This week we sit down with Edwin Phua, a key opinion in the F&B scene and Chef At Work’s founder, to hear his views on the year ahead.
1. How was 2016 for you?
2016 had been a remarkable and monumental year for us. We had the opportunity to work with many seasoned industry players as well as a large pool of budding entrepreneurs. Through the process of working together, we have been enriched by their experience and excited by their passion for the industry.
We have seen many large-scale F&B businesses venturing into the area of supply chain management and integration to increase profitability. In the upstream, there are beginning to source for raw materials overseas to reduce cost and decrease their reliance on a single merchant through diversifying their purchasing channels. On the downstream, many businesses are looking for greater opportunities in the distribution and retail scene. They are looking to increase their reach and revenue through tapping on delivery platforms, expanding their product range and allowing transactions to take place over the Internet.
On the other end of the spectrum, we have observed that many businesses are finding starting smaller spaces (e.g. kiosks, spaces around or below 300 square feet) being more attractive as a business proposition. A smaller space will imply that it is easier to start a business (lower capital expenditure and lesser risks involved since operating costs tend to be lower.
Businesses are also making a more deliberate effort in reaching out to customers through social media, creating unique selling points and placing great emphasis on branding and design (i.e. collaterals, store design).
We have also seen businesses being more conscious about growing at a sustainable pace. There is a greater awareness being placed on financial management where a more sophisticated modelling system will enable business owners to be more cognizant of their financial position, breakeven point, returns on investment and cash flow position.
2. Did you observe anything remarkable?
Technology has become a key integral part and function for F&B businesses. More and more businesses are relying on Enterprise Resource Planning (ERP) and many other innovation systems to increase efficiency and create more value from their existing resources. These information technology systems have enabled owners to get information on a real-time basis, giving them a better grasp of management indicators, measuring performance, managing finances and their supply chain. As a result, many businesses have experienced growth, reduction of cost and human error as a result of implementing technological solutions to their operations.
3. What advice do you have for restaurant business owners in 2017?
The existing major trends will continue to be in play this year. Trends such as a tight labour market, a shift towards faster adoption of technology as well as the need to contend in an environment where the cost of supplies and operations are increasing.
In order to navigate within such an environment, business owners will find it useful to keep a watchful eye on expenses, streamline operations, reduce clutter and focus on the main tasks (i.e. ensuring high quality consistently and excellent service delivery). They will also need to keep an eye on the current and emerging trends, learn from and exchange pointers with industry players, and possibly even with their competitors.
For business owners that are intending to step into the market, it is important for them to gather sufficient market research about the industry, be mentally prepared to put in some long hours, be committed to training up your staff and constantly identify areas of improvement through gathering active feedback from your customers.
4. For bigger F&B players, what do you foresee will be their challenges?
For bigger players, one of their key challenges is maintaining the high standards and consistency while at the same time pursuing expansion. Many businesses are being weighed down or had their growth being abated due to the lack of effort placed in ensuring consistently high quality across their stores.
Another challenge that larger players would tend to face is in the area of staff training. In order to produce consistently high standards, the business inevitably has to invest a large amount of resources in training their staff to ensure that they are able to meet expectations required. This is an area where most businesses tend to neglect and without a strong organic growth within their staff strength, the path towards growth may be faced with plenty of hindrances.
Lastly, cash flow management is especially important in the F&B industry, even more so for bigger players. Due to the scale of operations, many businesses may have the false impression that they have sufficient cash for a buffer. Generally, the F&B industry is characterised by the need to have a strong cash position as operating expenses are relatively higher, suppliers needed to be purchased on a regular basis and customer demand could fluctuate due to a variety of factors (e.g. economic conditions, seasonal demand, hygiene issues etc.).
– To be continued
Join us again next week for part 2 of the interview.