenging amid a persistent high-cost environment and market uncertainty.
“Measures taken sooner or rather than later can alleviate some of the ailing symptoms, such as the closure of several Michelin-starred restaurants, and ensure that the sector remains sustainable for local and international brands to stay and grow.”
The consultancy also noted that sweeping tariffs by US President Donald Trump could dampen business sentiment and rental growth.
In the first quarter of 2025, average gross rent of prime retail spaces in Orchard area grew 0.4 per cent on quarter to S$31.20 per square foot per month (psf pm).
Rents in suburban areas inched up 0.3 per cent quarter on quarter to S$26.80 psf pm, while those in Marina Centre, City Hall and Bugis rose 0.6 per cent to S$26.40 psf pm. In contrast, average rents in the city fringe fell 0.3 per cent on quarter to S$24 psf pm.
Knight Frank said that for a small trading nation such as Singapore, tariffs could “undermine the delicate 1 to 3 per cent growth forecast of prime retail rents in 2025”.
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