Lean, mean F&B machines
Is it your imagination, or is your favourite restaurant looking a little less busy these days? As market sentiment stays cautious at best or bearish at worst, Singapore's favourite past-time - eating out - is taking a hit.
With the seasonal highs of Christmas, New Year and Chinese New Year well behind them, restaurants are now settling down to a normal routine. But given Singapore's sluggish economy, the new normal means that people are not dining out and drinking as much as they used to.
Naturally, the higher end of the market is feeling it the most, with fewer tables being filled at each service.
"The economy has been showing signs of slowing down and business has not been as robust as before," says Daniel Sia, chef-owner of The Disgruntled Chef. "We have also noticed that people do not make reservations well in advance like they used to."
For those who are still going out to wine and dine, they are doing so with caution.
Gattopardo Ristorante di Mare chef-owner Lino Sauro says: "There is a culture of eating out in Singapore, whether it is for pleasure or for entertaining. So I don't think diners are eating less, but they are definitely more conscious about the prices."
He notes that more diners are starting to buy wines direct from distributors and bringing them to Gattopardo, thereby shrinking their restaurant bills.
Savvy diners are also ordering shorter tasting menus. For example, at Labyrinth - which takes a progressive approach to Singaporean cuisine - customers opt for the S$98 menu of five dishes, over the 10-course menu, which costs S$168.
Prive group chairman Yuan Oeij concurs. "We are seeing more diners spending less on drinks, and also having fewer courses for their meals at our restaurants," he says.
But the smaller restaurant takings are not worrying him just yet. The group's casual joints such as Prive Cafe at Keppel Bay and Prive Chijmes have been pretty resilient in the face of the economic downturn. "In our new eateries such as Empress and Prive at Asian Civilisations Museum and Clarke Quay, sales are increasing steadily as the outlets establish themselves," says Mr Oeij.
Another industry veteran who is still feeling upbeat despite a general drop in dining expenditure is restaurateur and hotelier Loh Lik Peng from the Unlisted Collection.
"Spending at restaurants is down, but not catastrophic. It is not as bad as during the economic crisis in 2008, when revenue dropped by half," says Mr Loh, who owns restaurants such as Cheek by Jowl and Esquina. "Revenues are flat rather than rising. The last year was flat, compared to previous years."
Ironically, even if diners are cutting back, they are getting more bang for their buck as restaurants ramp up their efforts to stay afloat in this current downturn.
The ilLido Group, for one, has introduced special menus. For example, at Osteria Art, there is the Early Dinners menu, where a three-course meal is priced at S$48++ per person, from Mondays to Thursdays, and on Fridays, there is the Ladies' Night dinners which offers a four-course menu with free flow of martinis and Prosecco for S$98++. "Attractively priced set menus are our key measures to keeping the bottom line healthy," says ilLido founder Beppe de Vito.
At Bacchanalia, head chef Ivan Brehm has introduced a smaller menu at S$75 for three courses. "They are more accessible, and aim to capture the attention of people who were otherwise uncertain about committing to a longer meal at Bacchanalia," says chef Brehm.
Labyrinth, meanwhile, plans to cut back on the number of menus it currently has. "We are looking to integrate the menus," says chef-owner Han Li Guang. "So instead of three menus, we will have one menu with supplement add-ons for a few more courses. This will allow us to concentrate on quality instead of having more dishes, and the team can turnover the menu faster as well. And in the process, we can control our costs better and manpower could be more efficient too."
On the opposite end of the spectrum, The Disgruntled Chef is spending more on produce to increase the value proposition of its products. "We are spending more on premium meat cuts and seafood, and slightly decreased menu prices so that the diners get more value for their dollar," says chef Sia. "We do not believe in cutting corners so we try to 'up the game' so to speak, rather than cut back, because customers can tell the difference."
The Naked Finn, meanwhile, believes in growing bigger in size rather than cutting back. Last year, it moved to a bigger space, but still in Gillman Barracks. Owner Tan Ken Loon says: "We increased our capacity from 40 to 60 seats, so that we can lower the prices to make it even more value for money. With that, we are targeting customers that will continue to spend for quality but at a reasonable rate," he says. He adds that the lunch crowd is even stronger than before.
The economic downturn has meant that Patrick Tan, chef/owner of Japanese grill joint Tamashii Robataya, has had to readjust pricing for his omakase menus, after requests from his customers.
And he has done so. Previously, an eight-course omakase menu was priced from S$180 to S$250. Now chef Tan is offering a six-course menu priced from S$138 to S$200. He says that operations and food costs have been rising over the years, hence he had no choice but to price the menu from S$180 previously.
"But in today's situation when the economy isn't good, I have to lower the price but still give our best products," he says. "Even with a lower price, I still have make sure that my customers feel they are getting their money's worth."
He is also taking this time to travel to Japan to find "better products at lower costs", which he says will help keep his food costs low.
Fine-dining restaurant Les Amis is bucking the poor attendance trend. Executive chef Sebastien Lepinoy says that the number of diners for November 2015 were better than the year before. "March has also been a good month for us," says chef Lepinoy. On a recent visit, the restaurant was buzzing for a weekday lunch.
But he acknowledges that people are spending less. "They would pick the lower-priced menu over the higher one. But that is alright. So long as we give people options," he says.
His decision to lower the prices at Les Amis three years ago has paid off in this downturn, he says. Lunch is priced at S$60, and dinners start from S$180.
"Once customers remember that Les Amis is affordable, they will return, regardless of whether it is a downturn or not. Most people tend not to return to a restaurant, once they have been shocked by the bill," he says.
He is not in favour of cutting back on portion size or manpower, which he says will eventually affect the overall dining experience. "When diners are not happy, they will not return," he says.
Similarly, Wee Teng Wen, co-founder of The Lo & Behold Group, says that for the restaurants under his group, some have in fact, surpassed expectations last year across the same period. "For example, Loof, our rooftop bar, celebrates its 11th anniversary this year. Even Odette, our first fine dining restaurant is still experiencing very healthy reservation take-up rates, despite it being opened for four months already," he says. There is still a month-long waiting list for Odette.
Esther Wee, managing director of Halia, says that compared to 15 years ago when Halia first opened, "if you were looking for an extravagant night out, there were probably only a few restaurants that come to mind. Today, restaurants have to work a lot harder to win over the savvy consumer".
Given Singaporean diners' notoriety as fickle, non-loyal customers, Halia continues to hold its own at its original Singapore Botanic Gardens location and its second outlet at Raffles Hotel. Ms Wee chalks up its longevity to a menu that "never stopped evolving through the hands of many chefs".
In addition, its outlet at the Botanic Gardens is also reinvigorated every few years. A recent makeover unveiled a more casual dining atmosphere to reflect the new menu of affordable, communal creations. Both restaurants are doing well, says Ms Wee, because "our 15 years in the industry has allowed us to build up a database of loyal regulars".
Another industry veteran who has seen it all is Carecci Salvatore, founder of Pasta Fresca Da Salvatore. The Italian chain of restaurants, which started in 1988, has weathered bad times such as the Asian financial crisis in 1997, Sars outbreak in 2003, and the last economic crisis in 2008.
This time round, Mr Salvatore projects a fall in demand of about 10 per cent, but says that "our humble pricing could actually make us even more palatable in the downturn as people would still want to go out and celebrate special occasions in a nice restaurant, but would prefer to look for more affordable alternatives such as ours". The Bukit Timah and Siglap outlets enjoy a very healthy crowd on weekdays, while the Boat Quay outlet is popular with the office crowd during lunch hours.
The economic downturn has seen some casualties, such as Fordham & Grand, Wagokoro by Hide Yamamoto, and Ujong, all of which have closed, over the past year.
Executive chef Mark Richards of Caerus Holdings, which owned Ujong, puts it down to high rentals and low foot traffic in the Raffles Hotel area for the restaurant's closure.
"I reckon our closure is indirectly due to the economic downturn. The spending power of locals wouldn't be as strong as before, especially when local food is cheaper elsewhere compared to an upmarket concept like Ujong," says chef Richards. "I guess consumers would rather opt for the cheaper option with counter service, rather than pay for table service when it comes to local cuisine."
Others however, are confident enough to open new restaurants.
Last month, the Emmanuel Stroobant Group opened three restaurants. There is Shoukouwa and Saint Pierre at One Fullerton, and Jean Dore, at Quayside Isle, where Saint Pierre used to be.
Edina Hong, the group's marketing director says that the firm has always expanded its business during downturns. "It is during such times that you can get better deals," she says.
The group was initially looking for the right space for Shoukouwa which, for an upscale sushi bar concept, did not require a large space. When they saw the One Fullerton location, they negotiated for a package deal, as more space was available than required for Shoukouwa.
"The timing was about right, as we were already looking at re-branding Saint Pierre (in Sentosa). So we thought why not, since we were already re-vamping Saint Pierre, and many of our regular diners had requested us to come back to the city," says Ms Hong.
Jean Dore came about because of an impromptu staff initiative. As they still had several months left on the lease on Saint Pierre's Sentosa site, the staff came up with the idea to do a French bistro-style pop-up restaurant.
"As we were already paying the rent there, it did not cost us much to use Jean Dore as a test bed till the lease runs out. However, as most of the team's attention is now focused on the new Saint Pierre and Shoukouwa, not enough resources and attention can be allocated to Jean Dore, so we decided not to continue this project," says Ms Hong.
Andrew Tjioe, president of the Restaurant Association of Singapore, acknowledges that it has not been good for the F&B industry. "It could stay the same for the rest of the year, or get worse, but I hope the situation will stabilise," he says.
Mr Tjioe says that restaurants should now take the time to see how they can encourage people to spend, such as doing promotions. "At the same time, restaurants should go the productivity way," he says. By that, he means to find ways to reduce manpower costs, which is now higher than food costs. "One possible way of this is to automate, or restaurants could downsize the menu and space, or have a central kitchen."
But he is encouraged to see that there are still new restaurants opening despite the slowdown. "When restaurants open, it means people have confidence in the economy. It is only when there are no openings at all, then we really have to worry," he says.
Mr Tjioe reckons it will take about two years for the F&B industry to boom again. "Hopefully it will not be longer than that. In the meantime, restaurants have to be lean and mean."
Additional reporting by Rachel Loi, Tan Teck Heng and Avanti Nim
This article was first published on April 16, 2016.
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