The Only Guide You'll Need To Set Up A F&B Business In Singapore!
Updated: May 21, 2021
Welcome to the MOST comprehensive and detailed step-by-step guide to opening your own F&B business in Singapore! This will be a lengthy read as we'll go over all the necessary steps you need to take on this thrilling venture into the F&B scene while squeezing in some tips and recommendations along the way. So buckle up; you're in for a ride!
Step 1: Concept Design
At the first stage, before everything else, you need to conceptualize your business, covering certain areas such as:
What kind of cuisine and food do you want to serve at your establishment? What kind of ingredients will it require and are you able to source for it locally? Does it require any sort of automation equipment to increase productivity?
Now that you know what your food product is going to be, you can then identify your target market and further customize your product towards your target market’s preferences! Which age group is going to be the most receptive towards your product? Are you targeting students or the working class? Perhaps you are targeting based on psychographics instead, such as health enthusiasts? You want to have a clear idea what your target market is as your whole plan is dependent on your initial choices of product and target market.
Branding covers a wide spectrum from logo to brand colors to food packaging and even merchandising. Identify your target market and consider the kind of emotion your brand wants to evoke from your customers and tweak the branding accordingly. Take Starbucks for example with its focus on experiential dining and a comfortable, relaxing environment. Their brand philosophy also revolves around responsibility and social ethics such as environmental conservation and corporate purchasing practices. Do you think that the green in their logo represents this key trait accurately?
Do you want your store to be a mini-kiosk for takeaway only? Maybe you’re looking at a full-service restaurant where patrons are able to take a seat and go through the full dining experience? Equipped with an understanding of what kind of store you desire is important for accurate projections and budgeting down the road.
Step 2: Financial Budgeting
With the conceptualization portion of your business done, you are now ready for step 2!
Setting up a F&B business in Singapore can easily cost you anywhere between $50,000 to $1,000,000 (sometimes even more!) due to extremely high costs such as rental, renovations and headcounts. The prior conceptualization will assist you with formulating a more accurate financial projection and enable you to have a good idea of how much capital you will need to invest into the business.
Setting up a restaurant isn't cheap - especially if you want it to look good.
The F&B industry is relatively volatile and susceptible to many external factors. A prime example is COVID-19. It is of paramount importance for you to have enough cash in reserve and as a rule of thumb, keep at least 3 to 6 months’ worth of operational expenses as company funds for business continuation.
If all this seems a bit overwhelming and you find yourself having trouble meeting your financial budget, you can always opt to scale down. Instead of a full-service restaurant, start small with a kiosk and gauge the potential of your business from there before deciding whether you want to expand your business.
At this point, you also need to have a clear idea of how you want to price your food for a more holistic approach towards financial projection.
Some companies go the extra mile to engage external CFOs for help with financial projections. This service got immensely popular during COVID as it was necessary for new projections to be made with the economy downturn.
Psst, Wemedia Consulting does provide restaurant financial consulting services too. Our many years of experience in the F&B industry have equipped us with the knowledge to analyze and make the projections as accurate as possible.
3. Business Registration (ACRA) Documents/ Bank Account Opening
Business registration can be done directly through ACRA’s official website at www.bizfile.gov.sg.
There are, however, certain requirements that you do have to keep in mind prior to registration and incorporation of your business.
1. Your business needs a name. Instead of settling on just one, try to come up with a few more choices just in case your top choice is already taken. You can check if your desired business name is taken by conducting a business entity search.
2. Your business needs to have at least 1 director. The director must be at least 18 years of age with no prior run-ins with the law. In the case where your company only has one director, he or she must be either a Singaporean Citizen, PR or an EntrePASS VISA Holder physically residing in Singapore.
3. Your business needs to have at least one shareholder, up to a maximum of 50. An individual or a legal entity (trust, other companies) both qualify to be a shareholder.
4. Your business needs a company address that is in Singapore. It must be a proper physical address.
5. Your business needs to have a company secretary. This is not required immediately but must be hired within 6 months of incorporation. The person in question must reside in Singapore. You can consider outsourcing this to corporate secretarial companies; a quick google search will yield you plenty to choose from.
You should open a business bank account at this stage too. We will recommend using local banks such as DBS, UOB and OCBC.
Location is of paramount importance when running a F&B business in Singapore. There are a multitude of factors to take into account when considering the location for your concept, mainly targeted customer footfall, price per sq. ft and presence of competitors.
This might sound obvious, but your location has to cater to your identified target market. For example, if you are looking at targeting office workers, you will want to have your store closer to the CBD area or near a crowded office building. If it is towards families having a meal together, you will be looking at residential areas.
Food Court in Shopping Malls
Full Service Restaurants
Let’s take it a step further: the type of unit matters as well. A standalone unit in a shopping mall compared to a unit in a food court – which one is more suitable? A standalone unit allows for you to fully exercise your creativity and showcase a unique concept and design that could be very eye-catching, but footfall might be an issue if it’s on an isolated floor. A unit in a food court ensures you have customers around the clock but there are plenty of competitors to be wary of. Every location has its pros and cons and you want to make sure you are able to fully reap the location’s benefits while keeping the disadvantages negligible.
Another tip to finding a good location is to do your due diligence beforehand by conducting a comprehensive appraisal of the surrounding area for potential competitors or brands catering to similar groups of customers. If your identified competitors are doing well, this typically means that the area has an abundance of your target market and could be a suitable place to set up your store. You just have to be prepared for a bit of healthy competition!
P.S. Your monthly rental fee, in general, should not exceed more than 25% of your projected monthly earnings in order to make a stable profit!
5. License application
F&B businesses in Singapore are mandated by law to apply for a Food Shop License. Other licenses that your business could require are:
MUIS Halal Certification
Import License (If any of your ingredients are imported and not sourced locally)
Public Entertainment License (For any TV placement or live band entertainment)
You can refer to GoBusiness, a Government website for all your license application needs.
6. Account opening
Once your company is officially registered, you can then proceed to start opening all the necessary business accounts. Some examples of accounts you must open exclusively for your business are utilities, telephone, CPF, Levy, internet etc.
Wemedia Consulting provides F&B license application & account opening services at competitive rates, so do hit us up if you would like to settle all of these without any hassle!
7. Kitchen equipment
Cr: Yek Engineering
A fully equipped commercial kitchen can cost more than you think. First-hand commercial stoves & ovens, refrigeration systems & customized equipment are far from cheap, and that’s before taking into account dishwashers, countertops, other preparation stations and secondary equipment.
The good news is that certain kitchen equipment are pre-qualified for government subsidies and grants. You can always check with us for more information on how to acquire such subsidies!
Regardless, we recommend that you get quotes from different local suppliers to find the best price possible. Even though a few hundred in savings for each equipment might not seem much, if you are able to do that for every single piece, it will end up being a sizeable chunk of savings.
8. Interior design & renovation
To stay consistent with your branding and make your customers’ dining experience memorable, your restaurant needs to have good interior design. Good design and creative use of your brand colors will bring about a unique ambience which could become one of the main selling points of your business. Aesthetics, after all, is all the craze nowadays among the younger generations.
Back-kitchens also require a bit of designing for proper ventilation and improved workflow efficiency between stations. This is where M&E (Mechanical & Electrical Services) comes into the picture. Professional installation of equipment systems and associated cabling works for power & gas is important for smooth operation. Get it right the first time to prevent complications in the future!
You will also want to co-ordinate and manage your timeline properly so that renovations and approval for your SFA license, WPOL & EPOL are completed around the same time. This allows you to start with on-site employee training immediately after renovation and not waste any additional time and money.
Recruitment of staff can be done concurrently while handling renovations. Recruitment is quite possibly the most important part of this entire establishment process as good and hardworking employees are a dime in a dozen. For more information on staffing and manpower laws such as the ratio of locals to foreigners, you can visit the Ministry of Manpower website.
Some local hiring platforms that we recommend posting job listings are MyCareersFuture, JobsDB & JobStreet. There are also certain groups on social media platforms such as Facebook where you can connect with like-minded entrepreneurs in the F&B industry and also find potential employees. One example is F&B Jobs Singapore with an active following of 15k. Telegram groups are also popular among job seekers. Two such channels are SGJOB4U and sgCareer, both boasting of a following slightly more than 20k and frequent job postings.
You will also have to ensure that the kitchen staff have all undergone the WSQ Basic Food Hygiene course. Every restaurant establishment also requires a Food Hygiene Officer, typically taken by either the outlet manager or the owner.
Wemedia Consulting value-adds to this portion in numerous ways with a variety of consultation assistance:
1. Headcount optimization: Having sufficient headcount is the most challenging part when running a F&B business in Singapore due to manpower laws and difficulty of recruitment. We are well-versed with various methods of headcount optimization to alleviate any pressure you might be facing with this.
2. Service Flow Blueprint: A complete service flow blueprint from when a customer enters the shop till departure. Find out how you can balance customer experience and operation efficiency.
3. Compensation System Design: Get the best out of your employees and motivate them through attractive compensation and incentives. This will also resolve some of your recruitment woes.
4. Maximization of Quota Generation through controlled CPF contribution: We will share tips and plan a timeline for your business to follow to get the most out of quota generation through CPF contribution.
10. Ingredient suppliers
We recommend for F&B businesses to apply for an import license so you are able to choose between both local and overseas suppliers for the best quality and price.
P.S. Remember to make sure there is a healthy profit margin between the cost of your raw ingredients and the selling price of your products! It is still not too late to revise the pricing if the raw ingredients turn out to cost much more than you initially projected!
11. IT software
We are almost at the finish line! One of the final touches is to find a good Point of Sales (POS) system. There are plenty of choices to choose from, though with how advanced software technology is nowadays, most of these choices offer similar features. You want to look out for 24/7 support and preferably same day or next day troubleshooting and repair services.
Hualala is the top Pont-of-Sales system in China with over 350,000 merchants currently using it. Famous for its strong loyalty programs linked to WeChat, Hualala provides a multitude of ways to strengthen customer relationships and maintain customer retention at an all-time high. Furthermore, the integrated management software has one centralised backend that covers and tracks the entire supply chain, from supplier to central kitchen to individual outlets. Businesses are also able to opt for Queue Display Systems to speed up outlet performance and efficiency.
There are also other software for HR management and financial management to further assist with operations and improve the back-end efficiency.
HR Management Software: Info-Tech
Financial Management Software: Quickbooks
There are numerous platforms you can market your business on such as social media. Facebook and Instagram remains two of the most popular platforms for F&B businesses as virality is highly possible when done right.
Taken from: Eatbook
Other alternatives will be to employ the help of established food review platforms such as Eatbook, DanielFoodDiary or SethLui and get them to write an article or film a video, effectively reaching out to their massive following. Just keep in mind to do some prior research and double check if your target market coincides with their following to achieve the best turn-up and bang for your buck.
You can also contact multiple influencers and invite them down to give your food a taste test. This is another way to ensure customer traffic and can help attract more customers in the future when positive reviews are given by these influencers.
One important thing to take note of here is to not bite off more than you can chew. We have seen countless of new restaurants make a mess of their opening day as the restaurant staff are inexperienced and a flood of customers can easily overwhelm them. This destroys the image of the restaurant – sometimes on opening day itself! We advise for new restaurants to ease into marketing and promotions or do a soft opening first for your service staff to grow accustomed to the procedures. Once operation has settled down and everything is smooth, you can then proceed with marketing efforts to get more customers through that door!
13. Continuous Improvements
Running a F&B business is essentially a never-ending pursuit of improvement and excellence. Every successful F&B company constantly innovates and seeks to improve its customer experience as well as internal management. This goes the same for your business.
You can look to create new customer experiences by presenting new dishes or re-engineering your process through adoption of the latest technology or setting up of new SOPs. Above all, it is important to set-up a Plan-Do-Act-Check (PDCA) system in your daily operations which awards good performers and discourages mediocrity. This is particularly effective when your business has stabilized and expansion is your next goal. This PDCA system is called the employee motivation system which could potentially be a game changer for your business.
You can also consider Mystery Shoppers who provide authentic reviews and feedback on your services and products. This helps in providing a holistic view on your business so you can better identify shortcomings and areas of improvement.
Up for the challenge?
In a nutshell, opening a F&B business is definitely not for the faint-hearted. The sheer number of steps you have to take, not to mention the heavy investment, will definitely turn some entrepreneurs away from entering this industry.
If you would like to bypass going through all the trouble above, you can always entrust the establishment process to us. This will also include consultation and implementation to help your business achieve a competitive advantage over your competitors, enabling you to start making a profit sooner rather than later! Check out our Brand Establishment page for more information on our services or directly contact our Head Consultant Felix @ 8357 0200.
So what are you waiting for? You miss all the shots you don’t take after all. Take that leap of faith; it could very well turn out to be the most fulfilling decision you have ever made.