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 process where the person with the highest price wins the thing that is offered.

National Environmental Agency (NEA) of Singapore is body that offer the tender for bidders (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. That is considered very high for a stall.

It 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. NEA said they ensured that sublet and reassignment are not allowed, but did not elaborate how they will monitor and control this.

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.

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

Chinese cruller (yau char kwai)

-ingredients

–ingredient (A)

  • 300 g high protein flour
  • 50 g flour
  • 1/2 tsp baking powder

–ingredient (B)

  • 1/2 tsp sugar
  • 2 tbsp lukewarm water
  • 2 tsp instant yeast

–ingredient (C)

  • 250 ml water
  • 1/2 tsp bicarbonate of soda
  • 1/8 tsp alum (pak fun)
  • 1/8 ammonia powder (chow fun)
  • 1 tsp salt

note: alum is K.Al(SO4)2.12H2O or NH4.Al(SO4)2 whereas ammonia powder is NH5CO3. Available from McCormick

–method

  1. mix ingredient (A) with electric mixer.
  2. mix ingredient (B) and allow to froth, 10 min.
  3. combine ingredient (C) together
  4. Mix (B) into (A) well, followed by (C) and beat for 5 min until soft dough forms.
  5. Cover and leave aside to double in size.
  6. turn out dough onto a lightly floured surface and knead until smooth.
  7. roll out into a long rectangle, then cut into strips
  8. place two strips, one atop the other and allow to rest, 5 to 10 min
  9. heat wok with oil until hot. press lightly on the two strips of dough with a satay stick
  10. stretch the strips a little and lower into hot oil
  11. deep fry until puffy and golden brown

 

Peanut cookies

-Ingredients

  • 4 cups ground roasted peanuts
  • 1 cup powdered sugar (icing sugar)
  • 1 cup peanut oil
  • 2 cups all-purpose flour
  • 2 tbsp shortening (or margarine)
  • 1 egg yolk, beaten slightly for egg wash

-method

  1. mix ground peanut, sugar, oil, shortening and flour together until well combined
  2. shape into small balls
  3. flatten it slightly
  4. Glaze with egg yolk
  5. bake at 180oC, 20 min or until golden brown
  6. Cool

Simplest Popiah wrapper

Popiah can be healthy and delectable diet. You can innovate with the popiah filling to suit your preference.

Popiah wrapper

-Ingredients

  • 600 g flour
  • 1 tsp gluten-rich tapioca flour (optional)
  • 1 tsp salt
  • 200 ml water

-method

  1. sift through the dry ingredients
  2. mix the rest of the ingredients
  3. knead the dough (sometimes rest the dough in water overnight helps)
  4. it should be a bouncy texture, and should stick to your hand
  5. Heat up wok without oil and make sure to use non-stick pan (easier)
  6. when the wok is hot, spread the dough around the wok in a thin layer
  7. size is approx 6 inches in diameter
  8. remove when cooked, 30 sec

other alternatives that uses egg will have slight changes in the popiah flavour that I’m accustomed to.

Popiah fillng

-Ingredients

  • 900 g icama thinly sliced
  • 1 large carrot
  • 2 to 4 pieces shitake mushroom, sliced thinly
  • 1 tbsp dried shrimps (soaked in water to soften)
  • 1 tbsp light soy sauce
  • 1 tbsp oyster sauce
  • Pinch salt
  • Dash of peper

-method

  1. Heat wok with oil
  2. Saute dried shrimp until fragrant, then add in garlic.
  3. Add in jicama, carrot and mushroom. stir fry until softened.
  4. add in seasoning, e.g. light soy saue, oyster sauce, salt, and pepper.
  5. Bring to boil and reduce heat to simmer
  6. Add water to prevent drying and continue to simmer until jicama is softened to taste. add seasoning if required.

-other ingredients to popiah

  • fried eggs, sliced thinly
  • sauces, e.g. cantonese sweet sauce (Tim cheong)
  • chilli sauce (with garlic)
  • lettuce
  • chicken shreds (stir-fried and coated with soy sauce)
  • Chinese sausage (lap cheung), sliced

Malt syrup

Malt syrup is derived from concentrated pre-fermented germinated/malted barley wort (i.e. liquid extracted from mashing process).

Process involves

  1. Sprout grain, e.g. barley
  2. Mill
  3. Mash
  4. Mash separation
  5. Wort boiling
  6. Flavoured with hops
  7. Concentrate
  8. Sterilized before storage

Fig. 1 Flavourful malt syrup (pic from joepastry.com)

Fig. 2 barley sprouting increases sweetness (pic from thefreshloaf.com)

Sprouting sweetens grains because of the breakdown of carbohydrate into smaller sugar molecules (nourichedkitchen.com).

Use of malt syrup or extract in beer brewing (beerandbrewing.com).