Category: study

Pricing prevents miscommunication while build trust in F&B

Cai png is economic rice

Cai Png is a dish of economic rice. The term “economic” refers to the affordable dish of rice with several selection of veggies and/or meat.

Unfortunately, there is no price label on the varieties of veggies or meat (aka dishes). Regulation is lax. Hence, regular customers are accustomed to becoming smarter, i.e., they are able to identify expensive dishes (in order to avoid them).

Bait or trap?

Sometimes, meat fried with a batter (aka fritter) can make it difficult to identify the dish. It is thus prudent to ask the stall owner or helper for the identity of the meat, else you will be charged higher for fish, prawn, squid or other seafood. In addition, any veggies fried with anchovies, small shrimps, or other seafood may also be charged as meat or “seafood”, and you end up paying higher price for the dish than normal veggies.

It is unfortunate that you are misled to think that you are ordering vegetables, while in actuality you are not. It may be frustrating when you have to argue with the stall owner. It brings back memory of pre-Jover Chew’s Sim Lim Square time when regulation and standards were poor there (ref. 3).

It is a trap

A cai png with fish at AMK Mayflower hawker centre that cost $11 was a trap (ref. 1). It was a TRAP because the dish was not priced and customer assumed that the dish in a hawker centre should be reasonably priced. Unfortunately, there was no price label or pricing table. It is understandable that the customer was shocked and upset.

The owner had justified the price of her mackerel at $8 per slice by suggesting that her fish was bought “fresh” versus frozen. Such justification is completely irrelevant and illogical. What’s next, Premium Wahyu beef fritters fried with veggies that would cost $10 per scoop? If she had the audacity to price her fish slice at $8, she should be more responsible to include a price tag there to prevent potential misunderstanding, especially when cai png at hawker centre is hardly as expensive as hers.

Alas, it is understandable that she had more motivation to lay the “trap” at her stall for gullible patrons to step than to act responsibly (by displaying the price). Unfortunate for her, in the age if social media, her act can become viral (i.e., highly shared in social media).

Include price to build trust

If you want to build cuatomer trust, ensure your business practices are ethical. Else, you will become viral and untrustworthy, regardless of how much you justified your act (especially when it made lesser sense after the reasoning).

Reference

  1. Cai Png with fish from AMK Mayflower hawker centre costs S$11 (https://mothership.sg/2022/06/economy-rice-expensive-singapore/)
  2. Hawker who sold viral $11 cai png with fish explains why it is so expensive (https://goodyfeed.com/viral-11-cai-png-responds/)
  3. Jover Chew, former boss of Mobile Air jailed 33 months for conning customers, also fined $2000 (https://www.straitstimes.com/singapore/courts-crime/jover-chew-former-boss-of-mobile-air-jailed-33-months-for-conning-customers)

How to download your certificates attained from NTUCLearning or SkillFuture

Steps are

  1. Visit https://www.myskillsfuture.gov.sg/content/portal/en/index.html
  2. Login with your SingPass
  3. Go to Menu (three line icon at top right)
  4. Select Skills Passport
  5. There will be a list of certificates that you have achieved

This is follow-up from previous blog in regards to Food Safety Course (FSC) Level 1 from NTUC LearningHub (ref. 1, 2).

Reference

  1. Finished FSC Level 1 via NTUC LearningHub (https://siekitchen.com/2020/12/30/finished-food-safety-course-fsc-level-1-via-ntuc-learninghub/)
  2. Food Safety Course requirement to work in F&B and how to register for that course (https://siekitchen.com/2020/12/24/food-safety-course-fsc-requirement-to-work-in-food-and-beverage-fb-how-to-register/)

Food Safety Course (FSC) requirement to work in food and beverage (F&B). How to register.

It is mandatory to have food safety course before one is allowed to work in F&B. The purpose of the course is to educate food and beverage handlers the good practices to ensure that F&B is safe for consumption. It minimizes the risk of contamination and poisoning.

NTUC Learninghub has online course about the above subject (i.e., Food Safety Course). It is a 7.5 hours course with assessment methods e.g., mcq, practical assessment, oral, and others. There are  parts, i.e., good  personal hygiene, safe ingredients, handling, store, housekeeping. Upon completion, participant will receive statement of attainment (SOA) from Skillfuture Singapore (SSg, refer to ref. 1-2).

Food Safety Course level 1 (since 30 Nov 2020) is administered by Singapore Food Agency (SFA) and Skillfuture Singapore (SSg). It was formerly known as “Follow Food & Beverage Safety and Hygiene Policies and Procedures” course (aka Basic Food Hygiene course or Food Safety and Hygiene level 1, refer to ref. 2).

Fee and payment (refer ref. 1). Supports are available, e.g., Union Training Assistance Programme (UTAP) and skillfuture credit (for Citizen). For Skillfuture credit claim, go to link (ref. 4) for FSC level 1 online learning. Click ‘claim skillfuture credit’. Login via Singpass. Follow the instruction to get the ‘claim id number’. An NTUC Learninghub representative will email you a link for claiming via skillfuture credit, complete the online form and paste the ‘claim id number’. Done.

Course schedule (ref. 3). Currrently, there is online course from NTUC Learninghub via Zoom. Book your slot and a representative will contact you asap to assist you. If you are new to NTUC Learninghub, you may need to provide personal information. Note that I don’t like to provide personal information over email.

UTAP: supports 50% course fees up to $250 per year.

Update: I have completed and passed this course (ref. 5)

Reference

  1. NTUC Learninghub mandatory Food Safety Course level 1 (https://www.ntuclearninghub.com/course/follow-food-and-beverage-safety-and-hygiene-policies-procedures/?gclid=CjwKCAiA8ov_BRAoEiwAOZogwfPB6_-p54rjNaAnCytjPC7_sOU_-tz0KIhFgBR23KE2MaECYNVJGRoC-J0QAvD_BwE)
  2. WSQ Food Safety Course Level 1 (https://www.eduquest.sg/courses/course/wsq-food-hygiene-course?gclid=CjwKCAiA8ov_BRAoEiwAOZogwQnuucZS519ItWQdb-XL8c4KuYN6sjiGMMruyi7kws3AhMZjjDe2mxoC9fQQAvD_BwE)
  3. NTUC Learninghub course schedule (https://www.ntuclearninghub.com/course/food-safety-course-level-1-synchronous-elearning/?action=schedules)
  4. FSC level 1 (synchronous e-learning), code tsg-2017501339 (https://www.myskillsfuture.sg/content/portal/en/training-exchange/course-directory/course-detail.html?courseReferenceNumber=SCN-200409359E-01-CRS-Q-0031336-FSS)
  5. Finished food Safety Course (FSC) Level 1 via NTUC Learninghub (https://siekitchen.com/2020/12/30/finished-food-safety-course-fsc-level-1-via-ntuc-learninghub/)

Costs incurred to hawkers

Study on the above topic will help most hawkers. For example, cost components for average hawker stall and other information conducted by Ministry of Trade and Industry (MTI) is important (ref. 1).

It suggested that raw material played the most cost for average hawkers, whereas rental contributed about 12% and utility at 9.3% (both at 21.3%).

Fig. 1 Cost component of average hawker centre (dated 2015; ref. 1)

As mentioned previously, the average cost of rental is $1500 with a range of $5 to $5000 (as offered bids; ref. 2). If a business operates daily without rest, then this translates to $1500/30=$50 per day from rental. Assume 12% rental cost is true, then total cost is $50/0.12 = $416. If daily total cost is true, then the cost of utility and rental would be $416 * 0.21 = $87.36. If raw material is approximately 60%, the cost is $416 * 0.6 = $250. Daily, a hawker would be spending $337.36. The rest is manpower and other service fees at approximately 20% (which is variable, because manpower could be business owner’s fixed salary and other service fees are variable).

To break-even, a business needs to achieve $337.36. If a bowl of product is $3, then the business owner needs 113 bowls per day. Subsequent bowls would be operating profit.

If I am to start a business in a location selling a dish, I will first determine the following:

  • Average footfall in the location per day (and especially compared during weekends)
  • Average peak time per day in hour.
  • Number of competitors
  • Average price of similar product around the location
  • Seats available
  • Parking area
  • Type of customers, e.g. workers, students, or other market segment.
  • Other marketing strategies.
  • Operations consideration, e.g. storage, freezers, footprint (sqm), process area (or kitchen), payment method (cash or cashless), and stall service provider (their efficiency), stall hygiene level (study the NEA awarded hygiene level, should be above Silver level; ref. 3)

Reference

  1. Examining the cost drivers of hawker food prices by MTI (https://www.mti.gov.sg/-/media/MTI/Legislation/Public-Consultations/2015/Examining-The-Cost-Drivers-of-Hawker-Food-Prices/fa_1q15.pdf)
  2. Hawker stall rental using bidding system is flawed (https://siekitchen.com/2020/05/16/hawker-stall-rental-using-bidding-system-is-flawed/)
  3. New food hygiene recognition scheme to replace existing grading system (https://www.channelnewsasia.com/news/singapore/new-food-hygiene-recognition-scheme-to-replace-existing-grading-10446030, 19 Jun 2018)

Hawker stall rental using bidding system is flawed

Bidding is a competitive process where contenders (i.e., bidders) express the price they are willing to pay for the item presented (with ask price). Anyone who expressed the highest bid price wins the item.

Singapore National Environmental Agency (NEA) is entity that offer the tender for bidders to express their highest price for monthly stall rental (ref. 1).

Bidding is susceptible to spikes and outliers, e.g. a lady who bidded $10,028 per month for a hawker stall to sell drink. According to NEA, the average price is $1,500 within a range of $5 to $5,000 (ref. 3). This would mean that the rental is $1,500 +/- 20% or from $1,200 to $1,800. So, the $10k monthly rental is considered very high for a drink stall.

The bidding process is also susceptible to those bidders who are out to win the bid and then sublet or assign the winning at higher price to others (in order to profit). NEA said they ensured that sublet and reassignment are not allowed, but did not elaborate how they will monitor and control this practice. I guess it would require stall operators to report this to the authorities.

For more information refer to ref. 4.

Reference

  1. NEA tender notice (https://www.nea.gov.sg/corporate-functions/resources/tender-notices)
  2. Bidder ends deal on record $10,028 monthly rental bid for Chomp Chomp hawker stall (https://www.straitstimes.com/singapore/10028-monthly-rental-bid-for-chomp-chomp-hawker-stall-highest-in-3-years-bidder-walked, 30 Aug 2018)
  3. NEA adopts transparent tender system for hawker stalls (https://www.nea.gov.sg/media/readers-letters/index/nea-adopts-transparent-tender-system-for-hawker-stallshttps://www.nea.gov.sg/media/readers-letters/index/nea-adopts-transparent-tender-system-for-hawker-stalls)
  4. Information for stallholder (https://www.nea.gov.sg/our-services/hawker-management/information-for-stallholders)

Hawker profit margin analysis, real experience

Introduction

CNA highlighted an article about profit margin of hawker. The piece was written by a Fishball noodle seller, who claimed that a bowl of his Fishball noodle had only 20-30 cents profit margin.

There was no sharing of his cost breakdowns, revenue and other financial data to help readers. For example, operating revenue is revenue – all costs. Costs included cost of goods sold (direct cost) and indirect costs (e.g. rental, utility and others).

If Desmond wanted to know his net profit, he would need to discount any loan interest, and subsequently income tax. That would be his net profit!

Profit is subjective

Desmond Ng does not represent all Fishball noodle sellers. That is because, to be a successful business owner, you have to be resourceful. That said, you need to reduce costs (either by sourcing for suppliers and drafting long-term contractual agreement with them), and operate more efficiently.

Instead of lamenting low profit margin, he should be differentiating his product. If he can differentiate his product to be more than just Fishball Noodle, he will be able to price his value-added plate higher.

Instead, he is attributing customers as the main reason his profit margin is low. His reasoning that customers are reluctant to pay more is flawed. Customers compare and select. If there are other Fishball noodle sellers selling at a particular price, they expect the price to be within that range, else they have avenue to select and abandon those who priced more. That is what supply and demand works.

Real experience

To be able to assess and analyse the claim that hawkers’ profit margin is low, I have to get into the industry myself.

This is part 1 of my research.

Reference

  1. Profit margins for hawker fare? As low as 20 to 30 cents (https://www.channelnewsasia.com/news/cnainsider/profit-margins-for-hawker-centre-fare-as-low-as-20-to-30-cents-10948414, 20 Nov 2018 by Desmond Ng). Note that Desmond is a Fishball noodle seller who shared his personal profit margin.