2,594 New F&B Businesses. Who Is Paying for Everyone's Dinner?

More restaurant concepts give diners more choice. They also give each operator more businesses to fight for the same meal.

A 10 September report citing ACRA figures recorded 2,594 F&B business formations and 2,101 closures in Singapore between January and July, with closures up around 25 per cent year on year. These are business formation and closure figures, so do not treat them as a precise count of physical restaurants opening and shutting.

Even with that caveat, the churn is striking. For landlords it produces plenty of enquiries. For the businesses signing those leases, it means a crowded fight for attention and repeat spending.

A new tenant still needs a funded runway

Opening a restaurant absorbs cash long before the first useful sales pattern appears. Renovation, equipment, deposits, recruitment and stock all arrive early.

Then the business has to pay rent and staff while finding out which assumptions were optimistic. A launch queue helps, but it is far too early to tell whether customers will come back at a frequency and spend level that supports the operation.

When assessing a prospective tenant, I want to understand the operating reserve that remains after the setup costs. A well-funded launch budget and a well-funded first year are two different things.

For an operator, the premises decision should leave room to learn. Taking the largest unit the opening budget can just about cover leaves very little margin for a slow first few months.

Competition is measured in customer occasions

Two restaurants can sell completely different cuisines and still compete for the same S$15 weekday lunch. Two similar-looking outlets can serve entirely different customers because of their hours, service style or location.

So I would map the nearby alternatives by what the customer is trying to do. A quick meal before a class, a family dinner after work, a weekend outing with friends: each has a different spending limit and a different tolerance for inconvenience.

A concept needs a clear reason to win enough of those occasions. Being new is a reason for one visit. Value, consistency and convenience do the work afterwards.

For a landlord, repeated enquiries are not the same as dependable income. A unit that turns over operators every eighteen months consumes time and money through downtime, repairs and renegotiation.

The quality of the match deserves more attention than the excitement of the newest brand. Does the layout suit the operation? Can the tenant afford the occupancy cost on plausible sales? Is there enough capital left to survive a slow period?

The registration figures show how many people are willing to enter F&B. The property opportunity is to provide premises where a capable operator can stay. That is a much better basis for a lease than assuming another enthusiastic tenant will always be waiting.