SINGAPORE: Coffee shop operators welcomed changes to the budget meal initiative, which will no longer be mandatory amid efforts by the Housing and Development Board (HDB) to make the scheme more sustainable.
From Saturday (Jan 10), existing rental coffee shops are no longer required to offer budget meals at tenancy renewal, while privately owned coffee shops can opt out with immediate effect.
Operators can now decide whether to participate in the initiative, in exchange for more discounts on rent or Temporary Occupation Licence (TOL) fees.
HDB has also standardised the requirements for budget meals, reducing the range from between two and six budget meals to three fixed meal options.
The three options include an economy rice option consisting of rice, one meat dish, and two vegetable dishes, a halal meal option and a breakfast item. The requirement to provide two budget drinks remains unchanged.
Budget meals are typically priced at around S$3.50 (US$2.70), and drinks are priced at around S$1.20.
Mr Hong Poh Hin, chairman of the Foochow Coffee Restaurant and Bar Merchants Association, said the standardisation helps operators define what a budget meal is.
“Because last time when they never clarify clearly, people will say, for example, noodle soup – how to define whether it’s budget or not budget?” he said, adding that some stalls had provided limited sets of budget meals due to the low profit margin.
Mr Hong, who owns a coffee shop in Serangoon, added that extending the 5 per cent rent discounts for rental coffee shops would encourage more operators to join the scheme.
Previously, HDB provided rental coffee shop operators a 5 per cent discount on their renewal rents for a period of one year if they participated in the budget meal initiative.
Under the revised scheme, the 5 per cent rental discount will be extended across the full three-year tenancy term.
Rental is a big part of operational costs, said Mr Hong.
“Now they added another two years (of discounts) … So this is an additional benefit to the operator,” he said.
Coffee shop chain De Tian’s managing director, Mr Glenn Koh, agreed that the enhanced discounts will incentivise more operators to come on board by helping to lower operating costs.
“But if you say (the discounts will) fully subsidise – I don’t think it will fully cover. Every outlet, every store is different,” he said.
Currently, 15 out of 20 De Tian coffee shops offer budget meals. Mr Koh said most of its outlets will likely continue to do so, although the company will have to evaluate.
One challenge, he noted, is having to price two drinks – typically a tea and coffee – at S$1.20.
When customers order the drink, they pay the default price for budget drinks at S$1.20. This leaves slim profit margins.
“And that is also challenging for operators, because that’s our bread and butter,” he said.
Another challenge could be to fulfil the halal option at each coffee shop, he said. He added that this could be overcome by having a halal-certified Western stall provide the meal.
Mr Koh noted that footfall at coffee shops has declined amid increased travel and growing competition from the influx of Chinese cuisine stalls.
“So all these added competition, that’s our challenges,” he said.