_Ya Kun's new recipe for growth

September 10, 2021

As with any of its expansion plans pre-Covid for its operated stores or franchisee outlets, Ya Kun International has always taken on a prudent approach with thorough profit-and-loss analysis. This is even more crucial as Ya Kun treads an expansion path for its physical stores as costs increases, competition heats up and market conditions remain fluid.

Rachel Tay, business development and franchise support assistant general manager at Ya Kun International, notes that new players in the F&B market have intensified competition further. But not all incumbents could grow the online share of their business seamlessly, depending on their business models. In Ya Kun’s case, the F&B player leverages delivery platform alongside its physical stores.

Since the 1940s, the name Ya Kun has become synonymous with traditional kaya butter toast, soft-boiled eggs and fragrant coffee and tea. To harness other means of growth, Ms Tay tells Knight Frank that it is increasing its menu offering for different time segments. “Ya Kun serves most customers during the day,” she says. “Since we started food delivery after the Circuit Breaker in April last year, our delivery orders are jam-packed for morning breakfast and afternoon lunch. We look forward to a successful dinner menu creation and enhancement for our customers.”

With that, customers will soon go for Ya Kun as their source of meals at all times of the day.

1. What are some new initiatives or investments that you have implemented to adapt to a “new normal” post-Covid?
We are still on continued expansion for our corporate-run and franchisee stores, with a focus on franchise store growth. The heartland will be our preferred choice, as this is more appropriate for today’s business climate. We are still hopeful for other locations to return to normalcy and we can be there to serve our customers. We also hope to be able to return to pre-Covid sales level in 2023.

So far, we have taken on a careful approach to taking up new stores. Besides the importance of brand presence, the P&L has to make sense. This is how we build trust with our franchisees. They have been with us for as long as 13 years.

2. How else are you pivoting your business, build resilience and seize new opportunities?
Currently, we have coffee powder, tea dust and kaya jars sold in our stores. Our kaya jars receive a fair amount of demand from locals and tourists. A dip was experienced since demand from tourists was hit by Covid-19. On top of our existing retail merchandise, we hope to develop new ones in the near and long term.

Ya Kun has started selling full menu on delivery platforms after the Circuit Breaker around April last year. Since then, our dine-in and takeaway accounted for 70 to 80 per cent of our total revenue, while delivery made up 20 to 30 per cent (before Heightened Alert since May this year).

We will continue to persevere amid this Covid situation and with the entry of more F&B players. During this crunch time, there are brands that move out of malls and also others which take the opportunity to move in, along with those selling online. While competition remains stiff, we continue to focus on offering good food and service to our customers.

3. What are the top challenges that you face in the F&B business since the Covid-19 pandemic and how have you coped?
Our key challenges are continued lack of manpower, decline in footfall and higher operating costs due to safe management measures’ compliance.

During the Circuit Breaker lockdown and closing of borders, we were left with the option of hiring only locals who also have other choices such as joining other hiring F&B players and other new industries.

Stores located in suburban malls are coping better relative to stores in tourist and office community premises. To mitigate the decline in revenue due to diminished footfall at our outlets in tourist venues and the CBD arising from work-from-home measures, we work with third-party delivery companies.

Significant operating costs associated with safe management measures such as cleaning chemicals, sanitisers and masks have set in last year and coupled with cost increase for some supplies due to border and global supply chain disruption, we are managing these additional costs while maintaining menu prices to customers during this period.

4. Is your F&B business back to pre-Covid levels? If not, how does it currently compare to pre-Covid levels? What remains to the key bugbears?
Before Heightened Alert, we were witnessing a U-shape recovery and were heartened that our heartland stores were somewhat back to pre-Covid levels,
relying on also takeaway and delivery sales. While we continue to rely on delivery sales, platform fees that we pay to third-party delivery operators add to our operating expenses.

5. Since news reports on high commission fees charged by food delivery apps, has things improved since?
Delivery apps serve as conduit between operators and customers. While we understand they have their operating costs to consider to ensure seamless delivery, not all operators can sustain based on the current commission fee structure.

6. How have you coped with the requirements on safe distancing and the higher costs associated with more regular cleaning and sanitisation?
Safe-distancing measures have taken away half of our sitting capacity in Phase 2 before the prohibition on dine-in during Heightened Alert. Some landlords were able to offer us additional seating space, hence enabling some stores to achieve pre-Covid levels. In order to cater to as many customers who wish to dine-in, we have to impose time limit, to counter the move to make certain seats unavailable for safe-distancing.

7. Do you feel there has been enough support from the government, landlords and trade associations for F&B operators?
The government has helped with providing rental rebates and legislating that on the landlords, as well as rolling out the Jobs Support Scheme and Delivery Booster Package. We are optimistic that things will get better. We are grateful for the help that the government has extended. We have also received rent rebate support from some landlords. The government has also acted very swiftly with the code of conduct for fair tenancy that kicked in from June 1 this year. In a way, I sense that this will set a certain level of fairness to tenants.

8. What else do you think can be done to provide better support for your business?
Singapore is very blessed – in that when we encounter any problems, we will surely get timely support from our government. At the end of the day, we also need to help ourselves. We need to have the entrepreneurship, the will to want to survive. With our sole focus on the single brand Ya Kun, we strive to continually develop and increase our menu offering for different time segments.

9. Do you think the terms spelt out under the Fair Tenancy Framework is sufficient to level the playing field between landlords and tenants? What is lacking and should be addressed further?
We are thankful to the government’s involvement to create a level-playing field as much as possible. It still largely depends on joint efforts of landlords and tenants to engage in a friendly and long-lasting relationship.

_Ya Kun's new recipe for growth

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