When you walk into a shopping mall or explore into a heartland, you will definitely not missed a shop that is selling food or beverages. In fact, these are so many of these F&B shops that they are likely to form close to 50% of the tenancy mix.
However, starting and running a food business in Singapore is more holes than a swiss cheese. A food and beverages (F&B) business in Singapore, be it a Quick Serve Restaurant (QSR), a Fast Causal Restaurant, or a Full Service Restaurant (FSR) is costly to set up, expensive to run, difficult to find manpower, challenging to compete in a bloated F&B scene, and ultimately the business owner will face a reality check when their limited capital is caught by monthly cashflow deficit.
This guide will be covered in 3 parts. It aims to take you through how to set up a food and beverages (F&B) business in Singapore and shares with you some high level numbers and pointers to get you started in this business. It is by no means a sufficient or complete guide to success, but we sincerely believe our guide is a very practical read and we hope you can benefit from.
Before Opening (Part 2)
Getting Ready (Coming in Part 3)
Manpower and Setting Up
Grand Opening and beyond (Coming in Part 3)
Social Media and PR Campaign
General Planning and Conceptualising
As with other business, we always advise our clients to at least do up some planning and running through on papers how you envisage your business to be like. Something what we commonly call - a business plan! Very theoretical stuff, we know!
"You know right, this business plan you asking us to think and write on, will NOT survive its first encounters with reality, with the real world! It will instantly fall apart, it is meaningless to waste time on this!"
The above statement is something we received from our clients time to time. Sadly the fact of their statement is true.. However, the real rationale behind writing out such planning or a business plan is really to force you to think though the structure, some of the issues and to get sort of mentally comfortable in what you going to face. Then once you start to understand - if you take this action, certain anticipated outcome will arise and if it does not the alternate outcome will appear and so on, which you will feel more ready to take on these challenges.
So what should you be considering on in such general planning and conceptualising? The below a few points to get to a simple start:
What to sell, what kind of cuisines - will it be chinese, western, japanese, korean, thai, etc..?
What kind of restaurant model - will it be quick serve, fast casual, or a full service restaurant?
What is the unique selling proposition, ie. the value proposition to the customer ?
What is the target market?
Which location/ area you are thinking of opening the store?
Who are the main competitors and their offering?
A sample menu on the products you thinking to offer
This planning that you wrote down will serves as a quick guide for you to refer back at some point in time going forward. You will get lost along the journey but these are the earliest and most sincere thoughts you have when you decided to start this business. So these are important factors that will guide you when you need to make a decision.
Incorporate A Company
Once you are ready, the next step you do is to choose a Company name and incorporate a company so you can enter into tenancy agreements, apply for licenses, hire workers, etc.. Without any legal entity, nothing can be done.
Few information you needed to register a Company:
Directors details (at least 1 must be a Singapore resident)
Company secretary details (must be a Singapore resident)
Number of shares issue
Share capital of the company (at least S$1)
Singapore address for the registered office of the Company
Financial year end date
After the company is incorporated, you will need a copy of your company business profile and company constitution for your records. This two documents are needed to open bank accounts and apply for licenses with authorities.
After incorporation is done, you will need to make an appointment to the bank to open a banking account under the company. This is important as you will want the monies collected from the business to go into the company, to separate business transactions from your personal finances or personal bank account.
Scout Locations And Arrange For Premise Viewing
With your planning written; your company registered, now is time to go on shopping! Finding the right premise or perfect shop in your dream location is not easy. This is especially true when you also throw in the consideration of lease rate, ie. rental price.
Pre-Covid times, a spot in Orchard road main shopping malls will cost as high as S$30 to S$40 per square foot (PSF). Depending on the location, the floor the shop is located and the size of the shop, the all-in rental rate for a premise designated for F&B purpose in a shopping mall will typically hover between S$15 and $30psf, inclusive of any maintenance charges, service charges, and GTO rent (if any of these applicable).
Generally, our firm categories the locations into the following 4 group:
Main Shopping Belts - Orchard Road, Cityhall, Central area, etc..
Central Business District (CBD) - Raffles place, etc..
Heartland and Neighborhood Regions - e.g. Bishan, Toa Payoh, Ang Mo Kio, etc..
Each of this group serve different crowds although there will be overlapping target audience. For example, the primary crowd for CBD is office workers where the lunch crowd during weekday is strong, but suffers from weekend as offices are closed.
It must also be noted within each location category there can be various F&B set-up. For example, the F&B can be operated in a food court, as a cafe, as a "to-go kiosk", a fast causal restaurant, etc.. The location and mode of F&B set-up will all depend on your planning done in Step 1 mentioned above.
Go out to have viewing to have a grasp on what is the market price for the area you are looking at. Remember that once you shortlisted a few premises, you must do your own research (DYOR) by:
Understand the nearby amenities, building/ structures, MRT stations/ bus-stops
Assess the audience group and human traffic
Visit the premise on different days and different hours
Think about the neighbours F&B shops around the premise and similar product offering in vicinity
Come up with "imaginary" revenue projection (covered more in the below)
Examples of some F&B rental listed online:
Be sure to go to Part 2 of this guide "How to Start a Food and Beverages (F&B) Business in Singapore", where we will discuss on the next stage of your exciting journey:
Before Opening (Part 2)