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.

orange carrot cake

ingredients

ingredient A

  • 1 2/3 cup flour
  • 1 1/2 tsp baking soda
  • 1 1/2 tsp ground cinnamon
  • 3/4 tsp baking powder
  • 1/2 tsp salt

ingredient B

  • 2 eggs
  • 1/2 cup sugar
  • 1/2 cup dark brown sugar
  • juice of 1 orange (70 mL)
  • 1/4 cup canola oil

ingredience C

  • 2 carrots grated
  • zest of 1 orange

steps

  1. preheat oven 180oC
  2. combine A. set aside.
  3. in large bowl, on medium speed, beat eggs until blended. add in sugar, beat, 2 min. on low speed, beat in orange juice and oil
  4. add in A and stir until combine
  5. stir in C
  6. pour batter into pan and top with almonds
  7. bake 2 min
  8. lower temperature to 160Oc and bake 25 min until cooked
  9. cool in pan, 10 min
  10. invert cake and cool completely

ginger shallot soy BBQ sauce

ingredients

  • 1 kg chicken wings
  • 1/4 cup soy sauce
  • 1/2 tsp salt
  • 2 tsp light brown sugarr
  • 3 tbsp fresh ginger root, grated
  • 6 garlic cloves, minced
  • 1 tsp paprika/red capsicum
  • 3-4 shallots, minced
  • 1 tsp pepper

steps

  1. mix all ingredients until thorough
  2. marinate refrigerated >= 4 hrs to overnight
  3. grill at low heat (or BBQ) until golden brown

ngoh hiang (five spice fritter)

ingredients

  • 1 packet bean curd skin
  • 500g minced pork belly (fatty)
  • 500 g fresh shrimps, minced
  • 400 g chestnuts (or jicama)
  • 1 egg
  • 6 garlic
  • 6 shallots

seasoning

  • 1 tsp light soy sauce
  • 1 tsp salt
  • 2 tsp white pepper
  • 50 g flour
  • 1 tsp five spice powder

step

  1. mix all ingredients and seasoning together and marinate, >= 1 hr
  2. place 3 tbsp filling in lower half of bean curd skin (soaked first)
  3. roll it in and seal edges with egg yolk/washes (egg wash is mixture of egg, water, milk, cream and salt)
  4. optional step: steam >= 10 min, cut into smaller pieces, coat with flour and proceed to deep fry
  5. deep fry until ngoh hiang turns golden brown
  6. drain excess oil and paper towel
  7. serve

deep fried anchovies (ikan bilis)

ingredients

  • dried anchovies
  • cooking oil

steps

  1. heat thick bottomed saucepan with 4-5 cm cooking oil, 5 to 10 min
  2. test oil by adding few anchovies into the oil. anchovies should float up within second.
  3. drop in only a handful of anchovies to fry each time.
  4. when anchovies sizzle, stir and pick the rest up to test, approx 4-5 min.
  5. drain fried anchovies.

DIY chee cheung fun (rice noodle)

ingredients

  • 354 ml rice flour
  • 3 tbsp tapioca starch
  • 2 tbsp wheat starch
  • 1/2 tsp salt
  • 2 tbsp canola oil (and extra for greasing pan)
  • 354 ml lukewarm water
  • 236 ml boiling water

steps

  1. combine rice flour, tapioca, and wheat starch, and salt in mixing bowl
  2. add canola oil and lukewarm water
  3. whisk until smooth
  4. whisk in boiling water
  5. set aside and allow the batter to rest, 45 min
  6. use aluminium square cakepan for steaming rice noodle
  7. add batter to abiout 1/8 in thickness to prewarmed greased pan
  8. swirl around to coat evenly and steam, 3 min until noodle bubble up

Traditional white bread

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.

Ingredients

  • 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

steps

  1. in large bowl, dissolve yeast and sugar in warm water
  2. stir in margarine/butter, 2 cups flour
  3. stir in remaining flour gradually
  4. when dough has pulled together, turn it out onto lightly floured surface
  5. knead dough until smooth and elastic, 8 min
  6. lightly oil large bowl, place in and turn to coat with oil
  7. cover with damp cloth and rest in warm place until doubled in volume, 1 hr
  8. dflate the dough and turn it out onto lightly floured surface
  9. divide dough into two equal pieces and form into loaves
  10. place them in lightly greased loaf pans
  11. cover loaves with damp cloth and let rise until double in volume, approx 40 min
  12. preheat oven to 220oC
  13. bake at 190oC, 30 min until the top is golden brown and the bottom of the loaf sounds hollow when tapped

Aglio et olio spaghetti

ingredients

  • salt to taste
  • 1 tsp salt (for sauce)
  • 450 g spaghetti
  • 3 cloves garlic,minced
  • 1/2 cup extra virgin oil
  • pinch of red pepper flakes
  • 2 tbsp chopped flat-leaf parsley
  • 1/2 lemon zested (optional)
  • Freshly grated parmigiano-Reggiano (optional)

steps

  1. cook pasta, approx 8 min in salted water
  2. in large bowl, combine garlic, olive oil, 1 tsp salt, and red pepper flakes.
  3. warm over low heat, stir intermitently until garlic softens, 8 min
  4. drain pasta
  5. reserve 1/4 cup cooking water
  6. add pasta and water to garlic mixture
  7. mix well
  8. add parsley and lemon zest
  9. adjust seasoning to taste
  10. transfer to a large bowl
  11. serve with grated cheese (optional)