SINGAPORE (May 20): It is no doubt that local F&B players have been hit hard by the impact of Covid-19.
At first, it was social distancing measures, forcing restaurants to cut down the number of patrons allowed to dine-in at once. Then, the circuit breaker period kicked in and dining-in was not allowed, only delivery and takeaway. Some cafes, bakeries, dessert bars and drinks stalls were also asked to close during this period.
These tightened measures in attempt to contain the Covid-19 spread have left restaurants with the sole alternative of offering delivery and takeaway as the only way to make revenue. It was not easy for a lot a lot of restaurants that previously did not offer these services.
According to online dining platform Chope in its latest study on how the nation’s F&B businesses have fared during the circuit breaker, 42% of restaurants surveyed had to offer delivery for the first time, in light of the circuit breaker measures.
Delivery and takeaway only contributed less than 10% of revenue for 88% of restaurants surveyed prior.
But is takeaway and delivery a sustainable revenue stream for restaurants?
According to Chope’s survey, it is not, as 62% of restaurants that have continued to operate on a takeaway and delivery basis have seen significant falls (50% or more) in revenue compared to the same period last year (April 2019).
In addition, the revenue generated is not sufficient to offset the losses and restaurants still face the high cost of working with logistics or third-party delivery providers, which remains their biggest challenge. At the current rate of cost and revenue, 42% of restaurants reported that they will not be able to operate beyond two months. 81% will not be able to operate beyond six months.
The road to recovery is a bumpy one for the F&B industry.
By now, already 11% of restaurants have retrenched staff and 41.8% have implemented pay cuts. Another 25% are considering ceasing employment of more staff should the situation not improve.
Moreover, about 13% of restaurants have yet to receive their rental waivers from landlords equivalent of the property tax rebate.
As it is, the Singapore government yesterday announced that the circuit breaker will end on June 1. But the country will enter three phases to reopen to economy. As Singapore enters phase one of safe reopening, restaurants are still not allowed to welcome patrons to dine in. The government has said that dining in restaurants will take “a few months”.
However, Chope remains optimistic about the recovery as it has observed a strong recovery in demand in markets like Hong Kong once they have eased social distancing measures.
Arrif Ziaudeen, Founder and CEO of The Chope Group says, “Restaurants have spent enormous effort figuring out how to do deliveries, but the data shows it's only helping marginally. Covering rent and salaries will require some easing off of dine-in restrictions, balanced carefully against public health concerns. When that happens, we're confident that diners' pent up demand will help get restaurants back on track.”
