Cocktail bar, Italian restaurant call it quits amid COVID-19 challenges for F&B sector
SINGAPORE: From Southward$1,726 in February to S$1,545 in March and then S$723 in Apr. The average daily sales at downtown cocktail bar Jekyll & Hyde steadily dropped as the COVID-19 pandemic hit business.
By April, sales were down by 70 per cent compared to five months ago in Nov, as the bar could only practise deliveries and takeaways in one case dine-ins were off limits under the "circuit breaker" measures that started on April seven.
Fifty-fifty before that, its owner Mr Chua Ee Chien had been busy negotiating with the real estate direction visitor that represents the landlord to reduce hire. Companies in the key business organisation district had begun directing workers to telecommute, and the number of customers he could serve was limited by safety distancing protocols.
After weeks of due east-mails and phone calls, his landlord agreed to cutting his monthly rent from S$14,000 to South$5,750 for either the residuum of the year, or until Singapore returned to the DORSCON greenish level, whichever arrived earlier. But there was a catch – Mr Chua had to sign a personal guarantee, meaning he would become personally liable for payments to the landlord if the business was unable to fulfil them.
READ: COVID-19: Delivery and takeaway models unsustainable, say restaurant owners
Mr Chua said that he plant the personal guarantee order unwarranted, since the landlord was already holding on to a Southward$42,000 eolith. And with the doubt over how long the COVID-xix situation will last, Mr Chua chose to cut his losses and volition shut store once his tenancy ends on Jun 14.
"It's a terribly unfortunate situation we've been placed in," said Mr Chua, who bought over the half-dozen-yr-erstwhile bar in 2018.
"I've poured a lot of fourth dimension and endeavor into this over the past two years, and sacrificed a lot, including coin and countless hours with the team, (who accept) slogged abroad to carry the bar (this) far," he said.
This request for a personal guarantee came but subsequently Mr Chua had made 1 more appeal - that if he failed to settle his rent on time at the end of each calendar month, he would pay 5 per cent interest on pinnacle of the Southward$5,750 hire. However, the landlord'southward status was that he should pay the full S$xiv,000 if he did not meet the stipulated monthly deadlines.
From the landlord's perspective, the tenant'due south request to pay 5 per cent interest instead of the original corporeality had "set off alarm bells", a spokesperson from the nugget management firm representing the landlord said.
There was as well the take chances that the S$42,000 eolith would not exist enough to encompass the price to renovate the shophouse and unpaid rent if the bar folded before the end of the year, the spokesperson added. She asked that her company not be named as it would jeopardise their relationships with other tenants.
Now that Jekyll & Hyde'southward closure is drawing near, one of Mr Chua's three full-time employees is now looking for some other chore in a new industry, he said.
Mr Chua has been working with the other two to scout for a minor joint where he tin keep to sell bottled cocktails and keep them on the payroll until he finds a permanent infinite when the virus blows over.
"(But) in that location are no certainties," Mr Chua said.
HARSH TIMES AHEAD
Even with financial help such as wage subsidies and a property tax rebate from the Government, the food and drink (F&B) industry faces huge uncertainties.
Aside from circuit breaker measures, the lack of tourists and safe distancing rules will batter the industry, said restaurant operators and analysts, as relief measures tin but help players shore up cash flow in the short-run.
Many independent restaurants operate in tight liquidity conditions and high overheads as rental rates take continued to ascension in recent years, said Mr Pua Wee Meng, a consumer industry leader at Deloitte Southeast Asia.
He expects the industry's outlook to remain in the doldrums, particularly among eateries heavily reliant on the dine-in crowd, as consumers go on to practice prophylactic distancing for some time.
READ: 'It's about trying until our final breath': New F&B players cook up survival plans for COVID-19 crisis
Eating house operators besides confront the challenge of managing food costs during this difficult time, Mr Pua said, having to approximate the amount of ingredients to procure confronting uncertain demand, while balancing wastage and the risk to food quality.
It would exist even harder for those with "depression-loyalty patrons", such equally those that cater to the mass market or tourists.
And though many restaurants have introduced online commitment services during the circuit breaker, this strategy squeezes their already-tight margins with higher costs in packaging, resources to manage the orders, transportation and high committee payments to third-political party delivery platforms, Mr Pua added.
Even before the circuit breaker came into play, a survey published at the end of March amidst 174 F&B business owners representing 249 establishments found that 93 per cent had seen a decline in revenue.
The study past eatery booking platform Chope as well reported that eighty per cent of those polled said they were reducing staff to cutting costs and a third had imposed compulsory leave for full-time employees.
Nearly four in five businesses and then said they were non prepared to final longer than 6 months if the state of affairs did not meliorate.
The industry's workers are also on shaky ground. In its latest macroeconomic review published on Apr 28, the Monetary Authority of Singapore (MAS) noted that the F&B industry is one of the sectors where workers are "most vulnerable" to lay-offs as competitive pressures among F&B operators were already acute.
Many of these firms tend to be minor and could face significant credit constraints, which would limit their ability to concur on to their workers, MAS added.
2-and-a-half weeks ago, Ashok Melwani broke the bad news to his team of 50, some of whom had been with him for more than 20 years, that he was calling it a mean solar day at both of his Modesto's restaurants.
After 17 years at The Elizabeth Hotel, Modesto's@Elizabeth ceased its dine-in service when April came to a close, although its kitchen will run till the terminate of May to cater to guests serving their stay-domicile notice.
And in June, Modesto's@Orchard at Orchard Rendezvous Hotel will close its doors after 23 years.
Mr Melwani chose to wind things upwardly after predicting that he would bleed for the residual of the twelvemonth if he continued, he said. The tourist clientele, which the restaurants are heavily reliant on, has all but dried up.
In March, he lost virtually S$200,000, he said, while April's earnings are even so beingness calculated. Both outlets were only able to proceed going by relying on what he accrued last year, when profit margins were between half-dozen to 7 per cent, he said.
"I cried at home the night I gave out the (retrenchment) messages," said Mr Melwani, who laid off the first batch of 15 at the terminate of last month.
"I (would) rather the affected staff get on with looking for new jobs as soon every bit possible, (since they) probably need to look at (other) industries at this fourth dimension," Mr Melwani said.
To help his retrenched staff members, Mr Melwani is looking for task leads amid his friends and acquaintances. So far, iii of them, including two foreigners, have managed to secure a position elsewhere.
He also launched a mini-fundraising entrada, setting aside 40 per cent of takeaway sales proceeds in May to help former employees who are in between jobs.
READ: More than companies announce wage cuts, no-pay leave amid COVID-19 economic downturn
The employees have been understanding, he said. Some of the longer-serving ones have sent him letters to say they appreciate any support he is trying to give.
Old customers have as well sent their regrets. I told him how he had, without neglect, celebrated his birthday with his extended family unit at the Orchard Route branch every year - now that tradition would be broken. Another said: "My daughters are going to weep when they hear this."
"I think I'll weep too, when this is all over," Mr Melwani said. "Now I'm just focused on catastrophe the business well."
Editor's note: This story has been amended to reflect that Jekyll & Hyde'southward rent was due at the end of the month, not the showtime. We apologise for the mistake.
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