Starting a Restaurant, Cafe business in Singapore
This write-up is particularly useful for food &beverages entrepreneur who wants to start a restaurant in Singapore. For overseas investors planning to set up a restaurant in Singapore, this write-up will provide highly useful information too. I’m actually speaking from the angle of someone who had had top notch experience opening a fast food outlet before, rather than a young individual that just heard how it is done from someone.
In few steps, I will show you with how to accomplish and start a Restaurant or Food and Beverage business in Singapore.
Recall that we’re covering the rudiment on how to set up of a restaurant business, not the operating or running off just one, This is pretty basic stuff that every entrepreneur that wants to start a restaurant must be familiar with to enter the restaurant industry in Singapore.
1. Designing Your Restaurant Business
If you refuse to plan, you plan to fail. Always have a good business plan even though it’s just a single or 2 pages long. I would however recommend that you think through each step of the process thoroughly and come up with a far more detailed plan.
Your business strategy plan should include financial projections, budgeting, marketing plan, pricing blueprint, operations, suppliers list, hiring guidelines, service standards, etc. fair to name a few.
Also, its helps to think about your exit strategy and contingency plan for as many unexpected situations as you can.
Things go wrong all the time, so you have to be ready. First-time owners are usually under budget, and you also don’t want funds to run out halfway before finishing the project.
2. Raising Enough Capital
For a fruitful restaurant start-up in Singapore, it’s going to gulp lots of capital. This is as a result of high rental rates, high labor cost and an overall higher cost of living.
Depending on the actual size of your business, it may take anything from S$50,000 - S$600,000 or even higher. You need to know where the capital is coming from, also leave enough for cash reserves and operating capital. A rough gauge is leaving a couple of months of pure overhead expenses as reserves.
If you find that you need to economize and save to set up a restaurant business, I would tell you not starting one at all.
Many times restaurant owners go cheap by having inferior renovations/design, underpaying staff, or even worst, finding a lousy location which has reasonable rent thinking you can overcome situation with your excellent cuisine. Guess what, you could burn off your entire cash with losses on a monthly basis before folks even hear about your restaurant business.
Every single factor counts for the success of renovating your restaurant business. Thus, you need to know what you can compromise on, and what is against the rules no matter what.
You will certainly also like to get some money that can be you can invest in marketing and PR at the start of your restaurant renovation business; that is critical for any new restaurant. Lack of awareness is a big problem for most the clients that I have consulted with, so cover it well from the beginning.
3. Incorporating your Restaurant:
Time to take your business to a legitimate level. If you happen to be a foreigner, you can apply for an Entrepass with the Ministry of Manpower. For locals, in case you already have a Singpass you need to head to ’Accounting and Corporate Regulatory Authorities Bizfile portal.
If not, get your Singpass first. Non-nationals would need a Singpass also after you have gotten your Entrepass.
At the Bizfile portal, determine the company to join up.
I would tell you the ‘Local Company (Public/Private Limited)‘ alternative for limited liability restricted to your online business entity only. As the portal will not be very intuitive, be sure to click on Local Company tab, then select ‘Apply for a New Company Name.' Go through the steps make payment (S$15).
*For facts and useful information on the different varieties of companies, partnerships or sole proprietary, visit this website.
Company Registration protocol:
As soon as your Company name has been sanctioned and payment made, you would need to pay and add your business using your reserved name under Bizfile again. Registration fees cost between S$50-S$600 for locals, or S$300 -S$1200 for non-nationals dependent on the type of company.
In my opinion, the big file portal isn’t very user-friendly, and I had some difficulties while registering on their website myself. For more clarifications, do give their customer care a phone call at +65 6248 6028 from Mondays to Fridays: 9.00am - 6.00pm.
4. Looking for the Right Restaurant Location:
Next, you are going to need to get a perfect place to build your restaurant. The general strategies to accomplish this comprises of:
• Newspaper- The Strait’s Times classifieds ads
• Propertyguru.com.sg (many posts are also made by several real estate brokers)
• Spamming multiple real estate professionals
Cold calling landlords
Individually, I can find several real estate agents to source several locations for you; I find this to be the easiest and quickest.
The downside to this is that certain positions will require someone to pay one month’s rent charge to the real estate agent, likewise for big departmental stores. Most smaller, private landlords will nevertheless pay the commission to the real estate agent in its place if the deal is done.
When using real estate professionals, ensure that you know your space size requirement, electrical requirements (M&E), the whole areas in Singapore you'd probably love, and the kind of cuisine you are doing so that brokers know what to focus on, and what to recommend to your landlord.
5. Design and Build your Restaurant:
Look for a decent interior designer, architect, and contractor to build your dream restaurant.
The interior designer normally has the contact for contractors he has worked with in the past.
A decent restaurant design will be the first phase of making an impression and bringing new customers into your restaurant. Repeat business and customers may come after being satisfied with the food and service in your restaurant.
Individual contractors might quote a very low price, though that actually means they are using cheap materials to build, which can be less durable and may actually need to be replaced or refurbished after a year, incurring more expenses.
A rough estimate is always to spend just $150 - $130 per square foot of area. So for just a 1000 sqft restaurant, you should be spending around $120,000 - S$140,000 on repairs and furniture (apart from kitchen equipment).
Other items to note is the planning of one's kitchen layout in the most optimal, well-organized manner. Get a skilled kitchen planner if you are unsure, because this can increase productivity significantly.
6. Getting your Licenses and Registrations
There are lots of compulsory licenses to apply for, and others depending on your model- is it a cafe, restaurant or bar?
These are the usual ones for Food & Beverage in Singapore with the right description that could lead to the path to get all the required licenses.
• Food Shop License: to operate a food stall; apply only after you've signed the tenancy agreement as well as your interior layout plan have to be finished.
• Basic Food Hygiene Course: join to get certified for all those food handlers.
• Liquor License: if planning to sell liquors/beers. There are numerous classes.
Importing food: through the Food Control segment, Agri-Food & Veterinary Expert of Singapore (AVA).
• Halal License: if serving halal clients.
• Registering for Central Provident Fund (CPF) being an Employer. CPF is really a social security savings plan mandatory for every Singapore employers to contribute to being a percent of monthly salary, typically at 16%.
• *Optional* Putting your name down for 8% Government Service Tax (GST) is Compulsory as long as your company annual turnover is well over S$1 million.
7. Purchasing Kitchen Equipment
First, you have to settle for the big ticket stuff like your combi-oven, salamander, stoves, freezers and chillers. Numerous companies sell profitable kitchen products.
’Jackies or U-Save, for instance, serve general and common restaurant equipment that you might contemplate.
You would also need to get regular restaurant utensils, as opposed to just using the ubiquitous Ikea tableware.
On Temple Street, Sia Huat and Lau Choy Seng and many others are the foremost shops for restaurateur’s and chefs.
Catering for the homegrown food industry precisely, say that you are in the restaurant business and get a 25% discount. They might need some verification, though, just like your name card.
8. Hiring Service Staff
This is perhaps one of the major headaches in the Singapore restaurant scene now. With a tight noose on overseas talent quotas and the remarkably little indigenous need for restaurant jobs, hiring labor is usually a goliath task.
Firstly, you need to offer above industry rates to attract real talent. Link it to profit sharing if at all possible for managers.
Make sure to screen properly and interview meticulously, and it's also always easier to get likable, naturally familiar characters rather than train these people to smile.Certain people are born to the service line; several other people are thrown in since they have no other skills yet. Select the passionate ones carefully.
Advertising in the native newspaper classifieds is one method to get interviews, though quite costly. Online job portals may also yield more foreign inquiries as opposed to locals, yet still a feasible and cheaper option.
The most useful method that I’ve found to work is headhunting business from other current restaurant establishments. Although debatable in business ethics, this yields the finest results once you've personally seen them in action and also the authentic service principles were given. If you may offer a better workplace with better pay, what is your thought?
9. Execute the Renovation Marketing Plan:
Recall that in step one we talked about planning? Now would be the time to try and implement your marketing strategy. Your marketing plan has to cover these three essential aspects:
• Gaining awareness and test purchase
• Repeating customers
• Online&offline Referrals and word of mouth marketing spreading
Many customers, as I’ve stated, don’t actually have a basic plan to gain brand awareness.
If clients do not know you exist, how would they buy from you? And after knowing about your existence, what is it about your restaurant that forces them to give it a try?
These are crucial questions that ought to be addressed and thought out way prior to opening your restaurant business.
10. Get Restaurant Consultation:
If you have no previous experience starting a restaurant business or have not worked for restaurants floor, it's almost guaranteed that you are going to make lots of mistakes that could cost you a huge sum of money.
No experience cooking commercially? Get a chef specialist. Cooking for 50 people or more is entirely different from cooking for five people, and regardless of whether you have a home cook, scalability comes with experience working in very commercial, fast-paced kitchens.
No, hint about how you can market you food business after its unveilings?
Get a restaurant marketing expert. A good meal is just one part of the equation, while good marketing would be the other.
It’s only reasonable to have a plan on the best way to get customers, before throwing few hundred thousand?
Of course, you could have to shell out a couple of thousand upfront,
Then wealthy business owners know to think about the long run benefits. Consultants could save you from wasting thousands on new purchases and decisions, also earn you a ten of thousand more from the right business choices.
I’ve seen far many restaurants startup for a year, and then start to panic and spend money on all sorts of useless publicity.
They also make many mistakes, such as using Groupon, or subscribing to many ‘street directory website package’.
Plan it very well right from the start, and get experienced help.