A wave of closures signals stress
On a quiet stretch of Greenwood Avenue, one of Singapore’s longest running Cantonese zi char names is preparing to switch off its stoves. Ka Soh, an 86 year old stalwart known for fish soup noodles, will close after the landlord signalled a 30 percent rent increase. The owner has said that this single step up would require selling about 300 extra bowls each month just to stand still, a leap he is unwilling to make at the expense of loyal customers who have kept the place bustling for decades.
His decision echoes across the island. Hundreds of eateries are vanishing every month as operating costs climb and competition intensifies. In 2023, more than 3,000 food and beverage businesses shut. The following year saw a similar number of closures. At some points in 2024, the pace averaged around 270 closures per month. Well known groups have shuttered outlets, while once packed neighborhood restaurants have gone dark.
The paradox is that even as many close, even more open. In 2024, there were over 3,700 new F&B registrations, adding to a market that has expanded rapidly over the past decade. Authorities estimate the number of food establishments rose from about 17,200 in 2016 to nearly 23,600 in 2023. That surge helps explain the squeeze. With more seats to fill and a finite customer base, frequency per outlet falls, marketing costs rise, and the weakest operators struggle to survive.
Independent owners say this churn hides a harsher reality for small players. Large, well funded chains can negotiate better rents, secure prime locations, automate more tasks and run loyalty programs that lock in regulars. By contrast, single shop operators rely on personal service, a handful of signature dishes and word of mouth. When rents spike or staff quit, there is little cushion left.
What is driving costs higher?
Owners describe a three part squeeze. Rent, ingredient costs and manpower all moved up at the same time. Each component alone is manageable. Together, they strain even healthy businesses.
Rent is the most visible line on the ledger. Many tenants report renewal hikes between 20 and 49 percent. For a small restaurant, that can mean tens of thousands of dollars more a year. Raising prices enough to cover that jump risks pushing away loyal regulars who are already stretching household budgets.
Construction and maintenance have also become pricier. Fit outs that met requirements a few years ago may now need upgrades, while older shophouses often demand expensive repairs. A kitchen refit that once took weeks can stretch into months as contractors juggle manpower and materials, delaying openings and draining cash.
Food inputs are tied to global markets. The World Bank notes that food price inflation remains high in many countries. Compared with January 2020, maize prices are about 13 percent higher and rice roughly 2 percent higher. Some cereal prices have eased recently, yet not all suppliers pass reductions on quickly due to contract terms and stock cycles. Shipping and insurance costs have stabilized from pandemic peaks but remain volatile. The strong Singapore dollar offsets part of the import bill, although many other fees are denominated differently and do not move in sync.
Rent pressures and the renewal cliff
Many leases signed during the pandemic are now coming up for renewal. Landlords benchmark to current demand, so tenants are seeing double digit increases after years of discounts or short term deals used to keep spaces occupied during restrictions. Increases of 20 to 49 percent are frequently reported, with some heritage names facing around 30 percent, as in the Ka Soh case.
Headline statistics can give a calmer picture. In some prime districts, average rent gains have been only a few percent year on year. Operators say this does not capture the full load. Service charges, marketing contributions, refurbishment commitments and reinstatement costs all add up. The final bill to keep a lease can jump far more than the base rent alone.
Tenant groups have floated ideas to smooth the spikes. Suggestions include renewal caps tied to inflation or economic growth, transparent turnover rent formulas, longer notice periods for non renewal, and mediation mechanisms to resolve disputes early. These measures would not freeze rents. They would reduce the surprise factor that kills a viable business that suddenly faces a sharp step up.
Some landlords are experimenting with sales linked rents and co marketing to lift footfall for all tenants. Others seek to curate a mix of brands that draw repeat visits, rather than chasing the highest bid each time a unit opens. Where such partnerships exist, operators say survivability improves.
The manpower squeeze
Hiring and keeping staff is the other pressure point. Smaller eateries struggle to match salaries offered by large groups. Restrictions on hiring non resident workers add to the challenge, and training new hires takes time in a business that runs on thin margins and long hours. Owners frequently step into the kitchen or the dishwashing station to cover gaps, a short term fix that is hard to sustain.
Wages and quotas
Wage growth accelerated as operators competed for cooks, servers and cleaners. Quotas and levies limit how many foreign staff a small outlet can employ, especially in roles that locals are reluctant to take. That pushes restaurants to rethink schedules, cross train teams and streamline service. Some manage with lean crews, but the workload often reduces morale and increases turnover.
Why automation is not a silver bullet
Automation helps, but it is not free. Kitchen display systems, QR ordering, smart fryers, robotic latte art and automated dishwashing can reduce labour needs. They also require up front capital, space, reliable broadband and integration with payment, inventory and accounting tools. In older units, electrical loading and kitchen layouts make upgrades hard. Payback depends on steady sales and careful execution.
A saturated market and new competition
Even as many businesses shut, many more continue to open. Oversupply of similar mid price concepts leaves outlets competing for the same customers and the same pool of staff. New international brands arrive with aggressive marketing, slick loyalty apps and central production that guarantees consistency. They grab attention quickly and set new expectations on speed, ambience and promotions.
The ripple effects hit suppliers too. When outlets close with unpaid bills, wholesalers absorb losses and then tighten credit. New operators struggle to get favourable terms, which makes it even harder to build momentum in the early months when cash is tight. Experienced groups can ride out slow weeks. One shop owners cannot.
Changing consumer behavior
Diners are more value focused and selective. Spending has tilted away from lengthy, premium set menus toward casual formats, sharing plates and targeted promotions. Turnover at full service restaurants has eased while fast food and catering have gained share. Many households now default to delivery or takeaway on busy weekdays, saving premium dining for special occasions.
Cross border dining and a strong currency
The strong Singapore dollar stretches further across the Causeway. As cross border transport links improve, it becomes easier to hop over to Johor Bahru for cheaper meals and experiences. That raises the bar on price and value at home, especially in heartland districts where household budgets decide where to eat.
What diners will pay for now
Consumers reward clear value, distinctive flavours and warm service. Restaurants that anchor themselves around a signature dish, maintain consistency and respond to feedback quickly tend to retain regulars. No shows and last minute cancellations remain a headache. Some operators have adopted deposits for peak slots or offer small incentives for early dining to smooth traffic and keep teams productive.
How small operators are adapting
Some owners have gone back to basics. They show daily prep on social channels, reply to comments and spotlight regulars who love a dish. That visibility builds community and keeps a restaurant top of mind at the moment a family is deciding where to eat. One cafe owner reported that steady posting and focused ads lifted sales meaningfully without resorting to deep discounts.
Others are diversifying revenue. Ready to eat items, bottled sauces and frozen meals extend the brand beyond a single dining room. Shelf stable bottling and pasteurization let operators sell online and through convenience stores. Packaging specialists offer systems that protect food, manage costs and reduce waste. Keeping products safe for longer cuts spoilage and keeps revenue flowing between dine in peaks.
Technology is becoming standard across the floor and in the kitchen. Cashless payment, table side ordering, kitchen display screens, automated inventory and staff scheduling reduce errors and save minutes every hour. Central prep for base sauces and stocks brings consistency and speeds up service. Menu engineering trims low margin dishes and focuses labour on items that customers love.
People strategy is just as important. Clear progression, split shifts, predictable rosters and small attendance bonuses improve retention. Owners who invest in supervisors and cross training report fewer crises when someone calls in sick and smoother service even with a lean team.
What landlords and policymakers could do
The landlord tenant relationship shapes outcomes. Flexible leases that blend a fair base rent with a sales linked component can align incentives, especially for new concepts. Early renewal discussions, transparent service charge breakdowns and realistic reinstatement terms reduce surprises that can sink a business at the end of a lease.
Policymakers balance food affordability, jobs and enterprise. Training support and digital grants help small teams adopt tools faster. A review of foreign worker access for specific roles may ease pinch points without depressing local wages. Streamlined licensing and clearer guidance on minor renovations cut delays and cost overruns. Plans to grow local food output to meet a larger share of domestic needs by 2030 aim to improve resilience, which can stabilize some input costs over time.
Industry groups have proposed renewal caps tied to inflation or economic growth, standard notice periods and a mediation framework to resolve disputes before they escalate. Such steps would make cash flows more predictable and give viable small businesses a better shot at survival.
Neighborhoods in transition
Well loved districts have felt the churn. In places like Holland Village, rising rents and new developments have shifted the tenant mix. Quirky independents have given way to larger chains, while foot traffic patterns changed as families spend more time in integrated malls. The character of a precinct evolves when leases recycle quickly and when long run operators cannot bridge a big rental step up.
Local merchants argue that coordinated programming, thoughtful curation and modest public realm upgrades can restore buzz. Simple changes like more outdoor seating where feasible, collaborative events and better wayfinding give people a reason to linger and return. That helps both food outlets and specialty retailers that feed off dining crowds.
What to Know
- Hundreds of eateries in Singapore are closing each month as rents, input costs and competition rise.
- Ka Soh, an 86 year old heritage restaurant, is closing after facing a 30 percent rent increase.
- More than 3,000 F&B businesses shut in 2023, with a similar number in 2024 despite thousands of new openings.
- Many tenants report rent hikes between 20 and 49 percent at renewal, while service charges and fit outs add to the total bill.
- Manpower shortages persist as small operators struggle to match salaries and face limits on hiring foreign staff.
- Consumer spending has shifted toward value, casual formats, fast food and catering, with delivery remaining a habit.
- New international chains with strong branding and technology have intensified competition for customers and staff.
- Small operators are adapting with social media engagement, streamlined menus, technology adoption and packaged products.
- Tenant groups have proposed fair tenancy steps such as renewal caps linked to inflation or economic growth.
- Flexible leases, transparent charges, training support and pragmatic manpower rules can improve the odds of survival.
