F&B Is Changing. Maybe It’s Not Just About Rising Costs.

Recently, there has been quite a bit of news about F&B businesses closing down, with rising rental, manpower and raw material costs often being cited as the main reasons. Some of these businesses have been around for decades, and yet eventually they reach a point where they can no longer continue. 

I know I might get flamed for saying this, but these are just my honest thoughts after looking at how the F&B landscape has changed over the years.

I don't really believe there is such a thing as a truly loyal customer. A customer doesn't keep going back to the same ice cream stall, fish soup stall or coffee shop simply because they are loyal to the owner. They go back because they like the food, the price, the convenience and the overall experience. The moment they feel that another place offers something better, cheaper or more interesting, they will probably give that place a try. At the end of the day, customers don't owe any F&B business their loyalty. They spend their money where they feel they are getting value.

This is also why I find the discussion about foreign competition quite interesting. 

Many businesses are saying that brands from certain countries are coming into Singapore with cheaper products and shaking up the market. But if we are being honest, how much of this is really about the competition and how much is simply about consumer behaviour? If you compare a $1.50 vanilla ice cream cone with a so-called artisanal gelato, does the vanilla ice cream suddenly taste terrible? For someone who simply wants something cold and sweet after lunch, perhaps that $1.50 cone already does the job. Likewise, for someone who just needs a coffee fix in the morning, does the fruity note, single-origin bean and carefully extracted coffee really matter? For some people, absolutely. But for another person, a $3 iced Americano might do exactly the same job.

The impact is coming from both ends of the market. 

Today, there are cheap products that fulfil simple needs, and consumers don't necessarily see the need to pay an additional $1 or $2 for something that only tastes marginally different. At the same time, there are also plenty of consumers who are perfectly willing to spend more when they believe the product is worth it. A $15 lunch consisting of a bowl of beef la mian with some side dishes can sell, while another person may be perfectly happy spending $6 on a bowl of minced pork mee pok. So why is one willing to pay $15 instead of $6? Because consumers' tastes, expectations and spending habits have changed.

If we look back at Singapore in the 1990s, the typical coffee shop was quite different. 

When I was in primary school, you would usually see chicken rice, fishball noodles, Malay food, Indian food, Hokkien mee, Western food and tze char. Ban mian was not something you saw everywhere, and Mala stalls were certainly not a common sight. Many of the food concepts that we take for granted today simply weren't part of the mainstream back then.

Even Western food has changed significantly. In the past, Western food could be as simple as a piece of chicken, some fries, mashed potato, coleslaw and a deep-fried bun. That was perfectly acceptable. Try selling exactly the same thing today and you might have a hard time attracting customers. Western food stalls have had to adapt and evolve. Walk into a random Western food stall today and you are likely to find cheese fries, loaded fries, garden vegetables, Angus beef burgers, different sauces and all sorts of combinations that would have been uncommon 20 or 30 years ago. 

The food evolved because the consumer evolved.

The same thing can be seen at pasar malam. Taiwanese sausage, tapioca cake, muah chee, Ramly burgers and tutu kueh used to be some of the familiar favourites. Today, you see stinky tofu, kunafa, loaded potatoes and all sorts of new food trends that would have seemed unusual years ago. Some disappear after a few months, while others become permanent fixtures. But the constant is that the market keeps changing because people keep looking for something new.

This is why I don't think F&B owners can simply blame everything on rising costs. Don't get me wrong, rental, manpower and raw material costs are very real problems. Running an F&B business today is undoubtedly more expensive than it was years ago. But consumers are also willing to pay when they believe something is worth the price. We have seen restaurants and food concepts charging $15, $20 or even more for a meal, and people are still willing to queue for them. So the question isn't always whether something is expensive. The bigger question is whether the customer feels that it is worth paying for.

I have spoken to some F&B owners who tell me that people nowadays "don't know how to eat anymore." 

To be frank, I don't think that's quite fair. I think our palates have simply changed. We are exposed to more cuisines, more flavours and more food trends than previous generations. We travel more, we see more food content online, and we have access to food from all over the world. People are looking for stronger flavours, better presentation, new experiences and sometimes simply something different from what they ate yesterday. If you try selling food that tastes like gu zhao wei, the old-school, simple flavour that we grew up with, you may find it difficult to survive today. At the same time, there is also a growing group of consumers who want to eat healthier, although ironically, those healthier options are often the more expensive salad bowls and specialised meals.

So perhaps the question we should be asking isn't simply, "Why are F&B businesses closing?" Maybe we should also ask, "Why are consumers no longer buying what they used to buy?"

I don't think every F&B business that closes down is badly managed. Some businesses genuinely cannot survive because their costs have increased to a level that their margins simply cannot support. But I also don't think rising costs should always be the only explanation. 

Sometimes, the market has simply moved on. 

A business can survive for 20, 30 or even 40 years and still eventually become irrelevant if it doesn't evolve with its customers. The F&B industry is not static. Consumer tastes change, competition changes, technology changes and expectations change. What worked 20 years ago may not necessarily work today, just as today's popular food trends may look completely different 10 years from now.

At the end of the day, customers don't owe businesses their loyalty. They spend where they believe they are getting the best value, whether that means a $1.50 ice cream, a $3 coffee, a $6 bowl of mee pok or a $20 meal.

Maybe the harsh reality of F&B is not simply that everything is getting more expensive.

It is that the customer is changing too.

And businesses that want to survive have to change with them.