'Delicious food alone is not enough': F&B owners talk about challenges here
More than 2,000 F&B firms shut their doors annually between 2010 and 2015. But even more open up each year
He knows all about losing money in the food and beverage (F&B) business.
Mr Muhamad Jamuri Busori lost about $40,000 from his venture, Ignite Music Cafe, in 2012 after running it for two years at 73, Bussorah Street.
In March 2012, he travelled to Amsterdam and did plenty of soul searching.
There, he fell in love with the atmosphere and with Dutch culture, which inspired him to set up a cafe incorporating his favourite things about Amsterdam - from bicycles to fries.
"The Dutch serve their fries in a paper cone and they dip the fries in mayonnaise, not ketchup the way Americans eat them," says the 44-year-old.
So, yes, at his new cafe, I Am... at 674, North Bridge Road, you can have your fries Dutch-style for $7.90 (Fries & Mayo).
With hardly any money left, Mr Jamuri started up the I Am... cafe with two other friends by borrowing money from family members in June 2013.
Today, the cafe has 40 employees and serves up to 200 patrons a day.
UNIQUE
Mr Jamuri says: "We are unique, a European-influenced street-side cafe that sells halal Western- and Dutch-inspired dishes."
So what's with the name?
"People may laughed at it, but our name is indeed catchy. It is derived from Amsterdam's city icon, 'I amsterdam'," explains Mr Jamuri.
"Customers can fill in the blanks with anything they can relate to: I am... hungry? Or satisfied? It can be anything."
He adds that when he started the cafe, he knew what to avoid and was ready for challenges.
"Running an F&B business is just like fixing up a puzzle. You can't have missing elements," he says.
"For example, if your food tastes delicious, but your service is lacking, it's not going to work."
Mr Jamuri also says the key elements are location, quality of food and service, and having the right team of people.
"Previously, with Ignite Music Cafe, I didn't have the right people with the appropriate skill sets in F&B operations to help me run the business. We had mostly part-timers instead of dedicated full-timers," he says.
But now, in hiring new employees, Mr Jamuri looks for sincere and honest people who are passionate about F&B.
His co-partners, Mr Jaffar Sariban and Mr Salle Ahmad, have experience in the F&B line.
The cafe places great emphasis on service and takes customers' feedback seriously.
"Customers make their way here for our popular burgers and pasta, so it is unacceptable if they can't have them because they aren't ready," says Mr Jamuri.
"We used to start operations later than scheduled due to a shortage in manpower and received complaints for that. Now, I ensure we start at 11.30am."
But some challenges, like rising rental costs, remain. The rent for the cafe, which occupies over 600 sq ft, has increased by "about 40 per cent" since the cafe started.
"Some people jump on the bandwagon without even understanding the market. Their business eventually folds," says Mr Jamuri.
"It is not a lucky break, any business requires a huge deal of sacrifice and perseverance.
"It is important to believe in yourself enough to make it happen."
BY THE NUMBERS
57% Percentage of smaller F&B businesses that have been in operation for five years or less
26% Percentage of smaller F&B businesses which are new entrants to the sector, having begun operations for less than a year
82% Run only one outlet
Unprepared, he plunges into business and sinks
They jumped into the business without experience and market research.
"Since I love Thai cuisine and Mookata (Thai for pork and skillet) restaurants were popping up everywhere, I roped in the help of a friend and started up one", says Mr Ken Lim as he talks about his first F&B venture.
The 26-year-old and his friend, who were newbies with zero knowledge of the F&B industry, did not conduct any market research.
Each of them forked out between $30,000 and $40,000 for the business. They rented a unit about the size of a four-room flat living room for a whopping $7,500 per month at 30, Dickson Road, in Little India.
Mr Lim thought it was an acceptable price, given that Little India bustles with tourists. Furthermore, there was a hotel near their unit. But it was nestled in an inconspicuous corner of the lane.
He says: "People can't really spot our restaurant when they walk past. I thought it was okay as some Mookata restaurants are also at low-traffic spots and yet still have lots of customers.
"We were too hasty and wanted to secure a unit fast, without even considering alternatives."
Mr Lim focused on delivering good food and offered Groupon vouchers for a Mookata Buffet.
Although these provided the business with several regular customers, it was not enough to cover rent.
He says: "For eight to nine months, we couldn't afford to pay rent. We earned $3,000 and we had to top up the balance from our own pockets."
Before he started his business, Mr Lim was working at an electronics company, earning $1,800 monthly.
He expected their Mookata restaurant to break even within six months, but it didn't happen.
Eventually, he had to cease operations after the restaurant incurred huge losses.
He blames the restaurant's location for its failure, adding that customers praised the food, which was cheaper than other Mookata restaurants. Mr Lim charged $25 per person for a Mookata buffet.
CAPITAL
Mr Lim says that once he has sufficient capital, he will give it another go. This time, he will look for storefronts with existing kitchen installations.
"The space we used to rent had never housed a restaurant. We spent around $20,000 just on kitchen appliances and equipment," he says.
"We can save a lot if we rent a place that already has the basic necessities."
Mr Lim acknowledges that everyone wants to be his own boss, "but if you are a first-timer like I was, running a business is a complex process that involves serious thinking".
"Before you decide to rent a unit, check if there is a steady stream of crowd and do some research regarding rental fees on the Internet.
"Do not make the same mistake I did by not comparing prices."
Only 6 in 10 survive first 5 years
Between 2010 and 2015, about 3,000 F&B firms were opened.
But over 2,000 closed their doors each year.
So here's something to chew on for those thinking of entering the business.
Only six in 10 smaller F&B businesses survive their first five years of operations.
That's based on a Spring Singapore study on 216 small F&B companies between July and November 2014.
Spring Singapore defines small F&B businesses as food services companies with less than $1 million in annual revenue.
More than eight in 10 restaurants here qualify as small F&B businesses.
And these players do not earn much. For every $10 the industry earns, the small businesses rake in $2 collectively.
In other words, there's not a lot of money to be made.
Which is why the study found that the average small F&B business is unprofitable, operating at a loss of 8 per cent annually and requiring an average of 2.5 years to recover their initial investment.
INITIATIVES
Small players can tap on various initiatives including Spring Singapore's Capability Development Grant for funding assistance.
And in this year's Budget, the Government announced a corporate income tax rebate increase from 30 to 50 per cent for Small & Medium Enterprises (SMEs). A series of other measures were also announced, including portals for SMEs to get grants.
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