Singapore's foodservice market to grow at 2.1% CAGR by 2023
Consumers are starting to ditch full service restaurants as costs remain a challenge.
The F&B foodservice market is projected to see a 2.1% compound annual growth rate (CAGR) by 2023, driven by the mass market segment, according to DBS’ Asian Insights SparX report.
The mass-market segment is said to have more transactions and higher spending on F&B at an average of SG$20 per head. Furthermore, the total mass-market size is valued at SG$6.2b.
Meanwhile, Singapore’s foodservice sector is currently worth about SG$8.3b and has seen a 2.4% CAGR over the ten-year period 2008-2018, led by cafés/bars, limited service restaurants, and street stalls/kiosks.
Consumers preferences are also starting to shift from full-service restaurants to quick-service formats as cost continues to be a challenge in the Lion City.
“[O]perators in the slowing higher-end full-service restaurants segment might need to operate with caution. High-end restaurants have closed. The recent slow GDP growth rate projections for Singapore could also fuel more switching from high-end to mass-market segment as compared to previous years,” the report explained.
Furthermore, more brands are starting to enter Singapore. DBS cited the opening of Jewel Changi as an example, where Shake Shack and A&W have launched its debut sites in the country.
“Companies in the mass-market segment continue to grow through acquisitions such as NTUC Foodfare’s acquisition of Kopitiam and BreadTalk’s planned acquisition of Food Junction. Consumer behaviour and busy lifestyles are driving a trend towards frequent eating-out, convenience, quick-service formats, and faster payment/checkout modes including cashless and online transactions,” the report stated.
QSR operators in the mass-market segment would also be able to extract higher productivity by implementing more self-service initiatives more easily than high-end full-service formats, as foreign worker dependency ratio is being tightened.
In addition, these companies are capable of morphing into multi-format, multicuisine, and multi-brand F&B companies. This will then allow them to introduce foreign brands, whilst exporting their own brands overseas for regional growth, as well as to utilise technology to deliver operational efficiencies.
The report stated that malls are going towards higher proportion of mass market F&B.
“The composition of malls has gradually shifted in favour of more non-discretionary (particularly mass-market F&B) and activity-based concepts that are harder to replicate online. This will likely remain a key strategy for landlords going forward, who are starting to see value in incorporating more mass-market F&B tenants into the mix,” DBS said.
