Friday, March 22, 2013

Low rents alone won't offer recipe for success

Mar 21, 2013
Some hawkers are having a tough time keeping their stalls going

By Sabrina Tiong And Cheng Jingjie

WHEN a minimum bid policy for food centre stalls was scrapped a year ago, many hawker-hopefuls such as Mr Panneerselvam Dharmarajan saw their chance.

The 38-year-old bid $121 a month for a place in Taman Jurong Market and Food Centre, after hearing about how others there had won tenders for just $21. The minimum bid for some stalls in the area used to be $599, according to another hawker.

But after running his Indian food stall for nearly four months, Mr Dharmarajan and others like him have realised that it takes more than just low rent to run a lucrative business. A good location and sufficient manpower are also crucial ingredients.

He has enough customers to break even, but he cannot serve them efficiently as there is only his uncle to help him man the stall. "If I am unable to employ more people, I might not be able to survive and might have to close down," said Mr Dharmarajan, who opens his stall from 4pm to 1am, when the food centre is most crowded.

The minimum bid requirement was scrapped to lower costs for would-be hawkers. Figures from the National Environment Agency (NEA) revealed that from the time the new policy kicked in last March until December, 112 cooked food stalls were awarded tenders, with 59 of them below the previous reserve rent.

But 13 of the 59 stalls were returned within six months of opening.
When The Straits Times conducted checks in the morning and afternoon over two days at 26 stalls which did not need a minimum bid - at Berseh Food Centre, Dunman Food Centre, Commonwealth Crescent Market and Taman Jurong Market and Food Centre - half were closed.

Mr Tan Chin Leong, who has been running a stall at the Berseh Food Centre in Jalan Besar since August last year, said business has been unpredictable because the centre does not have a steady stream of diners.

The bak kut teh seller pays $166 a month in rent - much lower than the usual rate of at least $700 for a stall at the centre.

"Although I can earn a maximum of $300 a day, it is rare because the crowd here is very unpredictable, I sometimes earn a lot less,
" said the 57-year-old. But he plans to continue with his business for the time being.

Sometimes, it pays to not give up, said Mr Nick Cheong, who has been running a muffin stall at the Taman Jurong centre for the past five years.

Despite his stall being tucked away, the 35-year-old got his father, whose fish soup stall is near a central escalator, to direct customers to his shop.

Selling a unique product also helps. Mr Glen Choi, 39, who runs a Japanese food stall in Commonwealth Crescent Market, said: "We don't want to do what other people do here."

Experts say that while the new policy lowers the rental costs for new hawkers, they should focus on improving the quality of food in order to thrive.

Said Dr Leong Kaiwen, an assistant professor of economics at Nanyang Technological University: "In the food and beverage industry, the most effective advertising you can get is by word of mouth.

"When small numbers have tried your food and are impressed by it, the crowds will come."

Ms Denise Phua, an MP for Moulmein-Kallang GRC who oversees the Kampong Glam division where Berseh Food Centre is located, suggested that the Hawkers' Association and the NEA could "collaborate more" by bringing in brand-name hawkers and installing ATMs to pull in the crowds.

[who are these "brand-name" hawkers, and if they are so successful, why should we give them low rents?]

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