RAS: Singapore food and beverage businesses struggling, landlords advised to cut rents to lighten the burden

Jewel Changi Airport in Singapore is now offering a 50 per cent rebate on rent for its food and beverage (F&B) business tenants for the months of February and March. This is done amidst the F&B businesses suffering from the Covid-19 virus outbreak in the country.

At a press conference on Thursday (13 Feb), the Restaurant Association of Singapore (RAS) announced the matter and appealed to other landlords to offer assistance to the F&B businesses at this tough time.

The retail and leisure complex, Jewel began operation less than a year ago.

RAS sent out letters to 24 landlords, including major mall developers like Asia Malls and CapitaLand on Monday and Tuesday. The letters were to request them to offer rental rebates as high as 50 per cent for February, March and April.

There are more than 450 members in RAS who represent almost 700 brands which operate more than 4,000 branches.

According to the snap poll done by RAS from Monday to Thursday, 57 per cent of the 302 respondents expected revenue to fall by more than half for the next three months. Almost 60 per cent stated that they are ill-prepared and ill-equipped to navigate the abrupt nature of the coronavirus outbreak. The survey also captures the top two concerns of respondents which are measures to address rental and wage costs.

According to Vincent Tan, the president of RAS, the F&B has experienced 50 to 80 per cent contraction in business activities since the viral spread as many shoppers avoid malls and crowded places and stay at home.

“If we don’t do something to help the industry, there will be a big collapse,” Mr Tan remarked.

 ‘Socially responsible’ landlords are important

RAS is exhorting landlords to be “socially responsible” because rent comprises a large proportion of operational costs for restaurant operators.

According to Andrew Tjioe, the president advisor of RAS and the chief executive officer of Tung Lok Group, RAS is trying to avoid the outcome where employees will be forced to go on unpaid leave.

Mr Tjioe remarked that both tenants and landlords need one another to survive “I think we really want to avoid this. This is the time that landlords and tenants have to be in good partnership and landlords have to do the social responsible thing to help us protect jobs…You can see how our landlords are performing financially, and there is an imbalance of distribution of income. It’s a very, very heavy burden on F&B operators”.

RAS noted that restaurants are beginning to employ less part-time workers and full-time workers have also been asked to go on unpaid leave.

Although there are no closures yet, many restaurants are somewhat empty because shoppers are avoiding malls, Mr Tan stressed.

Recalling the time of the severe acute respiratory syndrome (Sars) epidemic, Mr Tan said that the F&B sector recovered only six months after the outbreak ceased.

“So we need to help (restaurants) these three to six months. Let us overcome the situation. We are not asking for long-term rental rebates. We are asking for help to ride through this very difficult time,” Mr Tan added.

In Hong Kong, it has been reported that landlords of major malls are slashing rent rates for February by as high as 60 per cent in order to lighten the burden of tenants hit by the viral outbreak.

RAS was queried about whether the 24 landlords replied back, to which it answered that some of the landlords will go and talk directly to the tenants to fully understand the current situation.

Although RAS is aware that landlords, like CapitaLand with its S$10 million marketing campaign, are trying to assist tenants, Mr Tan said that these efforts do not bring immediate assistance. Rather, a rental rebate would benefit the bottomline of restaurants directly, he concluded.

Businesses are suffering

In the event that landlords do not agree to cut rents, restaurant closures would then be possible because it is “just untenable”, Andrew Kwan, the vice president of RAS remarked.

“It’s not something where you can kind of wait it out over a few months without any sort of assistance…I liken this to a patient that is haemorrhaging from the arteries. We don’t have time to say that, ‘Let’s assess and let’s decide what’s the next measure’, and then slowly stop the bleeding. It’s something that is happening very rapidly,” Mr Kwan added.

At this time, there are reports by several F&B outlets that food delivery orders have increased, but RAS opined that this increase is not enough offset the sharp decline in business at the physical stores.

Last Sunday (9 Feb), RAS wrote a letter to Chan Chun Sing, the Trade and Industry Minister, asking for assistance on this matter. The first is asking the government to cut labour costs by temporarily providing wage credits and waiving foreign worker levies. The second is appealing to government agencies like the industrial estate developer JTC, the Housing and Development Board, Singapore Tourism Board and National Parks Board to ask them to provide rental rebates to their tenants as well.