Thursday, February 28, 2013

He sold his house to start dishwashing company

Feb 25, 2013

Beating the labour crunch

A new breed of companies has emerged to help food and beverage operators who cannot find enough workers to do work, from cleaning dishes to serving customers. JESSICA LIM finds out how these budding entrepreneurs have built up their businesses

HE SOLD his terrace house in Pasir Ris for $1.1 million to help fund the purchase of three commercial dishwashers, each as big as an MRT train cabin.

The German machines cost Mr Lawrence Low $120,000 each.

Another $150,000 was spent to set up a factory in Sembawang where six full-time employees clear residual food off crockery before loading them into the stainless- steel dishwashers.

The idea to start Synnovate Solutions was seeded in 2009 when the Government announced that it would be clamping down on the hiring of foreign workers here.

The holder of a diploma in hotel management said: “The first thing that came to my mind was, how would restaurants cope?

Cleaning dishes is the dirtiest and lowest job. Many locals don’t want to do it.”

While Mr Low, 50, believed his outsourcing service would work, the road to making money has proven a long and winding one.

He recalled the first day of operations on Dec 5, 2010. He was raring to go, said the father of two, as he had a deal with NTUC Foodfare to wash 25,000 items a day over the next three years.

The former managing director of a catering firm had hired four people to work the morning shift and another four in the afternoon. But only three showed up.

One hundred and seventy tubs of dirty dishes needed to be returned within 24 hours. His wife, who was pregnant with their second child, had to help out.

“I really felt like dying. I used to be a managing director. Now my wife was washing dishes,” he said, adding that four workers are needed to operate each machine. They did not sleep that night but completed the task.

He tried to hire more workers but failed. “On the third day, I knew I couldn’t go on,” he said. He called to terminate the contract, but the foodcourt chain had let its dishwashers go and needed two weeks to hire new ones.

“We had to hold on till then,” said Mr Low, who enlisted the help of his mother, sister, mother- in-law and brother-in-law.

After the deal was cancelled, he lost another $50,000 on three months’ worth of labour and rental expenses as he tried to hire more staff and get more clients.

While he managed to snag three clients, the work was not sufficient for his machines which could handle up to 15,000 dishes an hour. He was washing only 6,000 dishes a day and losing $20,000 a month.

This went on for nine months until early last year when he signed on six more companies, including Din Tai Fung and Union Farm Eating House. Losses went down to about $7,000 a month.

The turnaround, he said, came only last October. From then to last month, he signed on six more clients. On March 1, another 10 – including Pasta Mania and Strictly Pancakes – will come on board.

He charges $5 to $8 per tub of 150 dirty items. He broke even in terms of operating costs last month. “Now I can breathe each month,” he said. But if the investment amount and losses are factored in, he will break even only in three to five years, he added.

One good sign, he noted, is that restaurant operators are now more amenable to change. “They used to tell me that if they group together and stay strong, the Government would change its mind and give them more foreign workers. I think they’ve realised that that’s not going to happen.”

[There is some truth that the govt has caved into business pressure. But at the same time, if the govt does not, are they then being unresponsive to feedback?

And now the govt is curbing recruitment and intake of foreign workers. Simply because Citizens are demanding curbs, because the PAP is being punished at the polls (or just Punggol East By-election?), and political pressure is being placed on the government. So the govt has to "respond" to such feedback.

Of course, one may also argue that the feedback from businesses who need foreign workers to run their business may be weighted in tangibles (business) whereas the complaints of citizens are less tangible or less quantifiable (crowding, lower quality of life, etc).]

No comments: