“This is something we feel we have to address as a small business in Singapore,” reads the caption on a May 7 post. “We’ve been in business for close to 16 years now, since 2010. We’ve had our ups and downs. We’ve faced the manpower crisis of 2017 (still ongoing in fact), we’ve seen food costs soar, and we can handle them. That’s what being in business entails, overcoming obstacles as they come and try your hardest to hold on to your principles.”
The post, which has gained over 5,000 likes, continues: “But rent is one thing that kills, you know?”
Widely shared and picked up by the media, it highlights how rising rents are putting pressure on businesses.
See also: Beer is flowing in the East
Heidi Tan, 36, chef-owner of Flor Patisserie, has run the cake shop for 12 years. But she recently announced it will close its last physical outlet in July after the landlord at Siglap Drive decided to raise the rent by 57%.
“Never thought our out-of-the-way, 21 mins by bus, 15 mins by walk from the nearest MRT station, no-parking-nearby outlet could be worth $8,500 in monthly rent (previously $5,400),” she wrote in a separate post on April 23.
Tan’s post is an appeal to Member of Parliament Edwin Tong, who represents the area, to introduce policies “to create a fair playing ground for businesses and landlords”.
See also: Old Chang Kee: A snack stock too tasty to ignore
“We know why landlords are trying their damn hardest to increase rents, because rent is the biggest factor in land valuation,” she writes. “High rent usually equals higher property prices. These buggers just want to flip their properties.”
Tan, who shut Flor Patisserie’s two other outlets last year, suggests a bold new policy: “How about implementing a grace period in which a commercial property can be empty for? We suggest a cap of six months. After which, the landlord will be fined 50% of the asking rent every additional month that it’s on the market.”
Win some, lose some
Her proposal comes amid a broader wave of closures that points to deeper structural issues; Flor Patisserie is just one of many businesses that have shuttered recently.
According to the Accounting and Corporate Regulatory Authority (Acra), 3,047 F&B businesses closed in 2024 — the highest number since 2005.
So far this year, the sector has seen an average of around 307 closures each month. Notable exits include Eggslut, Manhattan Fish Market, Prata Wala and Burger & Lobster.
From humble local eateries to award-winning fine dining restaurants, none have escaped the impact of inflation, which business owners and analysts say has driven up rental costs and made it harder to retain skilled staff.
To stay ahead of Singapore and the region’s corporate and economic trends, click here for Latest Section
Exhausted, several restaurant owners had announced that their businesses were “no longer able to sustain themselves” or that “rent prices have increased too significantly,” forcing them to hang up their aprons and call it quits.
However, new restaurants swiftly filled the gaps left by those that shuttered, with 3,793 openings last year, the second-highest on record after 2021’s 3,934.
In a report dated April 14, real estate consultancy Knight Frank noted that, despite the wave of closures, both local and international F&B brands continue to enter the market.
The result is a survival-of-the-fittest environment, where deep pockets offer a competitive edge and similar concepts often rise and fall in tandem.
Ethan Hsu, head of retail at Knight Frank, says: “The dining scene appears to be reaching oversupplied levels and measures to cool the market for a sustainable sector may be needed sooner rather than later.”
According to the OCBC SME Index released on April 16, SMEs in the F&B space scored lower q-o-q on the index, which tracks the health and performance of businesses.
The index for SMEs in the F&B space fell from 51.1 in 4Q2024 to 49.6 in 1Q2025, with the F&B services segment seeing the largest decline from 50.6 in 4Q2024 to 48.3 in 1Q2025.
To put things into perspective, a local F&B entrepreneur shares that as a small business owner, it was tough to keep all the stores running. At its peak, this entrepreneur owned five outlets across the island. In September 2024, the owner was forced to close their outlet in Great World City after the landlord doubled the rent.
Although the owner said on social media that the brand will reopen elsewhere, finding a suitable location with rents climbing remains a challenge.
Former F&B boss Chua Ee Chien says consumer demand has changed. Speaking to The Edge Singapore, Chua says operating an F&B concept today is harder than it was some five years ago.
Chua is currently the commercial director at Token2049 and SuperAI. Previously, he served as managing director of Whimsical Inc, where he oversaw the F&B group and its three concepts: Jekyll & Hyde, Graft and Dagger — all of which have since permanently closed.
The former Jekyll & Hyde space along Neil Road
Jekyll & Hyde lasted till 2023. It was a well-known bar-restaurant in Tanjong Pagar, famous for its creative cocktails and Singaporean fusion dishes.
Chua notes that finding trustworthy and reliable staff is increasingly difficult. In 2020, just days after a media preview of the bar’s new space, the staff were arrested for drug use on the premises, leaving the bar empty and unmanaged. Chua faced rental costs even without operating income.
While many have attributed their challenges to the Covid-19 pandemic, Chua says Jekyll & Hyde remained profitable during that time. “The Keong Saik area was hot. The bars and restaurants were flourishing,” he adds.
However, as borders began to reopen, things started to take a downturn. The competition shifted from local players to international ones, as consumers embraced “revenge travel”.
Today, Chua has moved on from the F&B industry, though a hint of passion for it still lingers. “I have said that I do not want to go back into the F&B business again. But if I do, there are certain things I know that I would have to do. The current market conditions here are not favourable, so maybe better in other countries,” he says.
Renewed growth
Some malls, especially those located near MRT stations and with higher foot traffic, have begun to see renewed growth. This recovery in shopper numbers from earlier lows may have encouraged these malls to raise their rents.
Paragon on Orchard Road is one such example. Set to undergo an asset enhancement initiative (AEI), the mall is poised for an upgrade that its owner, the soon-to-be delisted Paragon REIT, believes will drive stronger rental yields over time.
DBS Group Research analysts Chee Zheng Feng and Geraldine Wong note that “location is key to profitability in this [F&B] space and malls with strong organic footfall will continue to appeal to top F&B players”.
They anticipate around 5% growth in the local F&B sector in 2025, fuelled by a continued shift towards dining out less but spending more on quality, along with a steady recovery in tourism.
Wok this way
While some F&B players are finding it difficult to stay afloat due to rising rents, others with deeper pockets are seizing the opportunity to grow.
Notably, Chinese F&B players are increasingly expanding into the local market. “We believe profitability could be under pressure due to intensifying competition. We believe the new Chinese F&B operators could be fierce competitors, given their experience in the highly competitive domestic Chinese market, abundant funding and strong appetite for overseas growth,” say DBS’s Chee and Wong.
Local F&B operator YKGI, known for its Yew Kee Duck Rice chain of eateries, does not see these new Chinese entrants as direct competition.
According to CEO Seah Qin Quan and COO Eric Seow, the arrival of Chinese F&B players has brought fresh dynamics to the market.
Backed by deep pockets and a higher tolerance for rising costs, these newcomers are shifting the competitive landscape, but not necessarily at YKGI’s expense.
In an email interview with The Edge Singapore, Seah and Seow note that these Chinese F&B players typically prefer to lease large store sizes of between 2,000 and 4,000 sq ft. This differs from the group’s focus on stores below 1,000 sq ft.
Chinese F&B brands have driven wage increases in the labour market but tend to prioritise experienced and skilled workers. YKGI, backed by a central kitchen, usually hires greener staff, who are trained on the job.
“Additionally, our company primarily focuses on the mass market (low- to mid-tier price points), whereas Chinese restaurant brands typically position themselves at a slightly higher tier,” write Seah and Seow.
Siblings Seah Kun Miao (left) and Seah Qin Quan, marketing director and CEO of YKGI respectively
Take Haidilao, for instance. The popular Chinese hotpot brand may have closed a couple of outlets here recently, but the overall revenue for Super Hi International Holdings, the listed company for Haidilao’s international business, increased 13.4% y-o-y to US$778.3 million in FY2024 ended Dec 31, 2024.
Singapore is the group’s largest revenue contributor. Revenue from the local market came in at US$162.6 million for FY2024, representing growth from US$158.9 million a year ago.
This may be lower today, however, as the group closed its Downtown East outlet on Dec 31, 2024 and its Northshore Plaza and Bedok Mall outlets within 1Q2025.
As of Dec 31, 2024, Super Hi counts 122 restaurants in 14 countries across Asia, North America, Europe and Oceania.
In its results report, the group stated that it had maintained a cautious approach to global restaurant expansion and implemented a “bottom-up” strategy, where country heads are responsible for new restaurant openings.
“In 2024, we opened a total of 10 new restaurants. Meanwhile, we continuously optimised our restaurant footprint and made adjustments as needed. In 2024, we closed three restaurants in Southeast Asia,” says the group.
Rents cut deep, but not everywhere
Japan Foods Holding (JFH) executive chairman and CEO Takahashi Kenichi also expects competition in the F&B space to remain high and continue to attract new entrants, both local and foreign. JFH operates brands such as Ajisen Ramen, Konjiki Hototogisu, Tokyo Shokudo and more.
As at March 31, or the end of JFH’s FY2025, the group directly operates 21 brands across 78 restaurants, down from 84 at Sept 30, 2024 and 79 outlets on March 31, 2024.
Amid “tough market conditions”, JFH generated revenue of $83.6 million in FY2025, 3.2% lower y-o-y. Gross profit fell 3.4% y-o-y to $70.7 million over the same period, while net loss attributable to shareholders widened to $7.9 million from a net loss of $0.5 million in the prior financial year.
Still, JFH remained debt-free with cash and bank balances of $7.9 million as at March 31, though this was below the $11.5 million it had booked a year prior.
In a May 25 press release, JFH’s leaders say they expect the “challenging conditions” in FY2025 to persist, “exacerbated by escalating global trade tensions and uncertainties in the macro economy, which have taken a toll on both business and consumer sentiment”.
The group expects conditions to be further compounded by ongoing industry challenges, including manpower shortages, rising costs of operations due to inflation, and changing consumer preferences.
Management also says the strong Singapore dollar will also continue to encourage more overseas travel, “particularly to Japan”.
“Rental costs in malls have been on an upward trend,” says Kenichi, adding that in efforts to manage these rising costs, the group carefully reviews lease renewals and prioritises locations with strong traffic and longterm potential.
To ease the impact of rising rental costs on margins, the group is not renewing leases on underperforming stores, centralising kitchen operations for better quality control, reducing staff reliance and introducing automation to lower labour expenses.
“Due to the above measures, Japan Foods enjoys one of the highest gross profit margins in the F&B industry. Based on historical figures, our gross profit margin has been consistently above 84%,” says Kenichi.
Kubota Yasuaki, president and CEO of the recently listed Food Innovators Holdings (FIH), says the closure of restaurants in the market presents an attractive opportunity for the group to expand its market presence locally, as it leverages its unique collaboration model with F&B brands from Japan and its expertise in securing restaurant locations at favourable prices.
“In recent years, F&B business exits have exceeded new expansions, particularly among Japanese F&B operators,” says Yasuaki.
Higher rent, fewer workers and unfavourable exchange rates have made it difficult for overseas operators to absorb, particularly when facing financial losses.
Yasuaki says he has not seen a “significant” increase in rents post-pandemic. While more popular malls have seen greater footfall, those in quieter locations — typically without a connected MRT station — have seen fewer shoppers.
Landlords in these malls have weaker negotiating power and restaurant operators are less willing to pay higher rents for such riskier locations. “For example, during rent negotiations for an outlet in a shopping mall in Singapore, the landlord offered a rental price that was half of the pre-pandemic rate,” says Yasuaki.
The offer was recent, he recalls, having occurred sometime within the past six months.
“For FIH, our priority is always given to renting standalone shophouses, particularly those with well-maintained interiors and thoughtful design. These properties require minimal modifications, helping to reduce costs for new restaurant openings,” adds Yasuaki.
He notes that the rental costs for standalone shophouses are typically lower than those for outlets in malls.
REITs on a platter
With F&B operators struggling to stay afloat, the easiest way for investors to gain a foothold in the F&B sector is through retail REITs.
F&B is an integral part of a shopping mall, typically accounting for approximately one-third of the total gross rental income. “Strong F&B spend will help retail REITs predominantly exposed to Singapore retail, such as CapitaLand Integrated Commercial Trust(CICT), Frasers Centrepoint Trust(FCT), Lendlease REIT (LREIT) and Paragon REIT,” says Maybank Securities analyst Krishna Guha.
Over the past five years, more mall operators have expanded their F&B offerings in the face of structural shifts like the rise of e-commerce.
This approach was further tested during the pandemic, which accelerated online food delivery as stay-at-home orders took hold.
However, post-pandemic, online F&B contributions have fallen from a peak of around 32% in 2021 to approximately 21% in 2024, notes DBS Group Research.
DBS analysts Chee and Wong believe F&B establishments are “vital social hubs” for in-person gatherings. “Going forward, we anticipate the continued shift in focus of shopping malls to experiences and social spaces. Certain trade sectors, such as department stores and cinemas, are struggling to remain relevant to the modern-day consumer. As such, shopping malls are making a meaningful shift towards F&B to bridge the gap.”
F&B businesses also serve as key crowd-pullers. They are also more efficient on a per sq ft (psf) basis, with F&B leases typically yielding higher psf. “Over the years, we have seen a higher willingness among mall operators to increase mall exposure to F&B,” say the DBS analysts.
Vijay Natarajan, vice-president of equity research at RHB Bank Singapore, says the intense F&B competition has allowed retail landlords to cherry-pick good quality tenants. This will enable malls to diversify their F&B tenant mix and better curate mall offerings to attract more foot traffic.
Natarajan names CICT, FCT and Starhill Global REITas potential beneficiaries.
Nibbling at privatisation
Facing a more competitive global F&B landscape, DBS’s Chee and Wong expect listed F&B players to reorganise and potentially even privatise.
They point to recent examples like BreadTalk, Koufu and RE&S, which delisted after their share prices struggled in an environment of rising costs and fierce competition.
Building on this, the duo has screened the remaining listed F&B players using criteria seen in peers that have gone private, such as share price performance, public float and corporate actions like share buybacks and insider purchases by substantial shareholders (Refer to Table 2).
Chee and Wong expect more privatisation ahead. “Out of the F&B operators, we view ABR Holdingsand Jumbo Groupas potential candidates for privatisation, given their soft share price performance, low float and recent corporate activity.”
Taking into consideration previous take-private premiums for F&B players, Chee and Wong believe investors could see a 15% to 45% upside from the current prices.
Maybank Securities analyst Jarick Seet also anticipates a rise in privatisation offers, as F&B operators grow increasingly disillusioned with their lower valuations compared to their Malaysian counterparts.
Given the lack of investor interest in Singapore, Seet believes it will become unprofitable for listed F&B firms to remain on the market. He adds that Jumbo and Kimlycould be next in line for privatisation.
The next course
Beneath the surface, challenges continue to simmer. RHB Bank Singapore’s senior research analyst Alfie Yeo has a “neutral” rating on the sector.
“While demand has been positive since 2H2024 led by restaurants, cafes, food courts and other eating places, the F&B sector is undergoing staff and food cost pressures to some extent. Profitability will be an issue for some players that are unable to navigate these cost pressures,” he says.
He sees strong interest from newcomers and expanding firms alike despite the sector’s challenges, with demand pushing up rents and putting pressure on profits.
Even so, growth is still on the menu. DBS analysts expect the overall F&B industry to expand 4.7% y-o-y in 2025 to $22.2 billion, fuelled by rising household incomes and the ongoing recovery in visitor arrivals.
Meanwhile, DBS’s Chee and Wong add: “We believe Singapore’s F&B landscape remains robust, with further growth expected as tourism arrivals recover and foreign visitor spending increases.”
Knight Frank, however, holds a gloomier view of the sector. While the high-cost environment and market uncertainty are clear challenges, the firm argues that the sheer volume of F&B businesses is becoming more of a burden than a benefit for operators, diners and the broader food landscape.
“In a small market like Singapore, the limited pie to share among all F&B businesses will make it harder for operators to remain profitable, given current demand levels. Measures taken sooner rather than later can alleviate some of the ailing symptoms, such as the closure of several Michelin-starred restaurants and ensure that the sector remains sustainable for local and international brands to stay and grow,” notes the Knight Frank report, adding that with the tariff situation in the US creating uncertainty in the market, it may have far-reaching effects that could undermine the delicate 1% to 3% growth forecast of prime retail rents in 2025.
F&B players, such as FIH’s Yasuaki, expect a challenging outlook for the local F&B sector, as more Japanese F&B operators head for the door. However, he sees this as a valuable opportunity, as it reduces competition for the group.
“We are carefully evaluating the interior conditions of vacated properties, particularly those that were operated by Japanese F&B players. Such takeovers require minimal modifications, reducing costs for new restaurant openings. Additionally, we are evaluating rental prices and locations to secure new openings at more competitive rates,” says Yasuaki.
Seah and Seow of YKGI, on the other hand, view the performance of the overall F&B industry in line with Singapore’s economic environment.
“If the country continues its post-pandemic recovery and remains resilient against global economic uncertainties, we are optimistic about the industry’s performance this year.”
Photos: Flor Patisserie/Instagram, Albert Chua/The Edge Singapore, FIH, Bloomberg, Chua Ee Chien
Infographics: DBS Group Research, Knight Frank
