Chili’s Singapore blames tightening of foreign worker quota for its closure

Last month, Chili’s Singapore announced the closure of its restaurant chain. Chili’s Singapore was run by Belgarath Investments through GDA Restaurants, which was Chili’s franchisee. It had 3 stores in Singapore at Tanglin Mall, Resorts World Sentosa and Clarke Quay Central mall.

Mr Greg Blakney, managing director of Belgarath Investments, blamed the new foreign-worker quota announced by the government in Feb as one of the reasons for closing its operations. He said that the foreign-worker quota for the services sector is set to drop in the next two years and this will make it “considerably difficult” for restaurant operators.

The F&B sector’s Dependency Ratio Ceiling — which stipulates the proportion of foreign workers that firms may hire — will be marginally cut from 40 per cent to 38 per cent on Jan 1 next year, and to 35 per cent on Jan 1, 2021.

Mr Blakney who is a Canadian, also mentioned that “escalating labour expense, difficulty in hiring and training people, exceptionally high leasing expense, and the general expansion of shopping malls in Singapore have fractured the market”, leading to the closure.

He added that it was expensive to train employees and those who learnt the ropes would leave after several months, as restaurants compete for qualified workers. “There are so many people looking for qualified restaurant employees and people trained at Chili’s were valuable in the market,” he said.

The problem was made worse because few Singaporeans are willing to take up such jobs. “The fact that machines cannot replace people in restaurants means the coming quota issues are going to make things considerably difficult for operators, except the small, mobile ones,” he said.

Despite raising wages for most workers by 30 to 50 per cent in the past five years, Mr Blakney said that his firm still could not get people to work in the industry. “Restaurants need to be staffed with people and there is no way around the need of them,” he said. “The market is completely unsustainable.”

MOM: Belgarath Investments’ utilisation of foreign workers “higher than average”

In response, the Manpower Ministry (MOM) told the media that the new foreign-worker quota will not affect most firms as their pool of foreign workers is below the quota.

However, with regard to Belgarath Investments, MOM noted that its utilisation of foreign workers was “higher than average” among food-and-beverage (F&B) companies.

“The average and median wages for its local employees are also lower than their industry benchmarks,” the ministry added. In other words, Belgarath Investments was not willing to pay more to get local workers.

“For those that are affected, the Government will continue to help them access the local manpower pool and to operate in more manpower-lean ways,” the ministry said.

The reliance on foreign workers cannot continue indefinitely, NUS Assoc Prof Lawrence Loh said. While firms may reduce costs and consumers pay lower prices, there is a broader social cost involved. “Having low-value-added foreign workers strains the tight social infrastructure in resource-scarce Singapore,” he said.

A quick online check does indicate that Belgarath Investments might be hiring foreign workers “higher than average”: