How a 58-year-old dim sum shop changed the game
Since COVID-19, the need for companies to digitalise and diversify their revenue streams has come into focus.
In remarks on Monday (30 November) after visiting the Swee Choon dim sum restaurant in Jalan Besar, Chan Chun Sing, Singapore’s Minister of Trade and Industry, said, “To seize business opportunities in the new operating environment, F&B companies must embark on transformation efforts to diversify into new revenue streams.”
“Companies need to accelerate their efforts in digitalisation, productivity, innovation and internationalisation to remain competitive. They also need to continue to build their human capital capabilities through, for instance, training and job redesign efforts to support their business transformation needs.”
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With much of the economy in ruins, many companies have been struggling to survive in the wake of border closures and enforced safety measures. Recovery has been slow amid COVID-19 concerns, and concentrated in certain industries and roles.
For the F&B industry, despite many food services companies being on a steady path to recovery, and rebounding to about 70 to 80 per cent of pre-pandemic sales and revenue, recovery too, is sluggish. As Chan explains – certain segments, such as outlets in the Central Business District and tourism-focused areas, as well as catering companies, continue to face the pressures of lower demand.
At the moment, the food services sector contributes to 1.1 per cent of Singapore’s gross domestic product, and employs about 5.5 per cent of its workforce. Total F&B sales fell by almost 30 per cent year-on-year in September, drawing concern from workers in the industry.
The need to turn digital
Instead of waiting for COVID-19 to blow over, many F&B outlets have thus pivoted towards employing digital strategies rather than continue to rely on a physical store.
Many are now in the online food delivery service; the current percentage of online F&B sales out of total industry sales remains higher than pre-circuit breaker levels, at 20.4 per cent as of September.
Says Chan, “Companies like Swee Choon that adapted quickly have been able to reap the rewards from being an early-mover.” Swee Choon pivoted online once circuit breaker, introducing food delivery to its customers.
Ramping up on digital marketing and tapping on food delivery platforms like FoodPanda, Swee Choon was able to increase sales from food delivery “significantly”, from less than 1 per cent to around 60 per cent of its existing average monthly revenue during the circuit breaker.
“With the increased revenue from food delivery sales, Swee Choon boosted its overall revenue to pre-COVID level, amidst seating capacity restrictions due to safe management measures,” shared Chan.
On building human capital
However, automation of processes is just the first step, as Chan points out, “Swee Choon’s digitalisation of its procurement and inventory systems through a cloud-based platform helped simplify processes and create job redesign opportunities.”
And increasing the appeal of jobs in certain sectors to locals is important, to boost employment and reduce the reliance on foreign manpower. While latest data from global job platform, Indeed, shows that postings have improved to being only 6 per cent behind the same period last year, demand remains skewed towards individuals with sought after skill sets. Risk management skills comprised more than 12 per cent of all finance postings in Q3, for example.
Within the F&B industry, says Chan, “More than 1,100 workers from more than 30 companies have completed or are undergoing reskilling through Workforce Singapore’s Job Redesign Reskilling Programme for Food Services, which started in April.” On SkillsFuture Singapore, absentee payroll for modular courses on process innovation and culinary arts are open for application, in combination with improved course fee subsidies.
Creating new growth opportunities
To level up the business, Chan recommends that F&B companies also tap on FoodInnovate, a multi-agency initiative led by Enteprise Singapore, for innovative knowledge and infrastructure resources.
He cited Swee Choon, which uses a cloud kitchen to serve more customers and reduce delivery, and sells a line of frozen dim sum products on its e-commerce platforms, as a good example of a company that captured growth opportunities by renewing their business model.
Chan concluded with the following: “By transforming, innovating, building up new capabilities, I am confident that our F&B sector can remain competitive and emerge stronger when the situation gets better.”