What's Killing Our F&B Businesses? | Talking Point | F&B Business Closures - Part 1/2

Summary

This video delves into the struggles faced by Singapore's F&B businesses, highlighting the closure of long-standing establishments due to rising operational costs, particularly escalating rents and manpower shortages. The story of Gaso, a heritage restaurant closing after 86 years, exemplifies these challenges. As rental prices soar, many F&B operators are forced to shut down, unable to sustain their businesses. The video also explores the impact of workforce shortages, competition from larger companies, and calls for changes in rental policies and manpower quotas, painting a stark picture of the crisis facing the sector.

Takeaways

• 🍜 Long-standing F&B establishments like Gaso, with decades of history, are closing due to financial pressures despite their cultural significance.
• 💸 Rising rental costs are a primary factor in F&B closures, with some businesses facing 20–70% increases upon lease renewal.
• 👨‍👩‍👧‍👦 Family-run heritage restaurants struggle to raise prices significantly to cover costs because they aim to remain accessible to loyal customers.
• 🏃‍♂️ Daily restaurant operations require high-speed, precise coordination, often with owners personally filling multiple roles to save costs.
• 📊 Industry data shows over 3,000 F&B businesses closed in 2024, with an average of 250 closures per month in 2025, signaling an unprecedented rate.
• 🏢 Different landlord types affect rental stability: REITs usually have moderate annual rent increases, while private landlords may raise rents significantly based on market expectations.
• ⚖️ Organizations like Singapore Tenants United advocate for rental renewal caps tied to inflation or GDP to provide F&B operators with certainty and planning ability.
• 👷‍♀️ Manpower shortages, especially among foreign workers, have caused wage inflation, making it hard for smaller businesses to compete with larger chains.
• 🤝 The F&B sector emphasizes hospitality and human touch, limiting automation despite rising labor costs.
• 📈 Despite closures, the number of F&B establishments in Singapore continues to rise, showing both sector growth and the challenges of sustainability.
• 🏗️ Broader economic factors, including investment trends in commercial properties and rising operational costs, contribute to a 'perfect storm' for small and heritage F&B businesses.

Q & A

What was the main reason for Gaso restaurant's closure after 86 years?

Gaso closed primarily due to rising rental costs, with a 30% increase upon lease renewal, making it financially unsustainable to continue operations while keeping prices affordable for long-time customers.

How many FnB businesses on average closed each month in Singapore in 2025?

About 250 FnB businesses closed on average each month in 2025.

Why did the Gaso owner continue working on the middle line despite being the boss?

The owner worked on the middle line to save money and manage costs effectively within the restaurant.

Why can't some heritage FnB businesses easily increase their prices?

Heritage businesses avoid significant price increases to remain accessible to longtime, price-sensitive customers, even when facing rising overheads like rent.

What is the role of Singapore Tenants United for Fairness?

They advocate for tenant rights, including proposing rental renewal caps tied to inflation or GDP, to prevent sudden, steep rent increases that threaten small and heritage FnB businesses.

How have foreign and local investment trends affected shop house rents?

Increased investment in shorter-title properties like shop houses has raised market expectations, driving higher rental costs and contributing to closures of traditional F&B outlets.

Besides rent, what other cost pressures are impacting FnB businesses?

Rising costs of goods, materials, utilities, and manpower have contributed to overall expenses reaching their highest levels in over a decade.

How has the manpower shortage affected smaller FnB businesses?

Smaller FnB businesses struggle to compete with larger companies offering higher salaries for limited skilled foreign workers, leading to difficulty in retaining staff and controlling costs.

Why is automation not widely adopted by some FnB businesses despite manpower issues?

Some businesses, like the husband-and-wife team featured, value hospitality and the human touch, which they believe is central to the FnB experience, making them reluctant to automate services.

Is the FnB industry in Singapore truly in crisis given new openings?

Although more than 3,790 new FnB establishments opened in 2024, the simultaneous high closure rate indicates financial pressures and sustainability challenges, particularly for small and heritage businesses.

How do rental increases differ between REIT-managed properties and private landlords?

REIT-managed properties typically have steady, low-percentage rental increases due to investor expectations, while private landlords can set rents freely, leading to potentially large, sudden hikes.

What long-term impact could unchecked rent increases have on Singapore’s FnB landscape?

Unchecked rent hikes could lead to the permanent closure of heritage and traditional businesses, reducing diversity in the FnB scene and threatening established culinary culture.