_Riding the recovery a top priority for Paradise Group

September 17, 2021

Like its F&B peers that pride themselves on the dine-in experience, Paradise Group has been impeded by mandatory safe management measures to cope with the Covid-19 pandemic. With the dine-in restaurant business historically making up more than 90 per cent of the group revenue, Paradise Group has to pivot quickly to delivery and takeaways during periods when dining-in is prohibited.

The oriental cuisine empire, whose brands include Taste Paradise, Paradise Teochew, Beauty in the Pot and LèTen among others, is now tapping all delivery platforms to reach out to its customers and tweaking its menu for the delivery and takeaway business.

Paradise Group CEO Eldwin Chua remains sanguine that his business is poise to ride the upside of “revenge dine-in” by patrons as restrictions are gradually eased.

1. What are the top challenges that you face in the F&B business since the Covid-19 pandemic? How have you sought to address them and to what degree of success?
Given the restrictions on dine-in, we have tried as much as we can to ramp up our delivery sales since last year. We are leveraging on whatever delivery platforms out there. We have to partially pass on some of the delivery charges to our customers, but these are not a 100 per cent transfer of the additional cost.

Local manpower, as you know, is limited in Singapore for F&B and it is very hard to bring in foreigners now. There is a huge shortage of manpower in our industry and this has caused unhealthy challenges in terms of wages. Costs are going up despite F&B businesses in Singapore coming down.

Our business in locations like Resorts World Sentosa, Jewel and the CBD are more challenging but those in suburban areas are holding up very well at 75 to 85 per cent of pre-Covid levels before fresh rounds of restrictions since May. Smaller chain operators with a few outlets in suburban areas have coped better and they may now have a window of opportunity to expand. For a large operator in diversified locations, we are mindful of conserving our cashflows and refrain from further expansion-related capital expenditure as we focus on boosting overall sales and revenue, because cash is most important in times of crisis.

We have mitigated our overall costs. Wages have gone up about 15 per cent last year though they were already pretty high before Covid-19. But we are unable to pass on the higher cost to customers. The fortunate thing in Singapore is that the government has given the push on rental rebates. Landlords are also very supportive in terms of passing the rental rebates to us. Hence, despite the fall in sales and rise in costs, they are mitigated by the support from the government and landlords.

2. Could you share the new initiatives or investments that you have adopted to adapt to a “new normal” post-Covid?
In this climate, it is all about mitigating losses and increasing sales, so we have controlled our costs very delicately down to that one or two cents. We have also increased the range of our food-delivery menu to include frozen food such as rice dumplings and introduced set meals in addition to the ala carte options.

3. Do you feel there has been enough support from the government, landlords and trade associations for F&B operators?
The Jobs Support Scheme is good for us and Singaporeans. It has enabled us to retain Singaporeans and we are now enticing more locals to join the F&B industry. We are in several markets regionally, with about 40 per cent of group revenue from overseas markets, namely Malaysia, China, Taiwan and Hong Kong.

Compared to other markets, the level of government support in Singapore is the most generous. When a country imposes a lockdown and there is no government support, it will be challenging to keep existing manpower and salaries. Markets like China and Hong Kong are on a path of recovery.

4. What else do you think can be done to provide better support for your business?
In such crises, everyone plays a part and takes his fair share of the damage. Landlords have to support their tenants. Tenants cannot be paying the same rent when their sales are down by 50 per cent or more. But current rental arrangements with landlords are not that flexible to factor in that revenue fall among tenants.

5. Do you think the terms spelt out under the Fair Tenancy Framework are sufficient to level the playing field between landlords and tenants? What is lacking and should be addressed further?
For chain operators like us, we are always eyeing good locations. For popular locations that are highly sought-after, the landlord makes the call. The Fair Tenancy Framework still allows a clause for the landlord and tenant to jointly declare an alternative rental structure with either a fixed rent or a percentage of gross turnover, whichever is higher. But what is fair this time under the new framework is the inclusion of mutual or unilateral pre-termination rights in the lease agreement.

Still, landlords have a part to play in supporting the tenants through this crisis. The government is seen doing more by giving rent-free concessions to hawkers. Right now, we still see retail rentals at pre-Covid levels for popular locations because landlords have the mentality that things will go back to normal. Based on our experience in renewal leases this year, renewal rents in good locations are still going up.

_Riding the recovery a top priority for Paradise Group

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