Singapore, a wealthy nation with a high GDP, has long been a magnet for foreign workers and a haven for diverse cuisines. The number of restaurants surged over the past decade, reflecting the nation's economic prosperity and vibrant food culture. However, this trend has reversed recently, leading to a complex situation in Singapore's food industry.
The Rise of Singapore as a Food Capital
Singapore's diverse population, comprised of Chinese, Malaysians, Indians, and other ethnic groups, has fostered a unique food culture. From Hainanese chicken rice to Indian pancakes, Singapore's culinary scene is a reflection of its multiculturalism.
Becoming an International Destination
Singapore aimed to become an international food capital, gaining recognition beyond its local appeal. The Michelin Guide awarded stars to 29 Singaporean establishments in 2016, further enhancing the country's culinary reputation. The combination of strong consumer spending and an open market attracted international food brands and encouraged local brands to expand overseas, particularly Chinese food brands.
Influx of Chinese Food Brands
Several Chinese food brands saw Singapore as their first step in overseas expansion. Haidilao started its overseas journey in Singapore in 2012, followed by Xichang in 2018. From 2021 to 2023, many restaurants entered Southeast Asia, with Singapore being a top choice for many of these brands.
The Downturn: A Catering Market in Crisis
By 2024, Singapore's catering market experienced a dramatic shift. A surge of 3,793 new restaurants emerged, exceeding the total number of new openings since 2005. Unfortunately, this rapid expansion has been followed by a wave of closures that continues into 2025.
White-Hot Competition
The simultaneous increase in restaurant openings and closures indicates a highly competitive market. While more businesses aimed to capitalize on the industry's potential, many struggled and were forced to close. This creates a challenging environment for new restaurants entering the Singaporean market.
Rising Costs and Inflation
Restaurant owners face significant challenges in covering expenses such as food costs, rent, and labor. Singapore experienced high inflation in 2020, peaking at 7%. The government's efforts to control prices led to tighter monetary policies and rising interest rates on commercial real estate loans. Landlords responded by increasing rents, placing additional pressure on restaurant owners.
Impact of Increased Rents
Commercial rents in Singapore increased significantly, averaging between 5% and 11% from the start of the pandemic to the first quarter of 2020. Prime locations experienced even higher increases, sometimes exceeding 50%. While market forces might typically curb excessive rent increases, the influx of new restaurants with substantial capital weakened this effect.
Manpower Shortages in the Restaurant Industry
The restaurant industry faces not only financial challenges but also severe manpower shortages. The issue predates the recent boom and bust cycle.
Historical Salary Discrepancies
Over a decade ago, the restaurant industry struggled to attract workers due to low salaries. In 2013, the average monthly salary for full-time workers was 3,705 SGD, while hotel and restaurant workers earned only 1,800 SGD.
Ongoing Labor Challenges
Even by 2025, restaurant salaries, though increased to nearly 3,000 SGD, still lag behind the overall median income. This makes it difficult to attract local workers, forcing restaurants to rely on foreign labor. However, the government imposes restrictions on the proportion of foreign employees to protect local employment.
The Combined Impact: Closures and Consumer Behavior
The increase in restaurant openings combined with manpower shortages has led to restaurant closures. Singapore's strong consumer spending and strategic location continue to attract new players, intensifying competition.
Consumer Sensitivity to Prices
Singaporean diners are accustomed to paying service fees and consumption taxes in addition to meal costs. Recent price increases have made them more sensitive to dining expenses. Some locals find it cheaper and better to dine in nearby countries like Malaysia.
Rise of Overseas Consumption
The New Year's currency has strengthened, increasing Singaporeans' purchasing power overseas. This trend of cross-border consumption further impacts the local food industry.
Conclusion: A Market at a Crossroads
Singapore's catering industry faces a complex situation driven by unique economic and market forces. The influx of foreign capital intensifies the market's volatility. If current trends continue, the market could become dominated by large chain groups, potentially diminishing the presence of smaller, unique establishments. The future of Singapore's food scene remains to be seen.
{# 
{# 
{# 
{#