![]() To hook more customers, some new players could offer attractive discounts at the start but experts cautioned that this might not be enough. “If they want to go up against the big boys like Starbucks, the only way a company like Luckin or Tim Hortons can beat them is to open as many outlets as them or more in a single day, which is near impossible,” he said. Most of the well-established companies would have already anchored themselves in places with higher footfall, making it harder for new entrants to compete, Mr Sabai pointed out. So it’s really a matter of whether there’s enough space and demand for more coffee outlets here,” said Ms Lam. “If you walk down the (central business district), through Marina Bay Sands to Tanjong Pagar, you can already see a lot of places selling coffee, whether they are takeaway or dine-in coffee cafes. New players also face steep competition from other international and local brands such as Huggs, Starbucks and The Coffee Bean and Tea Leaf, all of which are well-established in Singapore.Īccording to their websites, Starbucks has 149 outlets in the country, The Coffee Bean and Tea Leaf has 72, and homegrown chain Huggs has about 20. “All these will eat into the company’s profit margins.” Even then, they still might not be able to get new hires due to the current manpower shortage, which means they have to keep increasing the starting pay until they find someone,” said Mr Sabai. “Whenever a company recruits a new employee, there is a base salary that they now have to consider. The ongoing labour shortage, as well as recent changes under the progressive wage model for F&B workers, have also driven up staff costs.Īnnounced in February, workers in the food services industry will receive annual pay increases over three years, with entry-level local workers to be paid at least S$1,750 (US$1,300). “A business model like Tim Hortons requires more real estate because they need sofas and comfortable seating for people to hang out, and given Singapore’s high rental costs, this will significantly increase their costs.” “I definitely have more optimism for Luckin because just looking at their business operation models, their strategy is actually very clear-cut – minimise manpower as much as possible via digital apps and keeping their shop sizes small,” she said. Even if you manage to do this, you might only just break even because of all the other costs you have to pay,” he added.Įchoing his sentiment, F&B consultant Karen Lam said companies hoping to break into Singapore’s market have to be strategic and clear in their goals to reduce overheads. ![]() “When it comes to F&B, the rule of thumb is that your sales should be at least four times your rental costs. “There will always be demand for new brands but the question is whether they can survive long enough because currently, the maths is against them,” said F&B expert Alvin Sabai, the chief executive officer of Strategic Consultants. While chains such as Luckin and Tim Hortons might have enjoyed success in their home countries, new players may face significant hurdles in Singapore, given the country’s high rental and manpower costs. With no shortage of cafes in Singapore, is there still room for brands to gain a foothold in the market? CNA spoke to industry experts to get their take. Less than half of Starbucks' tables were occupied while only one table was occupied at Gloria Jean’s. In comparison, crowds were thin at other coffee chains in the mall including Starbucks and Gloria Jean’s, both of which have an area larger than Luckin's. ![]() When CNA visited Luckin’s outlet at Marina Square at lunchtime on Friday (Apr 14), all 15 seats were occupied and at least a dozen people were waiting outside for their drinks. Tim Hortons – best known for their coffees and doughnuts – plans to expand to hundreds of locations across Singapore, Malaysia and Indonesia from April, according to a report by Nikkei Asia. In addition to its two outlets at Marina Square and Ngee Ann City, it reportedly plans to open another eight in Singapore by the end of April, including one at Guoco Tower in Tanjong Pagar. Nicknamed the “Starbucks of China”, Luckin has more than 8,000 stores in its home country and is already planning for more in Singapore, which is the first market in its overseas expansion. SINGAPORE: Competition in Singapore’s coffee scene is heating up with the entry of two new mega players.Ĭhina’s largest coffee chain, Luckin Coffee, opened its first two outlets in Singapore last month while Canadian chain Tim Hortons is set to make its debut this month.
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