Secrets of the hawker business

Have you wondered why the internet is suddenly abuzz with talk about hawkers recently?

It all started with this post from one Douglas Ng. In short he’s furious about NTUC Foodfare “forcing” him to charge $2.70 for a bowl of noodles.

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But he’s making much ado about nothing really – and with all due respect, he’s just throwing a fuss for no reason at all.

You see, all that NTUC Foodfare requests, is for just two menu items that are priced especially low for the benefit of Singaporean workers.

Two! Two menu items! Out of all the things you sell, Foodfare is asking to allocate two items for the benefit of us, is that so hard to do?

How hard can it be? Create one dish, allocate it the price of $2.70 and $5.80… and that’s it! You’re free to price all your other fancy noodles at whatever price you so wish. Put prawns, put abalone, put fish coated with liquid gold – the rest of it is your business freedom.

One of the worst kept secrets in the hawker industry is this: that bids for a stall does not amount to more than $1500. Don’t take my word for it, ask the hawkers yourself. (Of course this excludes prime locations in the CBD, because then the earning power is higher)

I’m going to take another step further and reveal more about the hawker business. The costs.

Rates for rental amount to about $800 to $1400 depending on location. Even the most premium sites in the city ask only about $2k to $4k.

Manpower is the next most expensive thing. Pay anything less than $1400 and chances are very few people are going to work for you. NEA does not allow foreign workers to work in hawker centers, so cheap labour is not an option.

The next most expensive thing are the stainless steel equipment. Cabinets, refrigeration equipment, food warmers etc can easily cost up to $10k for the set.

Ingredients are a variable component. If you don’t sell so much, then you won’t stock up so much… and anyway, more ingredients ordered means business is better.

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Rental from an NEA or Foodfare (hawker) outlet truly is low. Where in the world are you ever going to find an F&B unit for rent at $1500? Foodcourts will charge at least $5000, SMRT shops will cost about $7000 and commercial outlets? Well, a search on PropertyGuru reveal rental rates costing some five figures.

Why doesn’t Douglas Ng direct his attacks on these commercial (and for profit) businesses instead? Remember the coffeeshop in the news lately? The one that changed hands for some $32 million dollars?

NEA and Foodfare (hawker) outlets have a social mission to keep food prices in Singapore low. Without them, your Food Republics, Kopitiams and other big names are going to come in with their profit model and then Singaporeans can be prepared to pay $8 char siew rice and $6 noodles.

Mr. Ng is so ready to lobby for lower rental prices that would benefit his business, but he is not willing to drop the price of just two dishes from his menu, for the benefit of Singaporeans.

I find that hard to stomach.

 

 

 

 

About the author

Tay Leong Tan

Tay Leong Tan is a collective of 3 writers. Tay, Leong and Tan. (Who were you expecting?!) We are enthusiastic about labour issues, economics and current affairs in particular.

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3 Comments

  • As long as rental is low, it is workable. Just look at School tuckshops. The vendors don’t make a lot of profits and are able to eke out a decent income. Their dishes cost an average of $2.50 per serving. Of course, if you want to make a lot of money that’s a different story altogether. The food business is hard work and many who venture into this field want it to be worth their while.

  • Wouldn’t this be like asking the hawkers to subsidize their food for the poor? Why are they obliged to do this? There is also the possibility that most customers would zero in on the cheaper fare at the expense of the rest of the food on sale. Also, what if customers complained that the cheaper food’s portion is too small or quality not up to standard. It is just not merely about tagging 2 food items at a cheaper rate, the hawkers’ entire food preparation is going to be affected. Furthermore, what if hawkers prepared only limited quantities for there 2 items? Are they going to be penalized? Penalizing them tantamount to interfering with how the hawkers run their business. What right has the authorities.

    IMO, the govt is as usual manipulating the situation to cover up its own sins! The sins of GST. The sins of increased transportation cost. The sins of high rental and generally increased cost of living. Can you remember, a minister’s own words, that there is no such thing as a free lunch.

    A better and more sincere way of going about it is for the govt to subsidize the meals by a coupon system whereby hawkers who accept such coupons from customers can claim for reimbursement from the govt. This would already involve extra work for the hawkers, but if they are willing to go the extra mile so should the govt!

    The problem is very often the govt’s solution has always been at the people’s expense as it does practically sweet FA, without even lifting a finger.

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