Concerns Arise Over Singapore's Initiative to Offer Budget Meals in HDB-leased Coffee Shops
The Ministry of Trade and Industry (MTI) has unveiled a new initiative for all 374 HDB-leased coffee shops in Singapore to offer budget meals priced between $3 and $3.50 by 2026. To ease the financial burden of this new requirement, a 5% discount on renewal rents will be offered for one year after implementation. While this idea may seem appealing to consumers, concerns have been raised about the quality and portion sizes of the meals offered and the sustainability of running a business in these coffee shops, given rising costs and the upcoming GST hike.
Netizens Highlight Potential Issues
It is commendable for the plan to offer affordable meals to the masses. Yet, netizens have expressed doubts on social media, suggesting that the new budget offering may compromise the quality of food served and the meal's nutritional value.
Screenshot: r/singapore, Reddit
There is also a risk of shrinkflation, where the portion size of a product is reduced while maintaining its sticker price to maintain profit margins.
Screenshot: r/singapore, Reddit
Screenshots: Complaint Singapore, Facebook
To investigate this matter further, we visited the 7 Stars Coffee Shop at Blk 693 Woodlands Ave 6 to get insights from the respective stall owners.
Budget Meals Very Popular Amongst Senior Citizens and Students
Photo: Siti Z
7 Stars Coffee Shop has nine stalls, three of which offer affordable food options packaged as the Senior Citizen/Student Meal. These meals include $3 fried rice, $3.50 mee rebus, and $3 cai png consisting of one meat and two vegetables.
Photo: Siti Z We spoke with Ms Carmen, a worker from Buey Tahan Seafood, who revealed that her stall's affordable offering is highly popular amongst senior citizens and students. When asked if the stall reduces the portion of the dish considering the reduced price, Ms Carmen said, "Cannot lah, very poor thing these old uncles and aunties. Some only have enough money for this plate of fried rice for the whole day. How to reduce like that?"
Is Rental Really Kept Affordable?
During the COS Debates 2023, Senior Minister of State for Sustainability and the Environment Dr Amy Khor assured that the rent for non-subsidised food stalls has remained stable at a median cost of $1250 since the introduction of the Price-Quality Method (PQM) tenders in 2018, which have reduced rental rates by an average of 27% since its implementation.
However, a quick check on the tender awarded to 7 Stars Coffee Shop in 2018 showed that the tendered rent of the 7 Stars Coffee Shop is $46,999. With nine stalls in operation, that works out to an average monthly rental of $5,200 per stall.
Screenshot: HDB It must be noted that the tendered rent awarded to 7 Stars Coffee Shop, is considered to be in the middle range as compared to the other tenders awarded. Even then, some of the 7 Stars Coffee Shop stall owners had to shutter their businesses because rental costs were too high.
Long-Term Sustainability is Up in the Air Under the new initiative, each HDB-leased coffee shop must offer six budget meals by 2026, meaning more stalls are expected to provide the budget meal within their menu.
Yet, it raises questions about the long-term sustainability of the stallholders. With rising inflation and the upcoming 9% GST, it will be even more challenging for stallholders to sustain their businesses from 2026 onwards.
The two newest stalls at the 7 Stars Coffee Shop are Xing Le, which sells Mala hotpot, and the Indian food stall. Both stalls were taken over from the previous owners who could not sustain the costs of operations.
Photo: Siti Z
The owner of the Indian Stall, Mr Eliyas, shared his frustrations about the high costs of running a stall, including rent, gas, water, and employee salaries, "My rent is around $8,000 a month, and the cost of gas is $4000 per month. The landlord just told me that the water bill is $1,800 for this month, which is double from last month. I have three workers, and their salaries are $1,200 each. Last month, I made zero profit."
He also explained that rising ingredient costs have also impacted his business, with a 1% increase in GST resulting in an additional $1,000 cost for purchasing $10,000 worth of mutton, as compared to previous years. He added, “That is only one ingredient. I have so many other ingredients to buy. So you imagine lah, how much more money I’m paying!” Raising Prices As a Last Resort
It was found that Singapore hawker food inflation rose to 8.1% in 2022, the highest it has been in 14 years. This trend can also be seen in the 7 Stars Coffee Shop. Many stalls at 7 Stars Coffee Shop have had to raise the prices of their food offerings.
Selera Rasa Chicken Rice stall, for example, increased its prices by 20 to 30 cents, which did not sit well with some customers.
Photo: Siti Z
Similarly, Buey Tahan Seafood raised the prices of all items on their menu except for the Senior Citizen/Student Meal, as they struggled to keep up with rising ingredient costs.
Photo: Siti Z
"The cost of everything else except the $3 fried rice, had to go up. That is the only way we can keep up with the rising prices of ingredients," Ms Carmen quipped.
While the budget meal initiative is a commendable effort to provide affordable meal options for HDB residents, it remains to be seen whether stall owners can continue to operate their businesses under the prevailing economic conditions. Some stall owners may have to absorb losses to offer budget meals. In contrast, others may resort to raising the prices of other food offerings. It is unclear how this initiative will fare in the long run and whether affordable cooked food options will remain accessible to residents in the future. Only time will tell.