SINGAPORE: Coffee shop operators welcomed changes to the budget meal initiative, which will no longer be mandatory amid efforts by the Housing and Development Board (HDB) to make the scheme more sustainable.
From Saturday (Jan 10), existing rental coffee shops are no longer required to offer budget meals at tenancy renewal, while privately owned coffee shops can opt out with immediate effect.
Operators can now decide whether to participate in the initiative, in exchange for more discounts on rent or Temporary Occupation Licence (TOL) fees.
HDB has also standardised the requirements for budget meals, reducing the range from between two and six budget meals to three fixed meal options.
The three options include an economy rice option consisting of rice, one meat dish, and two vegetable dishes, a halal meal option and a breakfast item. The requirement to provide two budget drinks remains unchanged.
Budget meals are typically priced at around S$3.50 (US$2.70), and drinks are priced at around S$1.20.
Mr Hong Poh Hin, chairman of the Foochow Coffee Restaurant and Bar Merchants Association, said the standardisation helps operators define what a budget meal is.
“Because last time when they never clarify clearly, people will say, for example, noodle soup – how to define whether it's budget or not budget?” he said, adding that some stalls had provided limited sets of budget meals due to the low profit margin.
Mr Hong, who owns a coffee shop in Serangoon, added that extending the 5 per cent rent discounts for rental coffee shops would encourage more operators to join the scheme.
Previously, HDB provided rental coffee shop operators a 5 per cent discount on their renewal rents for a period of one year if they participated in the budget meal initiative.
Under the revised scheme, the 5 per cent rental discount will be extended across the full three-year tenancy term.
Rental is a big part of operational costs, said Mr Hong.
“Now they added another two years (of discounts) … So this is an additional benefit to the operator,” he said.
Coffee shop chain De Tian’s managing director, Mr Glenn Koh, agreed that the enhanced discounts will incentivise more operators to come on board by helping to lower operating costs.
“But if you say (the discounts will) fully subsidise – I don't think it will fully cover. Every outlet, every store is different,” he said.
Currently, 15 out of 20 De Tian coffee shops offer budget meals. Mr Koh said most of its outlets will likely continue to do so, although the company will have to evaluate.
One challenge, he noted, is having to price two drinks – typically a tea and coffee – at S$1.20.
When customers order the drink, they pay the default price for budget drinks at S$1.20. This leaves slim profit margins.
“And that is also challenging for operators, because that's our bread and butter,” he said.
Another challenge could be to fulfil the halal option at each coffee shop, he said. He added that this could be overcome by having a halal-certified Western stall provide the meal.
Mr Koh noted that footfall at coffee shops has declined amid increased travel and growing competition from the influx of Chinese cuisine stalls.
“So all these added competition, that's our challenges,” he said.
Most of the eight stallholders CNA spoke to said the changes to the scheme would not significantly affect them.
They noted that the take-up rate for budget meals has been low, with one worker at an economic rice stall estimating only two to three plates sold a day.
Others already sell meals that fall within the budget meal price range, and intend to continue doing so even if they are not required to.
Mr Chua Sai Heng, for example, sells minced meat noodles and fishball noodles at a coffee shop in Bukit Batok for S$3 a bowl. It qualifies as a budget meal, even though he did not intend to brand it as such.
He sells around 30 bowls of budget meals a day, mostly to seniors and students. “If I raise my prices, there won’t be anybody … I don’t dare to raise,” he said in Mandarin, adding that his earnings are sufficient to cover his day-to-day expenses.
Similarly, Mr Siew Ken Win, who works at a chicken rice stall in an HDB rental coffeeshop in Serangoon, said the business would likely continue to offer its budget meal – a smaller portion of breast meat chicken rice priced at S$3.50 – even if it is no longer required to.
“We’re already used to selling it, and customers are also used to buying it,” he said in Mandarin. “If we suddenly stop selling it, it might have an impact on business.”
Mdm Siti Aishah, 61, who sells Malay food at a coffee shop in Bukit Batok, does not officially sell budget meals yet. She wondered if she needs to join the scheme if her nasi lemak is already priced at S$3.50.
Still, she hopes to enjoy the cost savings through the 5 per cent rental discount given to operators, and passed down to tenants.
“I hope so lah, because the rental quite high,” she said.
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From Saturday (Jan 10), existing rental coffee shops are no longer required to offer budget meals at tenancy renewal, while privately owned coffee shops can opt out with immediate effect.
Operators can now decide whether to participate in the initiative, in exchange for more discounts on rent or Temporary Occupation Licence (TOL) fees.
HDB has also standardised the requirements for budget meals, reducing the range from between two and six budget meals to three fixed meal options.
The three options include an economy rice option consisting of rice, one meat dish, and two vegetable dishes, a halal meal option and a breakfast item. The requirement to provide two budget drinks remains unchanged.
Budget meals are typically priced at around S$3.50 (US$2.70), and drinks are priced at around S$1.20.
Mr Hong Poh Hin, chairman of the Foochow Coffee Restaurant and Bar Merchants Association, said the standardisation helps operators define what a budget meal is.
“Because last time when they never clarify clearly, people will say, for example, noodle soup – how to define whether it's budget or not budget?” he said, adding that some stalls had provided limited sets of budget meals due to the low profit margin.
Mr Hong, who owns a coffee shop in Serangoon, added that extending the 5 per cent rent discounts for rental coffee shops would encourage more operators to join the scheme.
Previously, HDB provided rental coffee shop operators a 5 per cent discount on their renewal rents for a period of one year if they participated in the budget meal initiative.
Under the revised scheme, the 5 per cent rental discount will be extended across the full three-year tenancy term.
Rental is a big part of operational costs, said Mr Hong.
“Now they added another two years (of discounts) … So this is an additional benefit to the operator,” he said.
Coffee shop chain De Tian’s managing director, Mr Glenn Koh, agreed that the enhanced discounts will incentivise more operators to come on board by helping to lower operating costs.
“But if you say (the discounts will) fully subsidise – I don't think it will fully cover. Every outlet, every store is different,” he said.
Currently, 15 out of 20 De Tian coffee shops offer budget meals. Mr Koh said most of its outlets will likely continue to do so, although the company will have to evaluate.
One challenge, he noted, is having to price two drinks – typically a tea and coffee – at S$1.20.
When customers order the drink, they pay the default price for budget drinks at S$1.20. This leaves slim profit margins.
“And that is also challenging for operators, because that's our bread and butter,” he said.
Another challenge could be to fulfil the halal option at each coffee shop, he said. He added that this could be overcome by having a halal-certified Western stall provide the meal.
Mr Koh noted that footfall at coffee shops has declined amid increased travel and growing competition from the influx of Chinese cuisine stalls.
“So all these added competition, that's our challenges,” he said.
Related:
STALLHOLDERS SEE LOW TAKE-UP RATE
Most of the eight stallholders CNA spoke to said the changes to the scheme would not significantly affect them.
They noted that the take-up rate for budget meals has been low, with one worker at an economic rice stall estimating only two to three plates sold a day.
Others already sell meals that fall within the budget meal price range, and intend to continue doing so even if they are not required to.
Mr Chua Sai Heng, for example, sells minced meat noodles and fishball noodles at a coffee shop in Bukit Batok for S$3 a bowl. It qualifies as a budget meal, even though he did not intend to brand it as such.
He sells around 30 bowls of budget meals a day, mostly to seniors and students. “If I raise my prices, there won’t be anybody … I don’t dare to raise,” he said in Mandarin, adding that his earnings are sufficient to cover his day-to-day expenses.
Similarly, Mr Siew Ken Win, who works at a chicken rice stall in an HDB rental coffeeshop in Serangoon, said the business would likely continue to offer its budget meal – a smaller portion of breast meat chicken rice priced at S$3.50 – even if it is no longer required to.
“We’re already used to selling it, and customers are also used to buying it,” he said in Mandarin. “If we suddenly stop selling it, it might have an impact on business.”
Mdm Siti Aishah, 61, who sells Malay food at a coffee shop in Bukit Batok, does not officially sell budget meals yet. She wondered if she needs to join the scheme if her nasi lemak is already priced at S$3.50.
Still, she hopes to enjoy the cost savings through the 5 per cent rental discount given to operators, and passed down to tenants.
“I hope so lah, because the rental quite high,” she said.
Continue reading...