Covid-19: Restaurants appeal for immediate targeted measures

AN informal grouping of over 500 restaurants has sent an urgent letter to Prime Minister Lee Hsien Loong ahead of the Solidarity Budget in Parliament on Monday.

The letter appeals for immediate targeted measures to stem the bleeding in an industry that has been among the most badly affected by the ongoing Covid-19 pandemic.

Current government measures are aimed at supporting the overall economy, but are not enough for restaurants which are labour intensive and run on a very tight cash flow with little to no buffer for exigencies like the current viral crisis, said the group, which calls itself #savefnbsg.

Among other things, it is asking for immediate rental rebates from landlords; doing away with base rent in favour of a percentage of gross turnover; increasing the Jobs Support Scheme (JSS) to cover a bigger percentage of salaries; and support for restaurants which cannot make the immediate switch to takeaway or food delivery and have to close in order to comply with the latest ruling to stop people from dining in restaurants.

The #savefnbsg movement's members represent a cross section of the restaurant industry from Michelin-starred eateries to large and small operators. There are over 18,000 restaurants in Singapore not including hawkers, employing more than 220,00 employees in an industry that contributes 0.8 per cent to gross domestic product (GDP).

The main drivers are well-known restaurateur Loh Lik Peng of the Unlisted Collection group, Beppe de Vito of the ilLido group and his wife Lynn Yeow-De Vito - a veteran public relations entrepreneur who has been instrumental in rallying the hundreds of F&B operators (and growing) since March 24 to form a collective voice to lobby for government support.

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The group has also been working closely with Enterprise Singapore, Workforce Singapore and Singapore Tourism Board to find solutions, but "we still need to be heard", said Mr Loh of the appeal to the Prime Minister's Office.

Since the announcement last Friday that restaurants and food centres would only be allowed to operate takeaway or delivery services from April 7 to May 4, F&B operators were working frantically over the weekend to get their operations in place for takeaway and delivery, as well as make the painful decision to shut down outlets that either cannot make the switch in time or are just not geared for takeaway, such as fine dining restaurants.

Although the past couple of weeks have seen restaurants ramp up their takeaway options, it was meant to supplement already falling revenues, not replace them totally, which is why the latest measure has hit the industry hard.

For the Les Amis group, chairman Desmond Lim estimated that "sales will drop to zero for outlets closed; by about 85 per cent for restaurant outlets and 50-75 per cent for the casual joints. Our Peperoni pizza delivery sales in normal times forms 30 per cent of sales, so we're targeting to hit 50 per cent during this period."

The group plans to close its three Michelin-starred flagship Les Amis for the duration of the no-dine-in directive, as well as other outlets not well-geared for takeaway such as Shabu Gen, Sushi Jin and Jinjo. But it will ramp up takeaway and delivery options for its other outlets, which are targeted to earn 15-50 per cent of normal revenue, depending on the concept. But "takeaway can never make up for the loss of revenue from dine-in sales, especially for the upper-mid restaurants", said Mr Lim. 

He, too, is hoping for some extra help from the government on Monday, in the form of raising wage support for Singaporean and PR workers from the current 50 per cent to 75 per cent for the month in question; 25 per cent wage support for foreign employees; reduction of employer-employee CPF contribution for three months; as well as more pressure on landlords to help F&B and retail tenants. "We live from month to month, trying to survive. But our staff have been very understanding and supportive of our need for cuts to help save jobs."

The reality is that "we're all in survival mode", said Unlisted Collection's Mr Loh, whose restaurants include Zen, Cloudstreet, Nouri and Burnt Ends. "Takeaway will at best make up 10 to 20 per cent of normal revenue. It's not so much about making up lost sales anymore but just to mitigate the effects and, with whatever support and concessions we get - basically we need free rent - to plough whatever money we can back to our employees."

Most of the restaurants in his group are gearing up for takeaway but there are plans to close certain restaurants in awkward locations that are not conducive for delivery such as Majestic and Majestic Bay Chinese restaurants.

The #savefnbsg group is pushing for more legislation to force landlords to pass on rebates to tenants immediately, instead of dragging their feet - especially for private sector landlords.

In one instance, Ryan Tan, co-owner of popular cafe Strangers' Reunion, has been forced to move out of the Kampong Bahru shophouse he had been in for the past seven years after his landlord changed her mind about halving his rent because of the Covid-19 crisis. 

"We were planning to move next door but she offered us the discounted rental. But after weeks of chasing her to sign the new lease, she told us she had found another tenant," he said. On top of that, the landlord informed him that his rental rebate would have to be shared with the incoming tenant. "This doesn't make sense because the rebate was implemented to help existing businesses, not incoming ones."

Meanwhile, other restaurant groups are scrambling to reorganise their operations. The Paradise Group's Edlan Chua will shut most outlets "except for 35 per cent which will stay open to do takeaways". The Lo & Behold Group, which includes the three Michelin-starred Odette and Over Easy, said that most of its outlets including Odette, will switch to takeaway.

Yuan Oei of the Prive Group plans to close the majority of his 12 restaurants, leaving only a few to focus on takeaway and delivery. "But it will still remain a single digit of our monthly sales," he said.

Like the others, he is waiting to hear about the extra measures on Monday before making the final decision. "It's not straightforward at all and critically depends on government support to enable us to continue to pay our staff."

What is hanging above all their heads is staff, many of whom depend on a monthly pay cheque to get by. Closure and being forced to take no pay leave with zero income are reasons why restaurants still want to try their hand at delivery despite the low returns.

So far, the government has been supportive with measures such as the waiving of foreign worker levy for one month, and a food delivery booster package to lower the commissions charged by food delivery companies.

Many eateries cannot afford the 30 per cent commission levied by such companies, but for the month in question, the government will absorb 5 per cent of it. Some landlords have also showed support, such as Paragon shopping mall which is waiving gross rent for tenants that decide to close during the one month 'circuit breaker' period, and concessions for those that stay open for takeaway services.

It is still not enough, but "something is better than nothing", said Les Amis's Mr Lim. Mr Loh reckoned that smaller, more nimble eateries without a very high operating cost may be able to bounce back, but it will be harder for those with bigger bills to pay. Referring to the latest no-dine-in rule, "we should be able to tolerate it for a month, but if this extends over several months, it will not be sustainable".