28 per cent of all F&B outlets in Singapore close within a year of opening. It is evident that staying afloat and becoming successful in this industry is not easy. Here are some trends to take note of in the food manufacturing industry.
Fads having less relevance
It is not uncommon to see F&B outlets opening and closing in quick successions. This may be attributed to the inability to sustain customer interest after leveraging on a new consumer craze. Brown sugar, salted egg yolk, mentaiko and buttermilk are just some of the many fads that have been infused in a variety of dishes.
However, such fads go as quickly as they come. Without proper trial and error to perfect the dish, it is easy to go wrong. In light of that, some companies such as 4Fingers have steered away from marketing themselves according to fads. 4Fingers makes a conscious choice to not position the company as a Korean food concept to prevent riding on the K-pop wave Instead, they take inspiration from various Asian flavours.
Rise of ghost kitchens and virtual restaurants
Imagine having a functional kitchen without a single human staff present- that is the future. You can order Greek food from Vios, a virtual restaurant run by Greek eatery Blue Kouzina in Dempsey, Singapore, through an app on your smart mobile device. With more food delivery services by Deliveroo, Foodpanda and GrabFood, it is now easier for ghost kitchens to reach out to patrons.
Without the high rental costs associated with the traditional brick and mortar store as well as the resources needed to hire, train and retain staff, ghost kitchens seem to be a great option.
Increase in shared kitchen operators
Deliveroo has two Deliveroo Editions located in Katong and CT Hub 2, as well as a Deliveroo Food Market located in Mediapolis. The Deliveroo Food Market features a 40 seat dine-in space and self-collection of food. There, they have a small team on-site and also provides basic equipment for the restaurants.
In addition, Foodpanda has two satellite kitchens known as Favourites by Foodpanda in Woodlands and Mandai. The Woodlands site has a 30-seat dining area as well. Shared-kitchen operator Smart City Kitchens also have a Tampines-based 13, 000 sq ft facility that provides infrastructure and basic equipment to 30 businesses, who then use food delivery services to reach out to clients.
This industry is expected to experience more chatter as it grows.
Research and development going strong
In Singapore, the food manufacturing sector sees forward-looking firms investing in research and development to not only meet new needs, but also keep up with food trends. Instead of using preservatives to extend shelf-life, non-thermal sterilisation processes such as the High-Pressure Processing (HPP) resource-sharing facility can allow food manufacturers to extend shelf-life of products as well as preserve its nutritional value. This facility is a collaboration between the Warehouse Logistics Net Asia, the Food Innovation Resource Centre and Enterprise Singapore.
SMEs can benefit from using these technologies without investing in the machinery upfront through a pay per use model. Local juice companies such as HIC Juice, Daily Juice and more preserve their cold-pressed juices using this HPP technology. For SMEs who are looking to invest into machines but lack the funds to do so, P2P lending may be one form of financing method.
Overseas business expansion
Advancement in technology also allowed Soup Spoon to extend the shelf-life of soups from two weeks to six months in a chilled format, allowing it to export it to more countries. With the Singapore branding assuring consumers both quality and safety, this presents unparalleled business expansion opportunities.
With Singapore as the manufacturing base, the company may be better able to control the consistency and quality of soups as well as protect their intellectual property (IP). Some of the places that Soup Spoon exports to include Hong Kong, Bangladesh, Cambodia and the Maldives.
Augmented Reality (AR) has been infused into mooncake boxes to further increase the aesthetics of the packaging. Unconstrained by paper, plastic, and other materials, Sheraton Towers Singapore uses such technology and art can create an intricate lattice pattern for their mooncake boxes.
Innovation also lies in creativity. Hot Stones Steak and Seafood Restaurant, for instance, offers chunks of meat on volcanic stone slabs suitable for adventurous diners looking for something new.
It is no secret that Big Data and the Internet of Things (IoT) are here to stay. There lies power behind data consolidation. In particular, Creative Eateries has a customer relationship management system that gathers valuable feedback from customers to shape future marketing campaigns. Such information is useful in predicting demand.
Operationally, Creative Eateries keeps its food wastage low through an inventory tracking and procurement system. Not only is this more sustainable, which can be appealing for environmentally conscious consumers, it also reduces costs for the company. Such digital enhancements have laid the foundation for the group’s sustainable growth.
The company has also established a central kitchen in Senoko to ensure the availability of menu items during peak hours. This allows consumers’ demand to be met to keep the revenue coming in.
Lean manpower lesser of an issue
Many F&B companies face the problem of a high turnover amongst its staff. As such, lean manpower is something that eateries, cafes, and restaurants all face. A self-ordering system in restaurants like EAT @ Taipei in Kallang Wave mall allows the customer to take charge of the ordering, which also allows the company to focus on providing better food and service quality while keeping manpower needs lean.
In May 2017, the first two productive coffee shops were launched in Singapore by Koufu Pte Ltd and Chang Cheng Group Pte Ltd to transform the food services industry in productive and innovative ways. These coffee shops were jointly facilitated by SPRING Singapore and Housing and Development Board (HDB). With technology and automation as well as layout redesign will increase productivity for offsite central kitchens and onsite shared kitchens.
Compared to Chang Cheng’s other coffee shops, the seating capacity of FoodTastic is about 25 per cent higher, and its manpower need is about 60 per cent lower.
Demand for transparency
Consumers today are demanding for more transparency to know what goes on behind their food consumption. Not only do they want to know the ingredients that make up their food, they also want to understand the environmental impact and ethics behind what they are eating. Using less energy to produce food that has minimal negative impacts to the environment is more crucial than ever. The trend towards an ingredient list filled with recognisable words as opposed to chemical labels are likely to happen.
This is especially so since food brands supported by consumers are a reflection of their own lifestyle. With a preference for fresh food with natural ingredients and minimal preservatives, shorter shelf lives may be preferred. Each purchase casts a dollar vote to a certain product. As such, food labelling, food products, and even marketing will have to evolve accordingly.
Science playing a part
Science has an increasingly larger part to play in F&B, and this goes beyond big data or analytics.
Scientists made radiation-free vodka from grains that were grown at Chernobyl. While the grains contain a small amount of radiation when harvested, the distillation process managed to remove it. There are still some legal hurdles at the moment, but small-scale experimental production is expected later this year. Called Atomik, this beverage can be the start of a new social enterprise for the Chernobyl Spirit Company.
Alternatives pouring in
Large companies have been recreating familiar products with healthier alternatives with a localised context. Milo by Nestle, for instance, launched Milo Gao Kosong in June 2018. Featuring only natural sugars from milk and malt, there is only 9.3g of sugar in each serving as compared to 13.5g of sugar in its regular formula. Even companies like McDonald’s have an Eat Light menu under 50 calories.
New and smaller entrants that are able to work faster than large corporations are also coming in to fill the gaps by offering food with healthier alternatives to suit the market demand. Having no artificial colouring, being GMO free, having no added preservatives or no saturated fats, and more and increasingly popular.
Beyond the trends above, the Industry Transformation Map (ITM) initiative by the government can also be very helpful for F&B businesses large and small. Find out how your F&B business can benefit from ITMs.