Scholar: High Rent and Labor Shortage Become Deadly Challenges for the Restaurant Industry; Strong Partnerships May Break Through | Lianhe Zaobao

Singaporeans love food, and the food and beverage industry seems to have a promising future. However, in recent years, there have been continuous reports of restaurant closures. Not only local brand restaurants are affected, but even Michelin-starred restaurants cannot escape the fate of shutting down. Scholars believe that the local food and beverage industry faces fierce competition, coupled with expensive rents, labor costs, and changes in consumer spending habits, which have become common challenges faced by operators. To alleviate the high closure rate in the food and beverage industry, it is suggested that the government could moderately intervene in rent control, and operators could seek partnerships with "cross-river dragons" to leverage each other's strengths and enhance competitiveness together. No One is Immune, Including "Cross-River Dragons" and Starred Restaurants Data shows that last year, 3,790 new dining establishments opened locally, but 3,047 also closed during the same period, a significant number, including many long-established brands or well-known "cross-river dragon" brands. For example, the branch of Jade Restaurant located in Holland Village ended its operations after 20 years, and the Prive Group also announced a complete shutdown. As for "cross-river dragon" brands, Eggslut, Burger & Lobster, and eight Michelin one-star restaurants, including Poise and Shinji, also ceased operations last year. This indicates that the challenges faced by the food and beverage industry are not unique to ordinary brands; even starred restaurants are not spared. Guy Llewellyn, an assistant professor at EHL Singapore campus, pointed out that although inflation has eased, the implementation of the minimum wage system, the increasing difficulty in hiring S Pass employees, and the burden of high rents mean that without any intervention measures, the difficulties faced by the food and beverage industry will be hard to improve. "Due to the increase in consumption tax, people dine out less frequently than before. If we compare the total income from ten years ago to last year, the overall scale of the industry has remained basically flat, but due to the surge in the number of new restaurants during the same period, more restaurants are competing for the same amount of consumer spending." Government May Intervene to Set Rent Increase Caps Guy also mentioned that the strength of the Singapore dollar has significantly weakened tourists' willingness to visit and their ability to spend locally, and high rents are the most concerning issue for operators. He believes that the government could set a cap on rent increases. Although this situation may not occur, rent control is a logical proposal. Further Reading Second food and beverage operator shuts down within two days, Prive Group announces closure of all outlets Concerned about rising living costs, many citizens plan to dine out less and save more In response to a query from Lianhe Zaobao regarding the competitiveness of local dining brands, EHL Singapore campus lecturer Natthavut Srinara stated that local restaurants focus on repeat customers. The rapid development of Paradise Group is attributed to the fact that their food is commonly consumed, and the variety of restaurants under their brand can attract different consumer groups. Guy pointed out that local restaurants that can operate for a long time often rely on good word-of-mouth to attract customers, rather than depending on prominent storefronts. Therefore, these restaurants often choose to rent lower-cost spaces on other floors or in hidden locations, which can actually be more beneficial for sustained operations. When discussing competition with Chinese dining operators, EHL Singapore campus Managing Director Bao Chen noted that Chinese operators do not focus on making profits at individual restaurants but rather on increasing capital valuation in the capital market. He pointed out that once these restaurants reach a certain number of outlets in Singapore, the logistics and supply chain of Chinese companies can create a magical effect, posing a threat to local restaurant operators in Singapore. Bao Chen also said, "Some local operators have adopted smart strategies, not confronting competitors directly, but instead collaborating through joint ventures. Local operators are familiar with the market here and possess professional experience, while Chinese operators have brand influence, online operational capabilities, and ample funding. This combination can create a win-win situation." EHL is the world's top-ranked hotel management university, and the Singapore campus is the first outside of Lausanne and Passugg in Switzerland, with Bao Chen being the newly appointed Managing Director of the Singapore campus. Bao Chen's vision is to establish the Singapore campus on a diversified development model focused on innovation, sustainability, and leadership. In addition to strengthening existing student mobility programs, he will also expand services to executive education and joint programs, explore collaborations with renowned business schools in the region, and provide consulting services for regional partners