Labour-hit restaurants turn to outsourcing

With the tightening of labour laws and lack of manpower in the service industry, food and beverage operators are now turning to food manufacturers and production kitchens to solve their labour woes.

Although some restaurants and hotels, including some four-star ones that outsource food and beverage operations to external operators, have been practising this for years, demand for such services have been on the rise of late.

Companies with production kitchens that manufacture and prepare food say they have seen as much as an 8 to 10 per cent month-on-month increase in sales in the past year. Others have noticed a 20 to 50 per cent jump in the number of clients approaching them for food products.

Food and beverage outlets that are now outsourcing their food offerings range from new restaurants and cafes to established chain restaurants and five-star hotels.

Factors that contribute to this rise include the higher foreign worker levies and further reduction of the foreign worker dependency ratio ceiling from 45 to 40 per cent, which will kick in next month. Other reasons for the increased demand, food manufacturers say, include rising operating costs due to rental hikes.

And it is because of these factors that food manufacturers see potential for growth in the sector. This is also in light of the Government's push towards increasing productivity and reducing reliance on foreign labour.

The trend of increasing productivity levels and outsourcing food here mirrors what has been happening overseas. In France, for instance, the French bemoan the disappearance of artisanal croissants. There, with the rise of the "industrial croissant", bakers are now turning to ready-made doughs, breads and other viennoiseries, baking them in the oven and at times, passing them off as their own, due to time and labour constraints.

In Singapore, diners are concerned about hawkers that turn to suppliers for ingredients that they once used to make themselves from scratch. These include carrot cake, fishballs and yong tau foo (beancurd and vegetables stuffed with fish paste).

Now, well-known hotels, buffet restaurants and chain restaurants are outsourcing too, production kitchen operators say.

In fact, there is plenty of food that these establishments can opt for - ready-kneaded prata dough, coffee beans roasted to specifications, individual portions of seafood, sauce for paella and dimsum.

Most items come either frozen or chilled, usually in vacuum-sealed packs. These need to only be reheated in a hot-water bath before serving.

With more food and beverage outlets turning to wholesale food manufacturers, this might mean that diners could be eating the same food at different places.

For instance, the same lobster bisque could be served at a hotel buffet as well as in a cosy cafe. Perhaps a curry at a hawker stall could be the same one at a hotel's coffeehouse restaurant.

However, these production kitchens are also able to create and development recipes for individual clients.

Chinese restaurant group TungLok started producing for other food and beverage clients about three years ago.

On why outsourcing appeals to clients, Mr Andrew Tjioe, 55, its executive chairman, says: "By outsourcing, companies can save on money and manpower, enjoy better-quality products, and concentrate on other areas of the business. Companies may also apply for a government grant."

For instance, meats, when cooked in large potions, have a more intense flavour, he says.

TungLok, which makes mainly dimsum, gyoza and a selection of cooked food for wholesale clients, has had "single digit" percentage growth in the segment in the last year, but Mr Tjioe says it will be "growing this sector for sure".

Other companies that offer these services include Antoinette, which sells its croissants and breads such as brioche and baguettes, and custom-made desserts to chains and stand-alone restaurants; and the Argentum Group that is behind Foodology at Marina Bay Financial Centre and Foodology Fresh in Maxwell Road. It manufactures food and pastries for about 100 clients, including company cafeterias, kiosks and semi fine-dining restaurants.

The Quayside Kitchen by The Quayside Group, which runs restaurants such as Peony Jade and Quayside Seafood, also supplies items such as dimsum and Western dishes to food and beverage outlets other than their own.

The savings can also be significant for restaurants that decide to outsource because staff can be cut and kitchen staff need not be fully trained in the culinary arts.

Moreover, because less heavy cooking takes place in the kitchen, exhaust hoods need not be cleaned as often. Restaurants can also downsize their kitchens and dedicate more floor area to serving customers, which will in turn increase revenue.

Savings from cutting manpower costs aside, it can still seem somewhat more expensive to purchase ready-made food, but existing staff can spend time making other items, and creating new dishes instead of labouring over simple stocks and stews.

Other draws for restaurants include high food safety and hygiene standards, consistency in food quality and the transparency of food costs.

Most restaurants declined to talk to SundayLife! about outsourcing their food, for fear that it might hurt their reputation. But those that spoke to SundayLife! say they do it for "peace of mind".

Mr Laurent Bernard, 45, who runs an eponymous chocolaterie as well as a cafe, Laurent at Portsdown, now buys savoury food for his cafe from chef Julien Bompard's Cuisine Service. He started doing so last year. He also runs his own central kitchen and supplies his chocolates and cakes to other businesses including hotels.

He says: "It is more efficient and I can be assured of the quality. Now, I am also able to focus all my energy on my core business, which is the chocolaterie."

He has also been able to cut the number of kitchen staff from three to just one. He used to employ three in case one did not turn up for work.

Only a few items, such as Eggs Benedict, burgers and scrambled eggs are cooked to order. Replacing staff who leave does not pose as much of a problem any more, as the work does not require as much skill.

Pizza chain Pezzo will be using a newly-created spice paste, which it collaborated with Dancing Chef to produce, for its Asian-inspired pizza, to be launched in August. The chain currently has 16 outlets and plans to have 25 by the end of the year.

Its co-founder Chiang Zhan Xiang, 29, says: "We could probably make it cheaper ourselves, but the trade-off of having someone to do it for us is that quality and consistency will be maintained."

Still, convincing chefs to outsource part of their food could prove tricky, as many do not want to be seen as compromising their own integrity.

Chef Bompard, having run restaurants and worked in hotel kitchens, says: "We can provide the framework for chefs to work with, not take away their creativty."

Some diners whom SundayLife! spoke to say they are irked by the thought of knowing that the food they are eating has not been made in-house. Others seem unfazed.

Account manager Daniel Lim, 26, says: "I guess, unless we have savvy tastebuds, we're not going to be able to tell whether we have had the same beef rendang at more than one place. Honestly, unless I ate it the day before, I'm not sure that I could tell the difference.

"But knowing that I could be paying $8 at one place and $15 at another for the same soup, just in a different setting, puts me off."

Another diner, Ms S.L. See, 42, a secretary, says: "Half the hawker stalls these days get their food from suppliers. I don't see much of a difference when restaurants have to do it because of manpower issues.

"But I think restaurants should at least do something to it - make what you have bought your own by adding more ingredients to it."

First Gourmet

Who: Business partners Joseph Lee, 56, and Jarrod Seah, 40 Where: 5 Burn Road, Level 3 Info: Go to firstgourmet.com

The First Gourmet group, founded in 2003, currently supplies its own restaurants, including six Prata Wala outlets, Turkish restaurant Ottoman Kebab & Grill, two outlets of Indian restaurant Zaffron Kitchen and Jai Ho Indian hawker stalls. More Prata Wala outlets are slated to open soon.

However, its 14,000 sq ft kitchen, known as FG Food Industries, not only produces foods for its own restaurants, but also supplies items such as curries and prata dough to hotels, which use the food in their buffets, restaurants and casual Indian chains.

Mr Lee says: "When we produce items with industrial equipment, it takes half the amount of time that it takes to do the same thing on a normal stove."

In the middle of last year, the company moved to a bigger central kitchen, four times the size of its previous one, to cater to growing demand from wholesale customers and its increasing number of restaurants and franchises.

Mr Lee did not want to reveal the cost of setting up the kitchen but said the company has bought more equipment that can automate and regulate temperature, as well as increase productivity.

In the kitchen are tilting pans that can each cook up to 180 litres of food, such as fish curry in a batch, as well as 200-litre electric steam-jacketed tilting pots to cook briyani.

The company is in the midst of obtaining ISO 2200 certification, a recognised international food safety standard.

Mr Lee says he hopes to be able to supply food to the airline industry in future and, to cope with increased volume, the company can start operating its kitchen in shifts.

Natrad food

Who: Founders Ling Ee Ping, who is in her 60s, and her husband Lum Choong Hon, 71, and their son, Lum Wai Onn, 42 Where: 149 & 151 Ubi Ave 4, Henson Warehouse Info: Call 6746-9498 or go to natradfood.com.sg or dancingchefonline.com

Natrad Food may not ring a bell, but the popular Laughing Cow cheese, or La Vache Qui Rit, might.

The company has been importing and distributing that cheese here since the 1970s. It also imports, exports and distributes other fine foods such as Parma ham and other types of cheese, and is also behind Dancing Chef, a range of ready-made pastes and sauces.

Madam Ling created Dancing Chef's instant spice pastes and sauces for time-strapped people who want to whip up quick and simple food without MSG, preservatives or artificial colouring.

These instant mixes were launched in supermarkets in 2002. There are now 20 different offerings, including Green Curry Paste, Indonesian Yellow Curry and Hainanese Chicken Rice. These mixes are also sold in bulk to chain restaurants, hawkers, start-up eateries as well as hotels, both here and in countries such as Malaysia and China.

Madam Ling has been working with a contract manufacturer in Thailand to create the mixes, but to cope with increasing demand, she will be opening her own 155,000 sq ft factory in Thailand. It will be ready in the next two to three months.

In the last year, wholesale supplies of her pastes have increased by about 15 per cent. Retail sales has also gone up by about 10 per cent in Hong Kong and Malaysia.

She says: "It is convenient for companies because they can control costs, and cut down time and labour spent on processes such as peeling onions and frying the curry paste."

She and her husband now leave the running the company to their son, Wai Onn, 42, who joined the business in 2001. Their daughter is not involved in the business.

"It is convenient for companies because they can control costs, and cut down time and labour spent on processes such as peeling onions and frying the curry paste."

Foodgnostic

Who: Daniel Tay, 44, founder Where: KA Food Link, 171 Kampong Ampat, 05-04 Info: Call 6287-0077 or go to catandthefiddle.com

After founding, expanding and then selling the successful Bakerzin patisserie-cafe chain, Mr Daniel Tay knew there was a demand from small businesses for good-quality food that would help them save on manpower and money.

So last December, a month after leaving Bakerzin, he put in $2 million to open Foodgnostic, a food creation and development company that does contract food manufacturing for food and beverage establishments, including cafes and restaurants.

He says he saw potential in the sector, given rising operational costs that included manpower and rental. "I knew that we could use technology to help smaller players in the industry save on production costs, in light of labour shortages and high rentals."

His 16,000 sq ft production kitchen in Kampong Ampat employs 50 staff and currently produces about 50 items, from his signature cheesecakes to soups that range from French onion to mushroom.

The company also makes pasta sauces, curry puffs and even an Asian chilli sauce which he makes on contract for a well-known seafood restaurant here.

Because food is made in large batches, he is able to increase productivity with technology and machinery. For instance, he has a boiler that can cook and process 250kg of soup at one time. The company also has a special robotic-arm cake slicer.

Foodgnostic's central kitchen meets Hazard Analysis and Critical Control Point regulations, an internationally recognised food safety management system.

"I knew that we could use technology to help smaller players in the industry save on production costs, in light of labour shortages and high rentals."

Cusine service

Who: Julien Bompard, 45, chef and director of Cuisine Service Where: KA FoodLink, 171 Kampong Ampat, 06-12 Info: Call 6732-6269 or go to cuisineservice.com.sg

Celebrated French chef Julien Bompard used to run high-end French restaurant Le Saint Julien at The Fullerton Waterboat House for 10 years, until it closed in January last year.

He has set up a production kitchen to create ready-prepared solutions for food and beverage clients. He founded Cuisine Service in February last year, and has been growing his business since.

From his 3,000 sq ft production kitchen in Kampong Ampat, he now supplies duck rillette, foie gras terrine, lobster bisque and duck confit to about 25 clients that include restaurants, cafes, country clubs and hotels.

The kitchen makes more than 100 products, including a range of tapas, pasta sauces, Asian dishes such as chicken curry, and various soups and main courses. It is also able to develop recipes and manufacture foods for individual clients.

He creates the dishes and oversees the research and development aspect of the business, leaving the running of the kitchen to his staff of five, some of whom used to work with him at his restaurant. He is also a consultant chef to private dining restaurant Scotts 27 in Scotts Road.

His food does not contain preservatives. It is cooked, vaccum-packed, then pasteurised and blast chilled.

He says he had the vision for this concept in the early noughties when he was deputy executive chef of Raffles Hotel. He had worked in Michelin-starred restaurants in France as well as in other hotels, and thought staff could be better deployed to do other things instead of, for instance, labouring over stocks.

Hotels would then also be better prepared for large banquets or last-minute events.

He says: "The manpower issue in the industry is making restaurants and hotels rethink how they do things, especially in the kitchen.

With outsourcing, they are able to increase efficiency, ensure high hygiene standards and consistency of food. They will also be able to offer more flexibility in the food offerings, which cater to the diners of today who tend to demand more variety."

The kitchen is expected to be ISO 22000-certified by the end of this year.

He adds: "What we can do is help kitchens with the basics, such as pasta sauces, stocks and stews, leaving chefs with more time and manpower for creativity."

"What we can do is help kitchens with the basics, such as pasta sauces, stocks and stews, leaving chefs with more time and manpower for creativity."

This article was first published on June 1, 2014. Get a copy of The Straits Times or go to straitstimes.com for more stories.