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.
- NEA tender notice (https://www.nea.gov.sg/corporate-functions/resources/tender-notices)
- 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)
- 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)
- Information for stallholder (https://www.nea.gov.sg/our-services/hawker-management/information-for-stallholders)
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.
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.
- 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.
Tradtional white bread should be soft and once toasted, good candidate for butter and kaya. This setup will complement with soft-boiled egg (softer than poached egg). Such setup is best for typical Singaporean breakfast.
- 2 packages of 0.25 oz active dry yeast
- 3 tbsp white sugar
- 2 1/2 cups warm water (45oC)
- 3 tbsp margarine/butter
- 1 tsp salt (or to taste)
- 6 1/2 cups bread flour
- in large bowl, dissolve yeast and sugar in warm water
- stir in margarine/butter, 2 cups flour
- stir in remaining flour gradually
- when dough has pulled together, turn it out onto lightly floured surface
- knead dough until smooth and elastic, 8 min
- lightly oil large bowl, place in and turn to coat with oil
- cover with damp cloth and rest in warm place until doubled in volume, 1 hr
- dflate the dough and turn it out onto lightly floured surface
- divide dough into two equal pieces and form into loaves
- place them in lightly greased loaf pans
- cover loaves with damp cloth and let rise until double in volume, approx 40 min
- preheat oven to 220oC
- bake at 190oC, 30 min until the top is golden brown and the bottom of the loaf sounds hollow when tapped