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MAY 2014













BDO Singapore and the Restaurant Association of Singapore (RAS) jointly conducted a business mission trip to London to learn the best practices of its successful F&B operators. To promote industry improvements in capability and productivity in Singapore, the business mission trip focused on two of the seven pillars of SPRING Singapore’s Business Excellence framework: •

People – The way organisations can develop the full potential of their employees at all levels, to create a high performance organisation

Processes – The way organisations can design and manage their systems to create value for their customers and to achieve organisational success and sustainability



INTRODUCTION The RAS London Mission trip in May

Singapore has been ranked as one of

was an eye-opening experience for

the major eating capitals in the Asia

all of us. The trip objectives were

Pacific region, and with good reason.

to learn best practices on Processes




always has something to cater to its


consumers’ ever-changing demands,


from traditional hawker delights to


pillars Business







cuisines and concepts.



international fine dining.

The learning objectives appealed to all generations of restaurateurs specialising in different


Despite growing at a 7.8% compound annual rate over the past five years, the Singapore F&B industry is not without its

During the trip, we learnt best practices from well-

challenges. Market forces and government policies are making

established food and beverage (F&B) businesses such as

it increasingly difficult for operators to address their manpower

Drake & Morgan, TGI Friday’s and K-10. We heard about

and property needs.

companies’ approach on Human Resource practices and process management. The sharing by these companies gave

On the face of it, these challenges are not unusual for F&B

us an overview of the London F&B scene and insights on

operators in any major city. Like Singapore, London’s F&B

some of the challenges faced by their operations team.

industry is highly competitive; good staff and good retail spaces are difficult to find and are even more difficult to keep.

Regardless of the years of experience in the F&B industry,

Nonetheless, London’s restaurants and bars are feted the world

food service companies should continuously learn from

over. What is their secret to success?

best practices around the world, be exposed to new markets, constantly seek to innovate and improve on their

This report will address some of these issues, looking at the

operational and internal processes for their businesses to

People and Process practices that have helped London’s

thrive in today’s competitive market.

restaurants to flourish. We hope you will find the report interesting and useful for your business.

ANDREW TJIOE President, Restaurant Association of Singapore Management Committee Executive Chairman, TungLok Restaurants (2000) Ltd

ROGER LOO Director, Management Consulting Services BDO Consultants Pte Ltd




Despite the 2007-2008 Global Financial Crisis and the decline of

Over the past two decades, the UK has transformed itself

in 2012 than in 2011. In London alone, there are an estimated

into a gastronomic hub with a reputation rivalling those of its

50,000 food businesses. Food start-up foundation Kitchenette

continental counterparts. According to the British Hospitality

believes that a further five new restaurants open fortnightly in

Association (BHA), hospitality is now the UK’s fourth-largest

the capital. 1.5 million people in the UK work in restaurants,

industry. Indeed, the F&B manufacturing industry is the largest

cafes and other food service businesses, with the hospitality

manufacturing sector in the UK1 . With a turnover of £92 billion

industry employing nearly 400,000 people in London itself.

and a Gross Value Added (GVA)

of £24 billion, it accounts for

The F&B industry’s employment growth was the highest of any

18% of the UK’s total manufacturing. Over £350 million was

industry, creating 58,000 new jobs. Recognising the important

invested in research and development (R&D), which generated

role it plays in the UK, the F&B industry has started a campaign

more than 16,000 new products in 2013. Industry productivity

to create a further 300,000 new jobs by 2020.

the British high street, 25% more restaurants opened in London


has increased by 12% over the last ten years, making UK F&B workers nearly 50% more productive than the EU average. 1 Source: Food and Drink Federation (FDF): a membership organisation that represents and advises UK food and drink manufacturers 2 Gross Value Added (GVA): A measure of the value of goods and services produced in an area, industry or sector of an economy. It is calculated as the value of an output minus any intermediate consumption and is used in the estimation of the country’s Gross Domestic Product (GDP).

Household final consumption across restaurants, cafes etc 2007-2012

TRENDS Although not traditionally associated with culinary excellence, the UK F&B industry, particularly London’s restaurants and bars, is enjoying its newfound epicurean status.

Contribution to the economy (As GVA)

Source: Annual Business Survey, 2011

Average meals eaten out per week

Value (nominal) Value (real) Source: ONS

Source: Zagat 2013



The UK economy is beginning to show signs of recovery as consumer confidence returns to its highest levels since 2007. The F&B industry was not as badly affected as other industries by the recent financial crisis, with some of the UK’s larger F&B brands experiencing growth during the downturn. Consumers are eating out more than before, resulting in an increase in the average spend per head.In fact, consumers continued to eat out during the recession, with Londoners eating out an average of 2.2 times a week. Nevertheless, the restaurant industry is highly competitive. In addition to the competition, rental and operating costs in London have been rising and will continue to do so for the foreseeable future. At least 25% of the industry’s workforce earns minimum wage, so any increase in wages will have a big effect on restaurants and bars.

STATISTICS AND OBSERVATIONS Think brands will be at the heart of the price war between retailers, putting continuing downward pressure on margins and weakening their premium in the minds of consumers.

Think food brands will represent a diminishing portion of in-store sales versus private labels.

Think it is very important there will be further consolidation of brand ownership and many casualties in mid and lower tier brands Impact of the further brand commoditisation on the UK food and beverage industry between now and 2020




It is common for Singaporeans to eat out more often than they eat at home. Sydney-based research company, BIS Shrapnel,

The Singapore F&B industry constitutes about 1% of the country’s GDP. It nevertheless plays a vital role in Singapore’s economy with a GVA of S$2.8 billion in 2012. 36.2% of the industry’s operators are restaurateurs and are the single largest contributor to the industry’s GVA1. For the past few years, the F&B and supermarket sectors have outperformed other retail sectors in Singapore. More than 60%

estimates that an average Singaporean spent about S$1,900 at hawkers stalls, cafes and restaurants in 2012 alone. Rising middle-class incomes and a more rapid pace of life have driven consumer demand for a wider variety of stable and discretionary food products.


of the businesses listed on the Singapore Stock Exchange (SGX)

The F&B industry in Singapore is very competitive, with

are involved in food production or distribution. The growth

operators both internal and external challenges to growth. As

potential of the F&B industry has not gone unnoticed by foreign

the industry mature, consumers are increasingly demanding

operators, attracting the likes of Jason Atherton and Joël

experiential dining, resulting in “new” concepts are falling out

Robuchon to set up businesses locally. The industry employs

of fashion more quickly. Operators find themselves needing to

nearly 28,000 people, constituting 6.5% of the total workforce.

continuously develop new concepts to meet changing consumer tastes.

1 Department of Statistics (Singapore): A government body responsible for collecting, compiling and disseminating a wide range of economic, business, household and population data




Table 1: Key Indicators of Food & Beverage Services








Operating Receipts


$7,247 mil. $7,836 mil.

Operating Expenditure


$6,922 mil. $7,482 mil.

Operating Samples


$528 mil.

Value Added


$2,503 mil. $2,759 mil.


Fast Food Outlets


13.4 %

$568 mil.

Restaurants Others

9.7 %

Food Caterers 40.8%





Arguably the biggest challenge F&B operators face is the

The problem is compounded by existing government labour

difficulty in recruiting and retaining staff. Operators find it

policies, restricting the number of foreign workers operators

very challenging to recruit local Singaporeans to work in the

can hire and retain. Many foreign staff with the interest and

industry, as it is perceived as having long hours for low pay.

ability to perform the required tasks are repatriated to their

Young, ambitious and well-educated, many Singaporeans would

home countries upon the expiration of their employment

rather work in more “glamorous” industries than in the service

passes. There is also a relatively low rate of adoption of IT and

industry, as the perceived financial and professional rewards

technology to streamline the organisation’s operations.

are more in line with their expectations. This general lack of

interest makes it even more difficult to find staff who have the proper skills training for the job.



UNITED VS SINGAPORE KINGDOM The differences of the F&B markets in Singapore and UK

The UK F&B industry is extremely competitive – low barriers to entry results in many new entrants to the industry

The F&B industry is extremely competitive – low barriers to entry results in many new entrants to the industry

The F&B industry is a core element of the UK manufacturing economy, representing over 15% of manufacturing turnover and employment

The F&B industry is an important part of Singapore’s economy, strongly supporting its tourism industry

Consumers are increasingly eating out as UK lifestyles change

Consumers continue to eat out frequently, due to the availability and variety of options

There is a growing focus and interest on sustainability practices and provenance (i.e. locally sourced food)

As yet, sustainability and provenance are not significant issues for Singaporean consumers

Casual dining is increasingly popular with many new entrants to the market in the last few years

Cafes are increasingly popular with many new entrants to the market in the last few years

Many of the newer, successful offerings have been concept-driven

Concept-driven offerings are beginning to play a stronger role in the industry

In addition to food, beverages (both alcoholic and non-alcoholic) contribute significantly to the operator’s total revenue as the UK has a strong “drinking culture”

Beverages do not contribute significantly to the operator’s total revenue as Singapore does not have a “drinking culture” for both alcoholic and non-alcoholic beverages

A typical property lease is 25 years in length

A typical property lease is 3+3 years in length

Some of the challenges operators face include rising taxes, raises to minimum wage and green initiatives

Some of the challenges operators face include manpower restrictions and rising property prices




Established in 2006, British steakhouse Hawksmoor is a relative

While good service has always been the cornerstone of the

was one of the few restaurant operators to rank on the Sunday

F&B industry, it is becoming ever more important as customers

Times 100 Best Companies list, as one of the best places to

increasingly demand experiential dining. Ultimately, an

work in the UK. Hawksmoor has built this reputation by focusing

organisation is only as strong as the people who contribute to

on establishing itself as a company where its employees are

it. Recruiting and retaining good people is therefore crucial to

encouraged to “do the right thing”. Hawksmoor’s management

the organisation’s long-term success.

team’s philosophy is to ensure their employees are happy; it

newcomer to the London restaurant industry. Nevertheless, it

logically follows that happy employees will be more gracious The company’s mission, vision and values determine the

hosts to the restaurant’s customers.

direction it will take but it requires like-minded people to drive it. To recruit the “right” people for the organisation, the

Having recruited the “right” people to join your organisation,

management team must be very clear on what the company

you must engage them so they remain with the organisation.

is inherently about. However, you do not need to be a well-

The Harvard Business Review found that companies with

established organisation to be able to do this.

highly engaged employees generated three-year returns to shareholders that were 200 percent higher than lowcommitment companies between 1999 and 2002. In a survey conducted by Purple Cubed, the top five factors that motivate people in their careers are: Communication Providing ongoing consultation and communication across all levels of the organisation Inspirational leadership Ensuring that strong leadership occurs at all levels of the organisation, from middle management onwards Career path Having the flexibility to properly provide for the career aspirations of the organisation’s employees, accounting their changing priorities



Training & Development Providing employees with ongoing and relevant training that contributes positively to their growth and development Values/Aspirations Aligning the values of the organisation and its employees so they can collectively work towards them It is interesting to note that “Money” ranked ninth (out of ten) on that list. Once employees are earning at least a fair wage, other factors take on a more significant role in influencing their engagement and satisfaction with their organisation. Knowing what these factors are and duly addressing them has proven to be elusive for many organisations. Companies will try to implement initiatives to promote these five factors but will do so in a piecemeal, discrete manner. Instead, these initiatives should be should be integrated into the organisation’s functions, making it part of the organisation’s processes. An engaged workforce will result in increased productivity, but will also positively impact an organisation’s bottom line. The unseen costs associated with high attrition rates are often not taken into consideration high staff turnover. PwC Saratoga, one of the world’s leaders in workforce measurement and employee engagement, conducted a study to determine the direct and indirect costs of attrition on an organisation. They estimate that losing a middle manager will cost an organisation five times that middle manager’s salary to replace them, whilst losing a director will cost an organisation 10 times their salary.

People are more likely to actively contribute to an organisation if they have an interest in it. It is therefore unsurprising that some of the more successful F&B operators have created careers, not just jobs, for their employees. With the F&B industry increasingly being seen as a viable career path, this trend will likely continue. Many of the top employers encourage promotion from within the organisation as and when the positions become available. Promoting from within has several advantages. Firstly, it ensures the employees who take up these positions are already familiar with the organisation’s culture and values and will continue to uphold them. Secondly, these employees will be familiar with other parts of the organisation. Thirdly, it demonstrates to the rest of the employees that they will be rewarded for their contributions to the organisation.




Senior management should review existing processes regularly

Organisations of all sizes and maturity stand to benefit from

Without regular reviews, organisations may soon find that their

standardising their processes. However, F&B operators with

processes are more of a hindrance than a help. Oftentimes, an

more than fifteen sites will find Standard Operating Procedures

organisation’s processes become cumbersome because:

to determine if they are still value-adding to the organisation.

(SOPs) necessary to ensure the consistency of their products and services.

Too many processes

Standardising the organisation’s processes does not have

Too many processes have been created to address issues as

to be a major undertaking. In many cases, small changes or

the organisation grew, but there has been no subsequent

adjustments to existing procedures should suffice to make the

differentiation between processes that are essential to

system more efficient.

creating value, to the customer or that do not need to be standardised at all


Overstandardisation In an effort to standardise procedures, processes become overly rigid and are unable to accommodate for unplanned events Resistance to change The people responsible for implementing the changes in procedure may be hesitant to do so for a host of reasons More specifically, F&B operators should look at maximising their throughput when faced with space and manpower limitations. One way to achieve this is through the effective use of technology to streamline various back-of-house and front-ofhouse processes. For instance, Domino’s Pizza was able to increase the throughput of its kitchens by increasing the capacity of its ovens and by reducing the amount of time the oven took to cook the pizzas. In Singapore, some F&B operators have already started using Artificial Intelligence Cooking Machines (AICs) to reduce the responsibilities of the chefs in the kitchens. Processes involving the organisation’s staff also stand to benefit from a technological solution. All of TGI Friday’s eighty outlets in the UK are connected to “Hot Schedules”, an online staff scheduling application. The application enables employees to change their shifts with relative ease. It also provides managers with accessible and upto-date information on the productivity of their staff and their restaurant for any given time frame. Nevertheless, the efficacy and consistency of any implemented processes are contingent upon the training the organisation provides its employees. Employees therefore need constant training to ensure the implemented processes are followed for the best results.




IMPLICATIONS FOR SINGAPORE As mature markets, both the London and Singapore restaurant industries share several commonalities. Eating out has become increasingly commonplace, creating the demand for good quality casual dining offerings. Discerning consumers are constantly looking for new concepts and new experiences, searching for alternatives more quickly than ever before. This dynamism has created very vibrant restaurant industries in both capitals as operators strive to meet the demands of their customers. The biggest problem Singaporean operators face, however, is their inability to recruit and retain people. As much as the operators try to implement integrated talent management policies to keep staff, there is little they can do about existing government policies that prevent them from hiring foreign talent. Using technology to streamline operations may alleviate some of these difficulties in the short term but it will not solve the underlying manpower crunch problem. Furthermore, the preparation needed for Chinese cuisine can be elaborate and may not be easily addressed by a technological substitute. There are simply some things that cannot replace a chef’s personal touch.

Additionally, there is a need to cultivate a stronger culture of service excellence amongst both the employees and the customers that frequent Singapore’s restaurants. While employees need to appreciate the importance of providing customers with a great dining experience, customers also need to recognise the value added service of the hospitality industry. Service excellence is fully within Singapore’s grasp. The national carrier Singapore Airlines is a five-star airlines and is internationally lauded for its excellence in service and innovation. If Singapore Airlines can offer its international customers great service, so too can its F&B operators at home. Fundamentally, the hospitality industry is about the people who work in it. Customers build loyalty towards certain brands in part because of the way the brand has been presented, but often because of the people who carry the brand message. The UK is slowly but surely cultivating a culture of service excellence, with people now seeing viable careers rather than transient jobs in the F&B industry. Singapore has some ways to go in this regard. However, the challenge lies in getting both the government and the public to recognize the value in pursuing a career in the F&B industry, in which great service is critical to the customer experience.

CHOONG MING SIEN Senior Analyst BDO Consultants Pte Ltd




“It is a rare occasion whereby industry colleagues can have a “retreat” in a far away country. We learnt new things and share our thoughts together, we may not know each other well before the trip, but we developed friendship as we braved the rain and jogged at Hyde Park. ”

ANDREW TJIOE| Executive Chairman, TungLok Restaurants (2000) Ltd

“The trip provided an opportunity to bond with industry peers through shared experiences in a vibrant environment like London. For me, the highlight of the trip was meandering down Soho full of emerging trends, looking at new F&B concepts and seeing street food of the city come alive. ”

ANDREW KHOO | Director, Business Development and Operations, ABR Holdings Limited

“It was a privilege to hear the premium F&B companies generously share with us their HR best practices. It was indeed an eye opening experience and there were many valuable takeaways from this trip that inspired some thinking, that which we could apply to our own organisation.”

CHRISTINA KONG | Senior Director, HR & Corporate Affairs, Jumbo Group of Restaurants

“The trip helped me to reaffirm our own current HR practices that we are on the right track of a best practice. The people solution to ensure staff are happy at work and other HR practices to help with long term solution to our manpower problem were very useful. ”

ANTHONY SAY | Chief Executive Officer, JP Pepperdine “The companies we visited were very willing to share on their success tips. Exposure to new concepts & the success tips inspire thought-provoking ideas that we could inject into our company operations. The networking session is another great takeaway.”

RACHEL CHONG | Chief Executive Officer, Sweetest Moments Pte Ltd






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Best Practices Of The London Restaurant Industry  
Best Practices Of The London Restaurant Industry