F&B Closures & Openings in Singapore

An example of the pressures faced by operators can be seen in the case of Wine RVLT, a popular wine bar on Carpenter Street. The establishment announced its closure in late 2024, citing a 30-35% increase in rent as a key factor. The bar’s management highlighted that while costs had risen significantly during the COVID-19 pandemic, customer footfall and revenue had not kept pace, making it impossible to continue operations. Similarly, across the sector, many operators have seen stagnating revenues while operating costs have steadily climbed, prompting a large number of businesses to shut their doors.

The impact of rising costs has been felt across various segments of the F&B industry, from casual dining to fine dining establishments. Bars, in particular, have struggled to recover from the pandemic-induced downturn, as consumer preferences shifted towards more affordable and convenient dining options. Additionally, the strong Singapore dollar has made the country an expensive destination for both locals and tourists. This has led to a phenomenon known as "overseas spending," where Singaporeans opt to dine and travel abroad, further reducing demand for local F&B outlets. The weakening demand from Chinese tourists, a key demographic for Singapore’s F&B sector, has also contributed to the decline in business for many establishments.

The rise of new F&B businesses can also be attributed to Singapore’s reputation as a global food hub, which continues to attract entrepreneurs and investors. According to data from the Singapore Department of Statistics, the F&B sector contributed approximately S$14 billion to the economy in 2023, accounting for 1.5% of the country’s GDP. This economic significance has encouraged innovation and experimentation, with many new establishments offering fusion cuisines, plant-based options, and experiential dining concepts. The government’s support for small and medium-sized enterprises (SMEs) through grants and initiatives has also played a crucial role in fostering entrepreneurship in the sector. For example, the "SG Together" movement and various government grants, including those aimed at enhancing digitalization and food safety standards, have encouraged new players to enter the market.

Furthermore, many new entrants are leveraging technology, unique concepts, and niche markets to carve out a space in the competitive landscape. For example, cloud kitchens and delivery-only brands have gained traction, capitalizing on the growing demand for convenience and affordability. The digital transformation in the F&B industry has been accelerated by the rise of food delivery apps, which have become indispensable to both consumers and business owners. In fact, the food delivery market in Singapore is projected to grow by 11.5% annually, reaching a value of S$1.4 billion by 2027. This shift towards delivery-based businesses represents a significant change in how F&B outlets operate, requiring investments in technology, logistics, and customer service.

In terms of variable costs, food prices have seen significant inflation in recent years. Global supply chain disruptions and rising fuel prices have affected the cost of importing key ingredients, particularly fresh produce, seafood, and meats. The cost of chicken, for instance, has risen by 12% year-on-year, while the price of seafood has increased by 8-10%. These increases place significant pressure on F&B businesses that rely on high-quality ingredients, especially in the fine dining and premium restaurant sectors.

Operating margins in the F&B industry are often thin, with many businesses struggling to maintain profitability. A typical profit margin for an F&B establishment in Singapore ranges from 5% to 10%, which is significantly lower than other industries. In fact, according to the Restaurant Association of Singapore (RAS), nearly 30% of all F&B businesses operate at a loss. With margins so tight, businesses are forced to adopt strategies to manage their costs more effectively, such as optimizing menu pricing, improving operational efficiency, and enhancing customer loyalty through technology-driven solutions like loyalty programs and mobile ordering.

On the other hand, the influx of new F&B outlets signals a shift towards a more dynamic and diverse culinary landscape. The emergence of innovative concepts and cuisines has the potential to enhance Singapore’s reputation as a global food destination, attracting both locals and tourists. According to the Singapore Tourism Board, F&B tourism is a major contributor to Singapore’s attractiveness, with 60% of visitors citing food as a primary reason for visiting the country. However, this growth is not without its challenges. The oversaturation of the market could lead to increased competition, making it difficult for new entrants to sustain their businesses in the long term. In 2024, nearly 10% of new F&B businesses closed within the first year of operation, underscoring the high failure rate in the industry.

​Ultimately, the future of Singapore’s F&B industry lies in its ability to strike a balance between tradition and innovation, sustainability and growth. By addressing the underlying challenges and embracing new opportunities, the sector can continue to thrive, offering a diverse and dynamic culinary experience for generations to come.