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SINGAPORE: from S $ 1,726 in February to S $ 1,545 in March and then S $ 723 in April. Average daily sales at the downtown Jekyll & Hyde cocktail bar declined steadily as the COVID-19 pandemic hit business.
In April, sales decreased by 70 percent compared to five months ago in November, as the bar was only able to deliver and takeaways once restaurants were off limits under “breaker” measures that They started on April 7.
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Even before that, its owner, Mr. Chua Ee Chien, had been busy negotiating with the real estate management company representing the owner to reduce the rent. Businesses in the central business district had started running workers to telework, and the number of clients she could serve was limited by safe distancing protocols.
Chua Ee Chien is the owner of the Jekyll & Hyde Downtown Cocktail Bar, which will close after his lease ends in June. (Photo: Rachel Phua).
After weeks of emails and phone calls, his landlord agreed to reduce his monthly rent from S $ 14,000 to S $ 5,750 for the rest of the year, or until Singapore returned to the green DORSCON level, whichever was earlier.But there was a catch: Mr. Chua had to sign a personal guarantee, which means that he would be personally responsible for payments to the owner if the business couldn’t meet them.
READ: COVID-19: Delivery and Takeaway Models Unsustainable, Restaurant Owners Say
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Chua said he found that the personal guarantee order was not justified, since the landlord was already holding a deposit of S $ 42,000. And with uncertainty about how long the COVID-19 situation will last, Chua decided to cut his losses and close the stores once his lease ends on June 14.
“It is a terribly unfortunate situation that we have placed ourselves in,” said Chua, who bought the six-year-old bar in 2018.
“I have invested a lot of time and effort into this over the past two years, and sacrificed a lot, including money and countless hours with the team, (who) have strived to push the bar (this) away.” he said.
This personal guarantee request came only after Mr. Chua had filed one more appeal:that if he did not pay his rent on time at the beginning of each month, he would pay 5 percent interest in addition to the rent of S $ 5,750. However, the condition of the landlord was that he had to pay the full S $ 14,000 if he did not meet the stipulated monthly deadlines.
From the landlord’s perspective, the tenant’s request to pay 5 percent interest instead of the original amount had “set off alarms,” said a spokesman for the asset management firm representing the landlord.
There was also a risk that the S $ 42,000 deposit was not enough to cover the cost of renovating the store and the unpaid rent if the bar doubled before the end of the year, the spokesperson added. She requested that her company not be named as it would jeopardize her relationships with other tenants.
Jekyll & Hyde is one of two known food and beverage outlets that will close as business heads south due to the COVID-19 pandemic. (Rachel Phua)
Now that Jekyll & Hyde is closing,He said that one of Mr. Chua’s three full-time employees is now looking for another job in a new industry.
Chua has been working with the other two to find a small place where he can continue to sell bottled cocktails and keep them on the payroll until he finds a permanent space when the virus overflows.
“(But) there are no certainties,” Chua said.
Difficult times ahead
Even with financial help, like wage subsidies and a government property tax refund, the F&B industry faces huge uncertainties.
In addition to the breaker measures, the lack of tourists and safe distancing rules will affect the industry, restaurant operators and analysts said, as the relief measures can only help players shore up cash flow in the short term. term.
Many independent restaurants operate on tight liquidity terms and high overhead, as rental rates have continued to rise in recent years, said Pua Wee Meng, leader of the consumer industry in Deloitte, Southeast Asia.
He expects the industry outlook to remain in crisis, particularly among restaurants that are highly dependent on the multitude of restaurants, as consumers continue to practice safe distancing for some time.
READ: “It’s all about trying until our last breath”: New F&B players come up with survival plans for the COVID-19 crisis
Restaurant operators also face the challenge of managing food costs during this difficult time, Pua said, having to measure the quantity of ingredients to counter uncertain demand, while balancing waste and risk to the quality of the food.
It would be even more difficult for those with “low loyalty customers”, such as those who cater to the mass market or tourists.
And while many restaurants have introduced online delivery services during the circuit breaker, this strategy squeezes their already tight margins with higher packaging costs, resources to manage orders, transportation, and high commission payments to third-party delivery platforms, Pua added.
Even before the circuit breaker came into play, a survey published in late March of 174 F&B business owners representing 249 stores found that 93 percent had seen a decline in revenue.
The study by the restaurant reservation platform Chope also reported that 80 percent of respondents said they were cutting staff to cut costs and a third had imposed a mandatory leave for full-time employees.
Nearly four in five companies said they were not prepared to last more than six months if the situation did not improve.
Industry workers are also on shaky ground. In its latest macroeconomic review published on April 28, the Singapore Monetary Authority (MAS) noted that the food and beverage (F&B) industry is one of the sectors where workers are “most vulnerable” to layoffs as competitive pressures between F&B traders were already sharp.
Many of these companies tend to be small and could face significant credit restrictions, limiting their ability to retain their workers, MAS added.
Two and a half weeks ago, Ashok Melwani broke the bad news to his team of 50, some of whom had been with him for more than 20 years, who called him one day at his two Modesto restaurants.
After 17 years at The Elizabeth Hotel, Modesto’s @ Elizabeth ceased her dinner service when April came to an end, though her kitchen will run until the end of May to cater to guests who receive her notice of home stay.
And in June, Modesto’s @ Orchard at Orchard Rendezvous Hotel will close its doors after 23 years.
Melwani chose to end things after predicting that he would bleed for the rest of the year if he continued, he said. The tourist clientele, on which restaurants depend a lot, has dried up.
In March, it lost around S $ 200,000, he said, while April earnings are still being calculated. Both outlets were only able to continue to rely on what they accumulated last year, when profit margins were between 6 and 7 percent, he said.
The Modesto’s Orchard Rendezvous Hotel branch will close in June after being in business for 23 years. (Photo: Ashok Melwani).
“I cried at home the night I dealt the (reduction) cards,” said Melwani, who left the first batch of 15 at the end of last month.
“I prefer (would prefer) that affected staff continue to look for new jobs as soon as possible, (as) they probably need to analyze (other) industries at this time,” Melwani said.
To help the employees of his team, Melwani is looking for job opportunities among his friends and acquaintances. So far, three of them, including two foreigners, have managed to secure a position elsewhere.
He also launched a mini-fundraising campaign, reserving 40 percent of sales revenue to go in May to help former employees who are on the job.
READ: More companies announce pay cuts, unpaid leave amid COVID-19 economic downturn
Employees have been understanding, he said. Some of the longest-serving have texted you to say they appreciate any support you are trying to give.
Former clients have also sent their regrets. One told him how, without fail, he had celebrated his birthday with his extended family at the Orchard Road branch every year, now that tradition would be broken. Another said, “My daughters are going to cry when they hear this.”
“I think I will also cry when this is all over,” Melwani said. “Now I am focused on finishing the business well.”
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