Tourists cannot go back to their home countries and claim they have visited foodie paradise Singapore if they have not eaten its version of chilli crab and bak kut teh.
However, with international borders closed and planes grounded due to the Covid-19 pandemic, it is not difficult to find a restaurant selling these must-eat dishes or any other Singaporean favourites whose business is not suffering.
Already, hundreds of local restaurants and cafes have closed for good due to the Covid-19 pandemic, while those who managed to survive also face an uncertain future or see their expansion plans go up in smoke.
One of these F&B players is local restaurateur Jumbo Group where roughly 60% of revenue comes from tourists and corporate diners. Prior to the pandemic, the group had been steadily expanding into other markets outside of Singapore through its seafood restaurant of the same name which is famous for its chilli crab. It also diversified into other offerings. This included restaurant Zui Yu Xuan which serves Teochew cuisine as well as Ng Ah Sio Bak Kut Teh.
“The last few months have proved to be the most challenging periods for Jumbo since the group was established 33 years ago,” says Jumbo Group CEO and executive director Ang Kiam Meng.
For the latest 1HFY2020 ended March just before the start of Singapore’s “circuit breaker” period which lasted from April 7 to June 1, earnings fell 66.3% to $2.5 million from a year ago as revenue fell some 13.1% to $66.7 million. If not for a $3 million lifeline from the government as part of the Jobs Support Scheme, the group’s results would have been worse.
And results for 3QFY2020 ended June are not expected to look any better either as it will capture the full extent of the negative effects of the circuit breaker. During the lockdown, Jumbo had to temporarily close 10 out of its 16 outlets while keeping the remaining six outlets open for takeaways and deliveries.
Jumbo is now guiding for a “substantially lower” topline in FY2020 compared to FY2019. “Though revenue has picked up gradually compared to the first week of the circuit breaker, and the majority of our landlords are providing varying amounts of rental rebates for April and May, which would help to defray some of our rental expenses, bottom line is expected to be significantly lower compared to same period last year based on preliminary assessment,” said the group in its 1HFY2020 results announcement.
Jumbo also did not declare an interim dividend for 1HFY2020, compared to a payout of 0.5 cent in 1HFY2019, citing its need to “preserve cash to support working capital requirements until the Covid-19 situation improves”.
In its latest report on Jumbo, RHB Group Research downgraded the stock to “sell” from “neutral” with a target price of 19 cents.
Analyst Juliana Cai says, “With the major decline in Singapore sales and a slow recovery in China’s footfall, we think Jumbo’s 3QFY2020 might go into losses, before a gradual recovery in 4QFY2020 when more social distancing restrictions could be eased.” And she does not expect any dividends for FY2020, given the challenging business conditions.
Nonetheless, Ang is positive on the group’s outlook. “We believe that the F&B environment will improve when Singapore finally moves to Phase Three reopening or when the borders reopen. While we look forward to the return of tourists, we will intensify our focus on the local market.”
To attract more local customers, Jumbo is organising dine-in and takeaway promotions as well as digitalising its menu and offering delivery services.
“Digitalisation has always been part of the group’s plan and this pandemic has accelerated our digitalisation process ... Delivery has gained popularity in recent years, especially for the younger generation. However, the pandemic has converted it to an essential service as consumers stay home more often and working from home has become a norm,” says Ang.
