August's New Restaurants Hide a Property Lesson in the Menu

Before I look at a restaurant's rent, I want to know what lunch costs.

A S$10 meal and a S$100 meal can both be excellent businesses. They usually need very different premises, and a surprising amount of location analysis falls into place once the average spend is pinned down.

Time Out's August roundup includes affordable Peranakan food in the CBD, nasi padang around Kampong Glam and a Japanese dining arrival in City Hall. That spread is a useful reminder that there is no single recipe for a good Singapore restaurant location.

A weekday office lunch needs a customer who can find the shop, order, eat and get back to work. Being near offices helps, but so does a visible entrance and a queue that does not block the pavement. A unit tucked away upstairs might have a lower rent and still cost the operator too many transactions.

A restaurant built around reservations works differently. Customers will accept a less obvious entrance if the experience justifies the trip. In return they expect the arrival, the seating and the surroundings to match what they are paying.

Counting pedestrians without asking what they are doing is a poor shortcut. Someone hurrying towards the MRT at 8.30am is not a dinner customer.

What a low average bill demands of the space

An accessible price point can generate frequent visits. It also leaves less room for a slow kitchen or an inefficient layout.

Take an illustrative S$12 average bill. Another S$3,000 a month in occupancy costs needs 250 extra bills just to cover that increase at the sales level. Once food, labour and the other variable costs are included, the sales you actually need are higher again.

That is why a slightly cheaper unit with poor throughput can disappoint. A narrow collection area, insufficient storage, or a delivery route that crosses the dining room is a daily operating cost that never appears in the quoted rent.

I would test the space against the busiest half hour of service, payment and clearing included. The bottleneck usually reveals itself long before a designer produces an attractive rendering.

New restaurants get attention because they are new. The more useful leasing question is why somebody comes back in November.

For a CBD lunch business the answer might be speed and value. For a destination restaurant it may be a meal worth arranging an evening around. Either way, the premises should make that repeat visit easy.

If you are comparing F&B units, bring the proposed menu, the intended opening hours and a rough seating plan to the discussion. They tell me far more about the space you need than a request for somewhere with good traffic.