TODAYonline has reported today (6 Aug) that higher rents are pushing up prices at some coffee joints [Link].
At least three coffee joints here have recently raised prices, citing rising operational costs, especially rent:
- S11 Coffee Shop
- Ya Kun
- Old Town White Coffee
- Coffee Bean
Since June, coffeeshop chain operator, S11 Coffee Shop, has increased the prices for its drinks by 10 cents across all its 15 outlets.
Last month, Ya Kun also raised its drink prices by 10 to 20 cents. Ya Kun posted notices on its storefronts which cited escalating operating costs leading to a “juncture whereby a price revision is inevitable”. A cup of coffee at Ya Kun now costs $1.60 instead of $1.50.
Ya Kun said rent accounts for the bulk of costs at the chain’s 44 outlets, followed by raw material and manpower. It added that labour costs have gone up as workers working more than 44 hours a week are paid an overtime rate of 1.5 times their hourly rate, and the Foreign Worker Levy has also increased.
Old Town White Coffee, which has 8 outlets here, is also expected soon to raise its prices of not more than 50 cents.
A spokesperson for Old Town said, “Rising costs are part and parcel of doing business and this spreads across an array of items. In saying that, rentals are becoming a lot steeper.”
The Coffee Bean also raised its prices by 10 or 20 cents two months ago, but only for food items.
Last month, a HDB coffee shop in Hougang Avenue 4 was reportedly sold at a record price of $23,888,888 (‘HDB coffee shop sold for record $23.8M, stallholders fear rental rises‘). The buyer is Broadway Group which owns a chain of eating houses in Singapore. The coffee shop has 17 stalls operating inside. Stallholders said they are worried that rent will go up as a result of the high-price sale.
In 2009, foodcourt chain Kopitiam won an HDB tender to build and run a market-cum-food centre for $500,100 a month at Kopitiam Square in Seng Kang. Its bid was almost twice the next highest bid. By 2012, about a third of the 60 stalls had folded, due to high rent imposed by Kopitiam and a lack of customers. A Seng Kang stallholder complained about the $5,000-plus monthly rental. He told the media last year, “In other hawker centres, the lease is only about $2,000 to $3,000 a month. It’s easier to break even. Here, I can only make $200 to $300 a day. Even on weekends, I can only bring in about $500 a day. It’s not like I have money to burn staying here.”
Because of the high rent, food ended up costing more at Kopitiam Square which in turn forced customers to patronise other cheaper food centres. Some of the stallholders who left Kopitiam Square still owe Kopitiam rent in addition to losing their deposit. Kopitiam has sent letters, asking them to pay their arrears.
And yesterday (5 Aug), the media reported that NEA has called for a tender for centralised dishwashing at 11 hawker centres [Link]. The media reported that centralised washing could mean higher costs for the hawkers. Presently, some hawkers pay $500 a month for their dishes to be washed while other hawkers wash the dishes themselves. However, with centralised dishwashing, the media reported that the cost can be as high as $1,000 per month for participating hawkers, twice the current market rate.
Ms Karney Ngai, Chairman of Yuhua Hawkers’ Association, said the programme should be an opt-in one, since it does not lower hawkers’ dishwashing expenses. She also warned that some hawkers may raise their prices if they are forced to pay for centralised dishwashing. She said, “And while most hawkers will not raise their prices, some who cannot absorb the higher costs might.”
As can be seen, when rent or other ancillary costs go up, either food prices go up or the stall or joint owners fold.
TR Emeritus
*Article first appeared on www.TREmeritus.com