8 Tips to Setting Up Your Food and Beverage Business in Singapore

The Food-and-Beverage (F & B) services industry is booming in Singapore. In view of the upcoming launch of the Integrated Resorts (IR), the F & B services industry is set to see phenomenal growth in the next 5 years. From 4,489 in 2005, the number of F & B establishments has surged significantly to 4,900 in 2006 (a short 1 year span).

Increasingly, students from renowned institutions such as ITE and SHATEC look forward to honing their entrepreneurial skills after graduation by setting up their own F&B brand names. This trend could be attributed to the swell in media attention placed on the F & B industry in recent years.

Mega-Exhibitions, Food Fairs and variety shows revolving around culinary themes, interviews, and success stories are ubiquitous on local and international media. Stories of aspiring individuals abandoning their established professional careers in their foray into F & B businesses are not uncommon.

Among the myriad of issues to address in the setting up of cafés and restaurants, even professional chefs and seasoned entrepreneurs, have missed out on critical aspects in the setting up of their F & B businesses. In that respect, proper guidance from the experienced in the field is crucial hopefully, this article will provide the many entrepreneurial and aspiring individuals with necessary information to kick-start their exciting journey into the F & B industry.

Some areas of concern that any budding entrepreneur should look into include:

1. Business Administration

Have you registered your business entity with the Accounting and Corporate Regulatory Authority (ACRA) Singapore?

Have all the necessary government-related licenses been applied for? These include licenses to commence food businesses and/or liquor licenses (if you are intending to provide alcoholic products as part of your food business). While these licenses are not immediately necessary, you are encouraged to at least have knowledge of what is required for your particular type of food business.

2. Competition Analysis

Just like starting any other business, ensure that you have studied your competitors well enough. You should have an in-depth understanding of the market you are entering. From the information that you have gathered, you can then proceed to strategize your operational and marketing approach.

Many F & B establishments in Singapore build their reputation around innovative and creative presentations and concepts. What is yours?

3. Market Analysis and Survey

From the information you have gathered on your competitors, identify the market segment that you wish to target and analyze how your brand should be positioned in that market. You are also encouraged to embark on a survey to find out more about the market segment that you intend to target. Information such as spending habits, taste preference and demographics are vital to the way you tailor your food and services to meet market expectations.

Your market analysis and survey results will also shape your marketing and advertising strategies.

4. Your Capital

The costs involved in establishing a business in Singapore is a major hurdle every entrepreneur must pass. Particularly for eateries, the fundamental rule is a location with good “human traffic” as your main revenue source is derived from food sales.

Having said that, rental for your premises can potentially diminish your profit margin to a discouraging level. Therefore, cost management will be a critical aspect influencing the success of your business. As a good rule-of-thumb, it is advised that you have adequate finance for 6 months’ expenditure before you officially launch your F & B business.

Initial start-up costs must be carefully calculated and you must take into consideration fundamental elements such as the purchase of equipment, renovation cost, fixtures and fittings, ingredients and most importantly, the initial Marketing expenditure.

5. Operational Efficiency

Your success is dependent on the support of your customers and the last thing you want to do is to keep them waiting! This is especially true during peak hours when hordes of hungry diners await eagerly or during office lunch hours where dining time is a limited luxury. You certainly do not want to see angry customers walk-out. But that happens!

The layout and workflow process of your eatery is extremely vital to operational efficiency (i.e. how fast your kitchen can respond to customer requests). Veterans in the F & B industry would have some knowledge on what we are talking about here.

However, if you are new to the industry, you are encouraged to get your chef onboard and involved in the layout and design of your kitchen, or engage professionals such as U-Save F & B Equipment Pte Ltd to propose a solution and walk-through it with you. Remember that it is not just about speed, but also about maintaining a consistent standard and quality for your dishes as well.

Secondary issues on operations would include sourcing for suppliers of raw ingredients, frequency of replenishing and optimizing the use of manpower among others.

6. Service Excellence

Customers, particularly Singaporeans, are often willing to pay more or wait longer in the queue for worthwhile causes. So, in addition to whipping up a sumptuous and awe-inspiring meal for your customers, service quality must never be forgotten.

Here’s a tip: encourage your floor crew to remember the faces and names of your frequent or regular customers. Greet and serve these customers by name or surname.

7. PR and Marketing

This area of a business operation is often placed on low priority. Wrong move! Try recalling how often your purchasing decisions were influenced by how you “felt” about a company in addition to price and quality. Major established companies thrive on good public relations exercises. A good way to start is by showing your customers your willingness to listen. Place feedback forms within reach of your customers. Allow them to drop it into a feedback box conveniently and discretely on their way out.

Here is a tip: Respond to feedback as much as possible. This may be through email or, even better, through writing. Have you received responses to your feedback from any restaurants so far?

Market your promotions and offers via e-mail or place advertisements on marketing channels that are effective. This is where the market survey results that you have acquired earlier come into play. From the results you have gathered and analyzed, find out as best as you can where your advertisements can reach out to your prospective customers. It is also a good strategy to do “tie-ups” with other organizations such as banks, Tourism Board and companies in related fields.

Among the Marketing Channels available to you the channel you select can and will affect your branding and marketing directions. You may want to engage a professional Marketing and PR firm to formulate a Branding or Marketing Campaign for your restaurant/eatery.

Many would choose to cut back on this expenditure and implement their own marketing strategy. This, however, takes up precious time that could have been better spent on customers and, more importantly, efforts are often return meager results. Therefore, it may be a good decision to outsource this aspect of your operations (for the moment) if you can afford it.

You may eventually want to establish a “Marketing and PR Department” within your operations at a later stage, but for now, leave it to the professionals as you should be fully focused on your operations at the initial stage of your business.

8. Last but not least, the culinary standards.

No amount of marketing and branding will be successful if the food itself does not impress diners. Marketing can fulfill the initial work of leading customers to you but it is down to the basics once they start streaming in through your doors.

Spend a day or two, gather a few gourmet critics and visit some of the established restaurants and cafes around the island. Observe their specialties, concepts and standard of their food. You may find some inspiration from these at the end of the day!

Remember, your menu should be updated at appropriate times or it will become a bore. This is especially true if you are running a restaurant. There should also be new, fresh and innovative courses designed periodically. Having said that, your specialty dishes should remain on your menu for as long as they are popular.

The F & B services industry is certainly worth venturing into. In 2006, the industry alone contributed 0.74 to Singapore’s overall GDP. The government’s continuous efforts to encourage and support the growth of this industry are evident in their constant programs and incentives to help F & B entrepreneurs. The government also works closely with related associations such as the Restaurant Association of Singapore to further boost the performance of the F & B industry. So, if you have an innovative and powerful gourmet concept, why not give it a try?

Statistics taken from SingStat and IE Singapore.

Images courtesy of DiscoverDuPage and ITHQ.

About The Author

Timothy C.L Ng is the Managing Director of Hexa Megan Media Pte Ltd and one of the directors in Innopakz Pte Ltd, a trading company whose parent company is based in Shanghai, China. He is experienced in the field of Marketing and Advertising, and have been actively involved in the planning and implementation of events on a voluntary basis. From planning to execution of a Marketing Strategy or Campaign, the process is described by him to be ” as entertaining as game consoles”.

His entrepreneurial journey began when he started his own e-shop selling Japanese Street Labels and Taiwanese imports back when he’s still studying in the Polytechnic. He gained further experiences through participation in other start-ups and joint-ventures where he faced multiple set-backs and success. Currently, he is planning on a charity event to help the children between the borders of Vietnam and Cambodia.

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