Produced by Tiger Sniff Commercial Consumer Group
Author|Zhao Xi, Tiger Sniff is an author stationed in Singapore
Editor|Miao Zhengqing
Photo: Visual China
Tiger Sniff Note: This article is the fourth article in the Singapore Business Observation series "Snowball", focusing on the industry opportunities and concerns faced by Chinese F&B brands that have flocked to Singapore after the epidemic in 2024. The "Snowball" series presents the current situation of the subdivided business track, reflects the changes in Singapore's business environment, and provides samples and cases for players of all sizes who go overseas in Singapore.
The Chinese food that flocks to Singapore is like a carp crossing the river.
| year | A Chinese F&B brand based in Singapore |
|---|---|
| 2012 | Haidilao |
| 2017 | Fish hunting |
| 2018 | Honey Snow Ice City, Hey Tea, Xiaolongkan, Tip of the Tongue, Nai Xue's Tea |
| 2019 | Sea of clouds |
| 2020 | Bawang Chaji, Yang Guofu, Zhang Liang |
| 2021 | Taiji |
| 2022 | Make up |
| 2023 | Luckin, Cudi Coffee, Xiabu Xiabu, Master Xi, Nongji, Cai Linji, Helens, Yao Yao Sauerkraut Fish, Lai Meili Rattan Pepper Grilled Fish |
| 2024 (as of press date) | A little bit |
This trend peaked in 2023 and will only be more lively in 2024. But there are concerns.
"China's catering customers have seen strong growth since the end of last year. From 3-4 contracts signed in the whole year last year, to more than 10 contacts in the first quarter of this year, the signed brands have exceeded the whole year of last year. Wemedia Consulting Pte. Ltd.) Founder and CEO Ren Yue told Tiger Sniff. Most of the customers in his mouth are Chinese chain brands that are mainly directly operated.
The essence behind it is that international capital is pouring into Singapore, and entrepreneurs, capital, and projects are constantly concentrating in Singapore. "Singapore is the next Hong Kong" has been talked about endlessly, and Singapore seems determined to attract more wealthy Chinese.
A general consensus in the Singapore industry is that the entry of many Chinese companies is not entirely based on strategic measures, but out of the immigration needs of the founders/co-founders and the education needs of their children. This also makes the expansion of some Chinese food in Singapore different from that of China: it may not be entirely a purely commercial activity.
"Since people and money have come to Singapore, idleness is idleness, so find something to do for yourself. The founder of a company that serves Chinese companies landing in Singapore and undertaking immigration and asset management business told Tiger Sniff. I've heard a lot of similar comments in Singapore.
In this context, Chinese food is becoming an outlet for Singapore. Chinese food brands that are well-known in China have squeezed into Singapore's catering track, and in the public perception, the excitement has doubled.
Those F&B brands who don't know the meaning of this may be lured by this grand superficial exuberance and venture into the Red Sea, which is already fiercely competitive under the pressure of Chinese brands. So much so that the wave was amplified again and triggered an even bigger tsunami.
"2024 may usher in a wave of Chinese restaurant closures. A practitioner who has been deeply involved in Singapore's catering industry for many years told Tiger Sniff that Singapore's visa-free policy for China has delayed this trend, but it remains to be seen how long it will work.
I visited a number of F&B brands in Singapore, and many of them set a conservative growth target of 5% for 2024. Combined with exchanges with catering consulting companies, takeaway platforms, and catering service providers, the industry's suggestions for Chinese food brands that are going to go overseas in Singapore are:
Cautiously optimistic.
I'll tell you why.
Accumulation of foam
"Singapore has a wide range of food and beverage offerings (food court and high-end dining) and a lack of middle ground, making it a must-have for Chinese food. Fang Daqing, founder and CEO of Cat Scratch Barbecue, told Tiger Sniff. This is also the consensus of Chinese chain restaurant brands going overseas to Singapore.
Among the top 20 cities with the highest number of millionaires in the world, Singapore ranks fifth. The plutocratous city is home to a number of expensive restaurants.
The tiny city of Singapore is home to 55 Michelin-starred restaurants. On 26 March this year, the 2024 Asia's 50 Best Restaurants were announced, with Singapore having the most restaurants on the list with nine seats. In terms of countries, it is also second only to Japan, an old culinary powerhouse, and China, which has a lot of land and resources.
Percentage of countries in the "Asia's 50 Best Restaurants" in 2024
Ranked as the best restaurant in Singapore, Odette, a French restaurant, is located in the National Gallery Singapore, with a five-course meal of S$348 (about 1,871 yuan) and a seven-course meal of S$498 (about 2,677 yuan).
Last week, a restaurant owner who came to Singapore for a visit told me that he ordered a Malaysian "can't forget fish" at Singapore's time-honored Taoyuan, worth more than 7,400 yuan plus taxes and service charges.
In stark contrast to high-end dining is Singaporean's unique food court culture. Hawker centre, later renamed Food centre, resembles our food stalls.
Food Court is an outdoor open food and beverage centre built by the government with a high density, usually built near HDB flats (affordable public housing) or transport interchanges, and is especially popular with the middle and lower classes. In order to encourage residents to dine at the Food Court and promote employment and the economy, most HDB flats do not have range hoods, making it inconvenient to cook.
Although the food court has a simple environment, no air conditioning, and you need to return the tray by yourself, it is better because the price is low, and you can eat enough for about S$10 for a meal, which is where the vast majority of Singaporeans solve three meals.
A Singapore food court, photographed by the author
Located in the middle of the high-end and the food court, there is a considerable space, which is a battleground for chain brands. These restaurants in the middle of the ground, the environment is better than the food court, the price is better than the high-end restaurant, and they are generally located in major shopping malls, which can meet the needs of family dinners, tourists and other scenes.
When Lu Zhitao, co-founder and head of overseas of Yunhai Cuisine, came to Singapore for an inspection in 2019, there was almost no competition in mid-range restaurants: "There are only a few catering brands in most shopping malls: Din Tai Fung, Haidilao, plus local Putian and Lotte. There are no innovative F&B brands. ”
Among them, the brands under Lotte Restaurant Group have low per capita prices, cuisines that meet the tastes of local people, and are known for their high repeat purchases, which are the main competitors of Chinese food brands.
"When I came in 2019, Singapore was really profitable. He recalls that when the first airport store in Singapore opened, the queue was 50 meters away. As a fresh specialty, Yunhai cuisine has received a wave of dividends.
Wu Zhanwei, the overseas regional manager of Taier Sauerkraut Fish, told Tiger Sniff that Singapore has a good degree of integration between Eastern and Western cultures, and the locals are very receptive to new things. This is one of the reasons why many Chinese food has been able to gain a foothold in Singapore so quickly.
Now, Singapore's F&B landscape has become more and more crowded. The influx of Chinese food brands has brought the entire catering market into a stage of fierce competition. Chinese food brands are bringing not only products and services to Singapore, but also various marketing tactics that are beyond the perception of the steadily growing Singapore market.
Take the hot pot category that has the upper hand in mid-range catering as an example. "In Singapore, the red soup hot pot circuit is an absolute red ocean, and the competition is fierce. Ren Yue said to Tiger Sniff.
Haidilao currently has 20 stores in Singapore (one was closed last year due to mall renovations), and Ren Yue believes that the number of stores is close to the upper limit of Singapore's capacity: "Haidilao used to target Din Tai Fung, which has 23 stores in Singapore. ”
Another strong competitor is Lotte Group's Maxim Pot, which has seven stores in Singapore. According to industry insiders, there are also many hot pot brands among the Chinese brands that will enter Singapore this year.
At the same time, two hot pot brands, including Da Long Yi, fell in the competition and are about to withdraw from Singapore.
The fierceness of the hot pot track is just a microcosm of the market.
Yang Jiabei, a chain restaurant manager who has visited Singapore several times, concluded that the understanding of Chinese food in the Singapore market is still very shallow, and there is no systematic understanding of the eight major cuisines in Chinese food. It seems that there are many opportunities, but in fact, only Cantonese and Fujian cuisine are in line with Singapore's cultural traditions, and the spicy Sichuan and Hunan cuisine and hot pot have been recognized by the Singapore public. The opportunities for other cuisines are not significant.
In other words, the market is not as big as expected, but the competition is becoming fiercer.
Difficult site selection
In Singapore, location has become a new issue in 2024.
The most superficial reason is that Singapore is a small country with a small population.
"Singapore is too small. When I open a store again, I am afraid that the new store will steal the business of the old store. Lui Zhitao told Tiger Sniff that this year, Yunhai Cuisine will suspend the expansion of stores in Singapore.
"Singapore has a resident population of more than 5.9 million, of which more than 1.5 million are foreign workers. About 76% of the resident population is Chinese, and more than 200,000 Singaporeans are based overseas. Therefore, in Singapore, the total population of the Chinese community with spending power is about 3 million. Lu Yi, the founder of the Singapore chain KTV brand, told Tiger Sniff.
Dig deeper, since last year, there has been an extreme shortage of suitable locations in Singapore.
Singapore has a high density of shopping malls, much higher than Shanghai. There are about 190 malls in Singapore, and Shanghai is 10 times the size of Singapore, with 433 malls, less than 2.5 times the size of Singapore.
Although there are many shopping malls, not all of them are suitable for food and beverage establishment.
First of all, shopping malls with a large number of tourists and a large flow of customers are naturally in demand.
Singapore rarely builds new malls, and new brands can only wait for the opportunity to adjust the stores of old malls. Generally speaking, brands will sign a "3+3" contract with the mall. Due to Singapore's stable business environment and focus on credibility and contractual relationships, it is easy for brands to renew their contracts with malls for another year after the expiration of a 3-year lease.
In other words, shopping malls with good conditions may not be able to wait for a vacant spot for several years.
Orchard Road business district, Singapore, image source: Visual China
Secondly, except for the shopping malls in the central area where tourists gather, most of the shopping malls are neighborhood centers, that is, small commercial complexes that serve the high-frequency daily comprehensive consumption needs of residents in the surrounding 1~3 kilometers. In the community planning of the Housing and Development Board of Singapore, a neighbourhood centre is built for every 6,000~8,000 households in each block.
A store manager of a chain restaurant brand told Tiger Sniff that his store is located in the center of the neighborhood, and 70%~80% of it is regular customer business. High repurchase puts forward higher requirements for the frequency of new product launches in catering.
The overseas head of the brand, Xiang Tiger Sniff, analyzed that the neighborhood center is not suitable for the survival of specialty cuisines. The brand's stores in the commercial center are thriving, but the performance of several stores located in the neighborhood center has declined significantly, and it is "already at the break-even point". He believes that the neighborhood center is more suitable for home-cooked cuisine, and the repurchase is higher.
The tight supply of points will naturally lead to an increase in rents.
A number of restaurant chain brand leaders told Tiger Sniff that store rents have risen in an almost crazy trend this year, and "rents are more than 30% higher than in 2022." Some people gave the highest price they could afford, and found that the final transaction price was one notch higher than their upper limit, "to be honest, it's a bit unimaginable"; some people bid for three positions last year and didn't get them; some people were crushed by their opponents at nearly 1.5 times the price, and found that the other party was also a Chinese merchant.
One detail with some dark humor is that rent increases aren't the biggest problem. After all, as we all know, the last thing Chinese brands lack is money. The biggest problem is that even if the rent is in place, shopping malls that have no shortage of tenants may be reluctant to rent to Chinese food brands.
The reasons are varied.
The founder of a top real estate group in Singapore told Tiger Sniff that he should consider the diversification and internationalization of brands in each business district, and would not introduce multiple Chinese brands. At the same time, in some high-end commercial areas, he will take the initiative to control the brand tonality. "Chinese businessmen are rich, but they don't necessarily fit into every region. ”
The general "non-competition" mentality in Singapore will also affect the entry of Chinese food brands.
Singapore does not advocate involution, and if one company succeeds in a single industry, peers tend to avoid the same category, avoid head-to-head competition, and instead choose peripheral categories for operation. They like to build a big "ecology" together and make money together.
The same is true for the investment logic of shopping malls. If there is already a hot pot restaurant, the mall will often not accept the hot pot restaurant anymore.
Finally, there is the issue of domestic influence not being able to be transferred to Singapore, which weakens the negotiating strength of Chinese restaurant brands. Compared with the dominant position of brands in the domestic market, in Singapore, the position of the first party of the mall is stronger.
Ren Yue and I met at Paragon Mall on Orchard Road, one of Singapore's most well-known and bustling neighbourhoods. He mentioned that there are Chinese brands (more than 300 chain stores) that did not get any shops when they negotiated with well-known shopping malls.
Only in the face of customers like Weizhong Consulting, who have Western, Korean, Chinese and other categories, and will find a suitable brand according to the needs of the mall, will the mall be willing to disclose its catering spots to be released. Before we met, Ren Yuegang had a two-hour meeting with Paragon, who introduced all the food and beverage outlets that might be available in the coming year.
In essence, this is a matter of the right to speak in the situation where there are more monks and less porridge.
Where are the opportunities?
"Since the fourth quarter of last year, Singapore's performance has fallen by 10%~15%. A person in charge of a chain restaurant brand in Singapore told Tiger Sniff that before, Singapore's performance had been relatively stable. He felt a noticeable decline in spending power.
His feelings coincide with big data.
According to the Economic Outlook 2024 report released by the Mastercard Economics Institute, Singapore's real consumption expenditure growth rate will be 3.5% in 2023, but the impact of rising living costs and high inflation has weakened consumer purchasing power and confidence, resulting in a slowdown in real consumption expenditure growth to 2.8% in 2024.
A common way to measure inflation is to use the Consumer Price Index (CPI), which shows the change in Singapore CPI from 2018 to 2023. IMAGE CREDIT: CEIC DATA
The above-mentioned person in charge went to the store to observe the consumption situation, and when he ordered food to customers, he found that many local customers in Singapore can order four dishes for a family of five. "We used to spend close to S$40 per capita, but now our per capita spending has dropped to S$35. ”
As a result, he planned a transformation for the brand, with the main focus on switching to a lower unit price for more accessible and affordable menus: "I want to reduce the number of orders to less than S$30. ”
At the same time, he is considering bringing the group's sub-brands with lower average customer value to Singapore. For example, casual fast food, which is dominated by Yunnan cross-bridge rice noodles, is more suitable for the current situation in the Singapore market.
"Overseas markets are still more suitable for the development of fast food. He pointed out that among the top 30 catering companies in the world, except for one Haidilao, the other 29 are all fast food companies.
全球前20强连锁餐厅名单，图片来源：Brand Finance
Ren Yue reminded that fast food that meets mass consumption is a good track, but don't choose niche specialties such as snail noodles, pot helmets, pancakes and fruits. These categories are not widely recognized in Singapore, and the cost of the education market is too high, and there is too little room for imagination. Previously, there were already brands operating in these categories that folded in the Singapore market.
During her visit to Singapore, Yang Jiabei observed that the attendance rate of several well-known Chinese food brands in China was less than 50%. And with the naked eye, it can be seen that the best business in every shopping mall is Din Tai Fung.
A F&B analyst told me that Din Tai Fung is the culmination of the plank effect, and although it has no special advantages, it has no shortcomings. Standardization is first-class, it solves the needs of Chinese people for carbohydrates and hot food, clean stores provide social scenes, advocate family consumption, and the price is pleasant.
Therefore, meeting the needs of consumers in a multi-faceted way and providing a "cost-effective" dining experience has been the top priority of Singapore's catering in recent years.
And the rich will always get rich, and even get richer.
Ren Yue's business focus this year is to introduce high-end catering brands, especially Chinese food brands that can impact Michelin. He believes that the choice of Singapore's high-end Chinese food market is old, and it is still guarded by old brands such as Imperial Treasure, Lotte and Lee Garden. With a massive influx of wealthy people, there is an opportunity for high-end new brands to gain a foothold in Singapore.
After going around in a circle, Singapore's catering opportunities are becoming more and more polarized (high-end and low unit price), and to achieve the extreme, it gradually returns to the original industrial pattern.
In the face of single-store investment several times that of domestic markets, entering overseas markets requires confidence and even more caution. People often want to be game-breakers who ride the wind and waves, but sometimes, it is necessary to follow the trend in order to obtain greater returns.
This article is from Tiger Sniff in Singapore, the author Zhao Xi, industry people can add WeChat communication, please note the identity of the enterprise and the meaning: cyantzl, news clues can also be emailed to [email protected].
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