Feb 19, 2015
EYE ON SINGAPORE
Eateries need to look at other ways besides foreign worker flows to create value amid entrenched practices, low profit margins, lack of manpower and low productivity
By Jessica Lim Consumer Correspondent
STEP into the kitchen of most Cantonese restaurants here, and there's a sight past its use-by date. Preparing your meal are a head chef, a second chef, a head chopper, a second chopper, a steamer, a second steamer, one to stir fry, one to deep fry and a general kitchen hand. There is also the person whose role is to pick out a dish's ingredients and place the right amounts on a plate for the chef.
Such a set-up, where each person does a specific task and little else, is a luxury in today's tight labour market: When a worker does not show up, another lacks the skills to take over. There is also redundancy - when no one orders a fried dish, the one who does the deep frying twiddles his thumbs.
Yet, of Singapore's 2,500 restaurants - of all cuisines - many are only just starting to rework their processes.
Restructuring will be difficult for many, after years of liberal foreign worker policies. Kitchens are not physically structured to make it easy for the same worker to move from one task to another, long-time employees resist learning new skills, owners are stuck in old mindsets. As for the chefs who rule these kitchens, many oppose labour-saving innovations such as central kitchens or automatic stir fryers.
Change is also painful because most eateries do not have deep pockets. The restaurant scene is dominated by small players with thin profit margins, ranging from 3 per cent for a fast-food joint to 12 per cent for a casual restaurant, experts told The Straits Times.
In 2013, 73.8 per cent of food and beverage (F&B) establishments here were firms with operating receipts of less than $1 million. These firms accounted for only 21.8 per cent ($647 million) of the industry's total value.
Bigger firms were much fewer in number but contributed a significant 78.2 per cent.
Wanted: 1,800 waiters
A BIG headache for all is manpower. Job vacancies in the accommodation and food services sector rose from 5,010 as at Sept 30, 2011, to 7,740 as at Sept 30 last year. Of these, 1,800 waiters, 850 food-service counter assistants and 840 cooks were needed. Most vacancies had been open for at least six months, with employers saying locals did not want these jobs.
Yet, since July 2012, the service industry's Dependency Ratio Ceiling, a quota setting the maximum number of foreign workers a firm can hire for every full-time local worker it employs, has been reduced from 50 per cent to 40 per cent. This is low compared with other industries, like manufacturing, which has a 60 per cent quota.
The good news is that there is room for growth. Productivity, measured by value-added per worker, is low in the domestically oriented industry. Productivity growth in the sector fell 0.6 per cent a year from 2010 to 2013. In that same time, globally competitive sectors like finance and insurance showed annual productivity growth of 8.1 per cent and 2.2 per cent respectively.
Entrenched practices, low profit margins, a lack of manpower and low productivity have driven stakeholders to call for the Government to relax the foreign worker inflow. But it is not yet time to do so. Here's why.
The productivity drive is only just gaining momentum among early adopters. These include Han's, where self-order kiosks have replaced 24 cashiers, freeing them up to run kitchen errands. By the end of the year, 40 drones will serve customers at Timbre Group's six restaurants and bars.
Yee Cheong Yuen Noodle Restaurant in Holland Village started buying pre-marinated meats and pre-chopped vegetables from suppliers last year, and has just bought a stir-frying machine. At The French Stall in Serangoon Road, customers scribble orders on slips of paper; customers at Rokeby in Jalan Riang help themselves to water.
The most daring, like Mr Andrew Tjioe, the executive chairman of TungLok Group, returned to the drawing board when a restaurant concept was failing. Barely a year into business, he converted his floundering multi-cuisine Modern Asian Diner in Turf City, which needed 18 kitchen staff, into Dancing Crab - a no-frills joint serving seafood cooked in a bag and eaten off the table with bare hands. It has seven staff members.
Another sign that change is afoot: Over 680 F&B establishments have applied for productivity grants from Spring Singapore as at September last year. Most applications for the grant, open only to small and medium-sized enterprises, were received in 2013 and last year.
Adding value
THOSE calling for measures to be loosened lament that the worker crunch will lead to the shutdown of eclectic cafes and eateries.
It is true that many have folded: Almost half of the 369 cafes, coffee houses and snack bars that registered in 2011 have closed, as did 511 restaurants last year.
But chances are that it was not just the manpower crisis which did them in. Look around and you see eateries serving the ubiquitous rainbow or red velvet cake, heavily-frosted cupcakes, or truffle fries. Their strategy is plain vanilla, and customers soon stop going back because they can get the same thing everywhere.
Such outlets, said Singapore Polytechnic marketing retail lecturer Amos Tan, do not have what he calls a USP (unique selling point) - a product that makes them stand out. Items are bought from suppliers who supply to everyone else.
"Such owners open up without understanding the competitive landscape and have no institutional knowledge," he said, adding that low barriers to entry means that such eateries are easily set up. "When the wind changes, they die."
Institutional knowledge and the ability to innovate are crucial because there is no single solution to the ongoing crunch.
Increasing productivity is more than just cutting staff, buying a stir-frying machine and a couple of drones. Making such changes may help, but what is more crucial is pushing the envelope to raise revenue, differentiating from the masses, finding a niche.
Salad Stop hired a branding expert to help it stand out from its competitors - over 20 of them. Apart from a physical revamp of its 12 outlets by June, boards have been installed above the salad bar with illustrations and information on nutrition. Its website now shows the number of calories in each menu item. The chain's central kitchen will open in May and it is exploring delivery to offices for bulk orders.
"A lot of customers were disconnected to the brand, they didn't understand what we stood for," said co-owner Adrien Desbaillets, who said that the chain is all about getting people to eat healthily and rethink their food choices. "So much more could be done in terms of customer engagement." Revenue has shot up 20 per cent since the rebranding.
Such innovation can be seen elsewhere.
Mr Christopher Tan, 33, owner of Nara Thai Cuisine, ventured into catering and deliveries last year. He is now exploring marketing his venues as locations for office lunch meetings and other events. "It opens up a whole new market. We work out of our existing kitchens, optimise their use," said Mr Tan.
Staff at his two restaurants are also punching in by scanning their thumbs on a machine installed last year. Payslips are generated automatically, saving his human resource team two days a year.
By the second half of this year, customers at Munch salad bar can use an app to place orders days in advance. Food can then be picked up or delivered on the day itself. Owner Edwin Ng, 36, said: "This will expand our customer base. The office crowd can easily pre-order for meetings, the app also remembers the customer's address, their favourite orders."
Mr Ng changed Munch's concept from a sandwich bar to a salad bar a few years ago. The restructuring seems to have worked - eight new Munch outlets opened last year.
There are also innovative ways to retain workers. At high-end Japanese restaurant Tatsuya, profits are shared with employees in the form of mid-month bonuses, staff go for expenses-paid high tea, and those who do well go on trips to Japan to familiarise themselves with the supply chain.
There is no one-size-fits-all solution, but superficial changes - like turning customers away at the door because you have no workers to serve them, or pushing your staff to breaking point - just aren't going to make the cut.
Not in today's world.
The change has to start with the fundamental ingredients.
So, Cantonese restaurants, it's time to step up to the plate.
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