F&B firms welcome delivery cost offsets, but seek more substantial rental, labour support

As they grapple with a ban on dining-in for the second time in the ongoing Covid-19 pandemic, food and beverage (F&B) firms in Singapore have welcomed the latest round of subsidies and rebates being offered to offset their delivery costs.

However, they flagged the need for more substantial help with rental and labour costs, similar to the support given the last time dining-in was suspended during last year's circuit breaker.

Enterprise Singapore (ESG) announced on Sunday that it is reinstating the Food Delivery Booster Package from May 16 to June 13. The package funds 5 percentage points of the commission cost charged by Deliveroo, foodpanda and GrabFood, as well as 20 per cent of delivery costs for food delivery orders made through third-party logistics partners Lalamove, Zeek Logistics and Pickupp.

Grab Singapore also said on Sunday that it will give full commission rebates to hawker stall owners operating in hawker centres managed and regulated by the National Environment Agency.

Non-hawker merchants will get a 50 per cent commission rebate on additional GrabFood orders, as compared to their current level of sales or previous month's sales.

In addition, Grab will fund promotional activities for all of its merchant-partners, including discounts on self pick-up orders and deliveries at off-peak hours. Smaller merchants will be featured in a new "Local Eats" section of the GrabFood homepage to highlight hawkers and single-outlet small businesses.

F&B operators told The Business Times on Sunday that any reduction in commissions, however small, is helpful during a time when deliveries will make up a large proportion of their business.

Most of them have had less difficulty adjusting to the measures this time, having retained their delivery processes and online marketing skills from last year's circuit breaker, which ran from April 7 to June 1.

Said Cedric Tang, director of Ka-Soh Restaurant: "We have already been through CB (circuit breaker), so with this heightened alert, it's about doing what was effective during the CB - social media posts or ad boosts, utilising Facebook groups and targeting community buys again."

He added that Grab's move shows that the delivery player is willing to be more of a partner with merchants, who lobbied hard for lower commissions last year to no avail.

Still, delivery revenue and delivery cost subsidies will not be able to cover the rental and labour costs that will continue to mount during this time. Wafuken co-founder Jake Pang noted that most F&B firms have a gross turnover (GTO) component in their rents, sometimes on top of base rent or used in a "whichever is higher" model.

"With deliveries being the main portion (of our revenues), we are trapped into having to pay delivery commissions and GTO. Some argue this makes no sense because people don't dine in (during) this period," he said.

Mr Tang hopes that any rental rebates will be mandated by the government to ensure the savings are passed down more swiftly by landlords.

And while support for F&B businesses under the Jobs Support Scheme (JSS) will be raised to 50 per cent from 10 per cent during this period, the F&B industry is highly dependent on foreign labour, which is not covered by the JSS. As a result, businesses are also hoping for foreign worker levy waivers or rebates.

In the meantime, F&B firms are setting up new revenue streams that they hope will help them tide through this tough period.

Yum Cha Restaurant deputy director Melody Tan plans to sell some of the restaurant's frozen dim sum on Shopee, and hopes to tap the E-Commerce Booster Package that ESG also reintroduced on Sunday. The package will offer a one-time 80 per cent support on qualifying costs for service fees charged by e-commerce platforms, capped at S$8,000.

In March, Creative Eateries, which houses brands including Siam Kitchen, Suki-Ya and Barossa, launched a meal subscription plan called prepbox.sg targeted at busy customers who want to continue achieving their health goals while working from home.

"We have been working out bugs with the website for the last month, and our marketing push was going to start in two weeks," said chief operating officer Bonnie Wong. "I suppose there's no better time (to start) than now."