19 June 12 The Business Times
WITH a large number of small players trying to make it big in the cut-throat local food & beverage (F&B) services industry, it is little wonder that many are feeling the heat from the government's move to raise foreign worker levies, and limit further the use of foreign workers in the industry.
The rationale for these moves is to raise efficiency levels across the board.
The target set for the 6,000 or so players in the F&B services sector is clearly spelled out: to see the value-add per worker rise to $27,600 by 2015, from $24,200 in 2010.
VA is a measure of output, and is calculated as the difference between what the customer pays (sale price) and what the business pays for raw materials and other inputs (cost price).
The higher the value of a product or service, the greater the wealth distributed back to the various stakeholders.
The government believes that this 14 per cent increase in value-add over the five-year period is possible because the sector currently sees little adoption of technology to boost efficiency. Also, workers undergo little training - according to Spring Singapore, training cost is only 1 per cent of employee payroll and focuses mainly on full-timers.
Daunting, but possible
But automation is not something that is within the reach of every F&B service company, says Andrew Tjioe, vice-president of the Restaurant Association of Singapore (RAS) and CEO of the Tung Lok Group of Restaurants.
"Some of the smaller ones may find it difficult. If their operations are small, how do you apply automation? Automation means producing quantities in the thousands. So if you don't have the volume, how can you automate?," questions Mr Tjioe, who is also a member of the National Productivity and Continuing Education Council (NPCEC).
But he quickly goes on to acknowledge that there is some simple technology that even the small F&B service firms can adopt. "Things like getting an automated fryer can be done," he says.
Other equipment includes automated woks, gyoza fryers, dim sum makers, electronic noodle boilers (where the noodles are raised after being boiled over a pre-set time) and even rice dispensers (dispenses rice in equal portions while keeping the rice warm and fluffy).
Then there are the mobile point of sales (POS) systems that outlets can use to boost efficiency. Mobile POS allows orders to be keyed in and disseminated real time, so that kitchen and bar staff can start preparing meals as quickly as customers order. Such systems can also store the preferences of frequent diners that can be drawn upon quickly - which could help to impress customers and snap up extra loyalty points.
Mobile POS also allows payment to be made using wireless credit card terminals - decreasing the need for service staff to walk to and from wired credit card terminals, saving time and reducing the chance of staff having to deal with red-faced customers upset with the long wait they have to endure to make payment.
Money, money, money
One issue though, is cost. For instance, one automated fryer that is made in Japan can cost $15,000, Mr Tjioe points out. "Imagine how many plates of fried rice you have to sell to cover the cost. Maybe for one whole year," he says, with a laugh.
It is also well-known that the industry faces high overheads and low margins, which makes operators even more reluctant to ride the technology highway.
Select Group's director of institutional catering and special projects, Lai Chin Kwang, says: "Equipment such as auto woks, auto boilers, auto slicers, auto fryers and auto mixers are not cheap. They can easily cost more than $10,000. So the initial capital investment is not easy for a sole proprietor."
This is where the government's financing and help schemes come in. Examples include the Customer Centric Initiative, which offers an assistance package to help Singapore-based companies upgrade service standards by covering up to 70 per cent of eligible costs. There is also the Technology Innovation Programme, which provides a range of co-funding and support schemes that help firms with the cost of technology adoption. Then there is the Innovation & Capability Voucher, which can be used to support projects or procure services from the various approved knowledge institutions.
And last year, Spring unveiled a $75 million war chest that F&B services firms can tap into to boost productivity over a five-year period. Companies can apply for grants to equip themselves with the necessary knowledge, support and tools to improve productivity and competitiveness.
Mr Tjioe says that the RAS has been conducting talks for its members to explain how they can tap into government grants.
"Many, especially the smaller establishments, do not know what grants are available and how to use them. We hold talks and dialogue so that many of them know what they can use.
"If they know what is available, they will be more receptive," he says, adding that more needs to be done to improve communication to the smaller establishments on the schemes available that can help them with costs.
In April, RAS also unveiled a new e-procurement portal that will be launched later this year. It is developing the portal with assistance from Spring Singapore and the Singapore Food Manufacturers' Association, and aims to introduce more efficient procurement methods by tapping into the online medium. Currently, the industry uses traditional means, such as through faxes and emails, to obtain produce.
What remains now is for F&B services firms to buy into the idea of automation, says Select's Mr Lai.
"The government is walking the talk with all the initiatives and schemes. Companies now need to buy into the idea. You can only help those who help themselves. The schemes are there. It's now up to the companies to use them."
Not looking back
F&B services firms that have jumped on the productivity bandwagon say that they have benefited from it.
Select, for one, says that it has seen improvements in revenue at outlets that have adopted automation.
In 2009, Select chose its Lerk Thai brand to drive its productivity initiative. Outlets were fitted with equipment such as automated woks and boilers. This allowed the various restaurants to cut back on kitchen staff by some 20-30 per cent, allowing Select to re-deploy them to new restaurants that the group had opened, or to other areas to improve service.
Automation also allowed the brand to ensure that food quality is more consistent across its outlets. "Our chefs also have more time to rest because they can leave it to the auto boilers and auto woks to do the work, so they are less tired," says Mr Lai.
"They now have more time to do things such as think of new menu creations."
As a result, customer satisfaction has increased. Mr Lai says that the group used mystery shoppers to gauge satisfaction levels, and found that the Lerk Thai outlets that adopted automation saw satisfaction levels that were 20-30 per cent higher than its other restaurants. Revenue was also 25-30 per cent higher.
Select also owns the Peach Garden Chinese Restaurants, Stamford and Select catering services, the Hong Kong Sheng Kee Dessert chain and Texas Chicken outlets. In 2010, it started to automate the kitchens of its Hong Kong Sheng Kee outlets, and has plans to further raise efficiency levels at the group level by enhancing its human resource and accounting systems, says Mr Lai.
Restaurant chains such as Sakae Sushi, for instance, has a wireless ordering system that simplifies the process of taking orders while improving efficiency. Ruyi, a restaurant under the Tung Lok Group, uses automated woks for cooking select dishes at the restaurants while the Tung Lok chain of restaurants, Paradise Group and Pu Tien have set up automated central kitchens to support their food preparation operations.
The people behind Timbre Group have rolled out menus on iPads, allowing customers to make their orders directly by tapping to make their selection. Customers can also make table reservations online.
Says Edward Chia, Timbre CEO and managing director: "Automation has helped raise productivity which in turn led to better profit margins that the company also shares with staff through better pay increments.
"In addition, automation has allowed us to understand our customers better, acquire customer databases that lead to more effective marketing campaigns that are cheaper and more targeted, which in turn leads to lower marketing spend but better revenue results."
And to those who are still doubtful, Mr Lai says: "Seeing is believing. Once you see that you can save on costs, you will believe it."
So try it.