Singapore Eateries Face Rising Rents, Cost Pressures and a Crowded Market

Ka Soh's closure captures a wider squeeze

Ka Soh, the Cantonese zi char restaurant known for fish soup noodles, is preparing to close its Greenwood Avenue outlet after its landlord signalled a 30 percent rent increase. For a business with a history spanning 86 years, the decision shows how a single lease renewal can overwhelm decades of customer loyalty.

The owner has said the higher rent would require selling about 300 extra bowls each month just to stand still. He is unwilling to make up the difference at the expense of the regulars who have supported the restaurant for decades. Zi char refers to the familiar style of Chinese cooking in which diners order dishes to share, making such restaurants a gathering place as well as a source of everyday meals.

Singapore's food and beverage sector is experiencing a much broader wave of closures. More than 3,000 businesses shut in 2023, and a similar number closed in 2024. At some points in 2024, closures averaged around 270 a month. Established groups have closed outlets, while neighbourhood restaurants that once drew crowds have also disappeared.

New businesses continue to arrive despite those losses. More than 3,700 food and beverage businesses registered in 2024. Authorities estimate that the number of food establishments rose from about 17,200 in 2016 to nearly 23,600 in 2023. The market has more places competing for customers, even as individual operators struggle to cover their bills.

Rent, ingredients and staffing costs are rising together. Diners are becoming more selective about spending, and new competitors are setting higher expectations for promotions, convenience and service. For small restaurants with little spare cash, those pressures can turn a viable operation into one that cannot afford its next lease.

More openings mean more competition

Singapore's growing restaurant population helps explain why closures and new registrations can happen at the same time. A new opening adds another dining choice, but it also adds seats that need filling and jobs that need staffing. With a finite customer base, visits become spread across more outlets, and businesses spend more on marketing to attract attention.

The expansion and subsequent churn can be traced through several years:

• 2016: Authorities estimate Singapore had about 17,200 food establishments.
• 2023: The estimated total reached nearly 23,600, while more than 3,000 food and beverage businesses closed during the year.
• 2024: A similar number of businesses closed, with closures averaging around 270 a month at some points, while new registrations exceeded 3,700.

Independent operators say the movement beneath those totals is particularly difficult for small businesses. Large groups with substantial funding can negotiate better rents, obtain prime locations, automate more work and use loyalty programmes to encourage repeat visits. A restaurant with a single outlet depends more heavily on personal service, signature dishes and recommendations passed between customers.

Similar concepts in the middle of the price range are competing for the same diners and employees. International brands arrive with aggressive marketing, polished loyalty apps and central production that keeps products consistent. Their speed, surroundings and promotions raise customers' expectations for other restaurants too.

Suppliers feel the strain when businesses close with unpaid bills. Wholesalers absorb those losses and may tighten credit, requiring customers to pay sooner or offering less generous terms. New operators then have less room to manage cash during their first months. Experienced groups can withstand quiet weeks more easily than an owner dependent on one shop.

Three rising costs meet at once

Restaurant owners describe a squeeze involving rent, ingredients and manpower. Each expense might be manageable on its own. Together, they leave less money to absorb an unexpected repair, a slow trading period or the departure of an employee.

Tenants report rent increases of between 20 and 49 percent at renewal. For a small restaurant, the extra annual bill can reach tens of thousands of dollars. Passing that increase to customers through menu prices risks losing regulars who are already watching household spending.

Construction and maintenance have also become more expensive. Premises fitted out to meet requirements several years ago may now need upgrades, while older shophouses can require costly repairs. Kitchen refits that previously took weeks can stretch into months as contractors juggle workers and materials. Delayed openings consume cash before a restaurant starts earning.

Food costs are connected 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 prices roughly 2 percent higher. Some cereal prices have eased recently, but suppliers do not always pass those reductions on quickly because of existing contracts and the timing of stock purchases.

Shipping and insurance costs have stabilised from their pandemic peaks but remain volatile. Singapore's strong currency offsets part of the import bill, although other fees are charged in different currencies and do not move together. A cheaper ingredient purchase therefore may arrive alongside higher costs elsewhere in the business.

Why a lease renewal can become a breaking point

Leases agreed during the pandemic are now coming up for renewal. Landlords are comparing their properties with current market demand after offering discounts or shorter arrangements to keep units occupied during restrictions. Tenants can consequently face a substantial jump from their previous rent.

Ka Soh's proposed 30 percent increase sits within the range of 20 to 49 percent reported by many tenants. Heritage businesses face the same arithmetic as newer outlets: the restaurant must earn enough from meals to pay the higher fixed bill before it can cover other costs.

Average rental figures can look much gentler. In some prime districts, average rents have risen by only a few percent from a year earlier. Operators say their total occupancy costs include more than the advertised base rent. Service charges, contributions to marketing, refurbishment commitments and the expense of returning a unit to its required condition when leaving all add to the bill.

Tenant groups have suggested renewal caps linked to inflation or economic growth, transparent formulas for rents based on sales, longer notice before a lease is not renewed and mediation to resolve disagreements early. Their proposals seek to reduce sudden increases rather than freeze rents.

Some landlords are trying rents linked to sales and joint marketing to attract visitors across a property. Others focus on selecting a mix of brands that brings people back, instead of taking the highest bid whenever a unit becomes vacant. Operators say these partnerships improve their chances of staying in business.

Staffing shortages put owners back in the kitchen

Small eateries struggle to match the salaries offered by larger groups. Wage growth has accelerated as restaurants compete for cooks, servers and cleaners, while training replacements takes time in a trade with long hours and narrow margins.

Restrictions on hiring workers who are not residents add another constraint. Quotas limit how many foreign employees a business can hire, and levies add to the cost of employing them. The pressure is particularly difficult in jobs that local workers are reluctant to take.

Owners often cover shortages themselves, cooking or washing dishes when an employee leaves or a shift cannot be filled. That keeps the restaurant running for the moment, but it is difficult to sustain alongside purchasing, accounts and the other responsibilities of ownership.

Restaurants are rethinking schedules, teaching employees to perform several tasks and simplifying service. Lean teams can keep costs under control, but a heavier workload can lower morale and increase staff turnover. Another departure then creates a fresh round of recruitment and training.

Some operators are putting more effort into keeping employees. Clear opportunities for progression, split shifts, predictable rosters and small attendance bonuses can help retention. Owners who train supervisors and prepare staff for several roles report fewer crises when someone calls in sick and smoother service with a smaller team.

Automation helps, but needs cash and space

QR ordering, kitchen display systems, smart fryers, robotic latte art and automated dishwashing can reduce the amount of work employees must do. Kitchen display screens send orders directly to preparation areas, helping staff keep track of what needs cooking without relying on handwritten instructions.

Restaurants must pay for these systems before they receive the benefits. Equipment requires space, dependable broadband and connections to payment, inventory and accounting tools. In older units, the electrical capacity and kitchen layout can make installation difficult.

Steady sales and careful implementation determine whether the investment pays for itself. A machine that saves staff time still carries an initial cost, and a restaurant facing a rent increase may have little money left to buy it.

Less conspicuous technology is also becoming standard. Cashless payment, ordering at the table, automated inventory records and staff scheduling tools reduce errors and save minutes throughout the working day. Preparing basic sauces and stocks centrally improves consistency and speeds up service.

Menu engineering offers another way to simplify work. It means examining which dishes customers buy, how much they cost to produce and how much staff time they require. Operators can remove dishes that earn little and focus their teams on items that diners value most.

Diners are choosing value more carefully

Customers are becoming more selective about where and how they spend. Demand has moved away from lengthy premium set menus towards casual meals, sharing plates and targeted promotions. Turnover at restaurants offering full service has eased, while fast food and catering have gained share.

Delivery and takeaway remain familiar choices on busy weekdays. Many households reserve premium dining for special occasions, reducing the frequency with which they visit more expensive restaurants.

Singapore's strong dollar also stretches further across the Causeway. Improving transport links make trips to Johor Bahru easier for cheaper meals and experiences. That competition raises expectations for price and value at home, especially in heartland districts where household budgets strongly influence dining decisions.

Restaurants that maintain distinctive flavours, warm service and consistent signature dishes have a better chance of retaining regulars. Responding quickly to feedback also matters when customers have many alternatives.

Missed reservations and cancellations shortly before a meal remain a headache for operators. Some restaurants have introduced deposits for popular booking times, while others offer small incentives for eating earlier. Both approaches help spread demand and keep staff productive rather than leaving tables empty at a busy hour.

Small businesses look beyond the dining room

Independent owners are using social media to keep their restaurants visible. Some show their daily preparation, respond to comments and feature regular customers who enjoy a particular dish. That contact can keep a restaurant in mind when a family decides where to eat.

One cafe owner reported that regular posting and focused advertising lifted sales meaningfully without deep discounts. For small businesses, maintaining contact with existing customers can be as useful as trying to attract people who have never visited.

Other operators are creating products that can earn money beyond a table booking. Prepared food, bottled sauces and frozen meals extend the business into online sales and convenience stores. A restaurant can then reach customers even when its dining room is quiet.

Bottling for storage at room temperature and pasteurisation help products remain safe for longer. Pasteurisation uses controlled heating to reduce harmful microbes. Packaging specialists provide systems intended to protect food, manage costs and reduce waste.

Longer safe storage reduces spoilage and allows sales between the busiest dining periods. Combined with simpler menus, central preparation and more efficient staffing, these changes give owners several ways to protect revenue rather than relying entirely on higher menu prices.

Landlords and policymakers face practical choices

Flexible leases can connect a landlord's income more closely to a restaurant's trading performance. A reasonable base rent combined with a component linked to sales can align their interests, particularly when a new concept is still finding its customers.

Early renewal discussions, clear breakdowns of service charges and realistic requirements for restoring premises can also make expenses more predictable. Industry groups' proposals for caps tied to inflation or economic growth, standard notice periods and mediation aim to give viable small businesses more time to respond before a disagreement becomes a closure.

Policymakers must balance affordable food, employment and the needs of businesses. Training support and digital grants can help small teams adopt new tools faster. Reviewing access to foreign workers for particular jobs may relieve staffing pressure while protecting local wages.

Simpler licensing procedures and clearer guidance for minor renovations could reduce delays and unexpected construction bills. Plans to increase local food production to meet a larger share of domestic needs by 2030 aim to improve resilience and may help stabilise some ingredient costs over time.

Renewal caps and other tenancy changes remain proposals; no decision or implementation date is given. Restaurants facing an approaching lease expiry therefore still have to work with their existing costs and the terms they can negotiate.

Restaurant churn changes neighbourhoods too

Holland Village illustrates how rental pressure and redevelopment can alter a district's mix of businesses. Quirky independent outlets have given way to larger chains, while families spending more time in integrated malls have changed patterns of foot traffic.

A neighbourhood's character shifts when leases turn over quickly and established operators cannot absorb a sharp rental increase. The loss extends beyond one restaurant: specialty retailers also depend on the visitors drawn by nearby dining businesses.

Local merchants argue that coordinated activities, careful selection of tenants and modest improvements to shared outdoor areas can bring people back. Outdoor seating where feasible, collaborative events and better signs can encourage visitors to stay longer and return.

Ka Soh's decision brings the wider pressure into focus. Restaurants need enough income to cover rising bills, while diners want meals they can afford. The businesses that survive must manage both demands in a market with more competitors, scarce staff and customers who have growing choices about where to spend.

What to Know

• Ka Soh is preparing to close its Greenwood Avenue outlet after a proposed 30 percent rent increase.
• Its owner said the increase would require selling about 300 extra bowls each month.
• More than 3,000 food and beverage businesses closed in 2023, with a similar number in 2024.
• New registrations exceeded 3,700 in 2024 despite the continuing closures.
• Food establishments increased from about 17,200 in 2016 to nearly 23,600 in 2023.
• Tenants report renewal rent increases of between 20 and 49 percent, with other property charges adding to costs.
• Staffing shortages, ingredient expenses and competition are putting particular pressure on small operators.
• Diners are choosing value, casual meals, takeaway and delivery more carefully.
• Restaurants are adapting through simpler menus, technology, staff retention, social media and packaged products.
• Tenant groups have proposed more predictable renewal terms, while landlords and policymakers are considering ways to support viable businesses.