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.

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

Chicken rice

pouched chicken

ingredients

  • 6 litres water
  • 1.8 kg whole chicken
  • 200 g young ginger, sliced
  • 150 g spring onion

base seasoning

  • 150 g chicken stock
  • 45 g sugar

method to prepare chicken

  1. heat water in deep pot until simmer
  2. add all ingredients except chicken
  3. add base seasoning
  4. next submerge whole chicken
  5. lower the flame and pouch 45 in
  6. soak chicken in cold water, 15 min
  7. cut chicken
  8. set aside

chicken rice

ingredients

  • 900 ml water
  • 375 g rice
  • 375 g brown rice
  • 150 g pandan leaves
  • 75 g shallots, finely blended
  • 75 g garlic, finely blended
  • 75 g young ginger, sliced
  • 75 g blue ring ginger, sliced (optional)
  • 30 g canola oil
  • 10 g sesame oil (optional)

base seasoning

  • 40g chicken stock
  • 15 g sugar

steps

  1. heat wok with oil, add young ginger & blue ginger
  2. saute until golden brown
  3. add garlic and shallot and continue saute until fragrant
  4. add pandan leaves and water
  5. add chicken stock into the wok after water simmers
  6. add sugar and whisk until dissolved
  7. heat until broth simmer and pour the broth into rice coker and cook rice for 45 min
  8. serve hot with chicken

Laksa Singapore

-ingredients

broth

  • 700 ml chicken stock
  • 100 ml water
  • 100 g ikan bilis (anchovies)
  • 4 tbsp veggie oil
  • 1 litre coconut milk
  • fish sauce
  • sugar
  • salt

rempah/spice

  • 8 shallots, chopped
  • 12 large dried red chilies soaked in lukewarm water, 1 hr
  • 200 g dried shrimp (hae bee) soaked in lukewarm water, 4 hrs
  • 2 stalks lemongrass, sliced
  • 12 candlenuts
  • 2 tsp shrimp paste (belacan), roasted
  • 5 cm piece fresh turmeric, peeled
  • 10 cloves of garlic, crushed
  • 2 tsp ground anise star
  • 1 tbsp coriander seed
  • 4 tbsp veggie oil

ingredients to serve (all cooked and ready to eat)

  • 300 g cooked thick rice noodle (bee hoon)
  • tiger prawns, cooked
  • 12 pieces perforated bean curd (tau pok)
  • pan-fried Chinese fish cakes, sliced
  • 2 eggs, hard boiled & halved
  • 1 cup bean sprouts
  • 1/4 cup fresh laksa leaves (Vietnamese mint or daun kesom)
  • sambal belacan (see below)

-method (to prepare laksa broth)

  1. boil chicken stock and water in large pot
  2. add anchovies and simmer for 1 hr on medium heat
  3. reduce heat to simmer
  4. pound all rempah ingredients in mortar into smooth paste
  5. heat 4 tbsp veggie oil in a pan over medium heat and saute the rempah paste, 5 – 10 min until fragrant and dark brown
  6. mix in rempah and coconut milk to the pot of broth
  7. turn heat up to boil
  8. season broth with fish sauce, sugar and salt

Sambal belacan

-ingredients

  • 10 g dried shrimp paste (belacan)
  • 4 chilli padi
  • 4 red chillies
  • 2 calamansi (Kafir lime)
  • 1 tsp sugar
  • 1/4 tsp salt

-method

  1. Saute shrimp paste on dry pan until fragrant
  2. In a mortar, pound chillies and shrimp paste until homogenous
  3. add calamansi lime juice to the paste
  4. add sugar and salt to taste
  5. store the sambal belacan in a container

Procedure to serve laksa
-steps

  1. apportion and add all ‘ingredients to serve except curry leaves” to a serving bowl
  2. “Rinse or run through” the above ingredient with laksa broth several times.This will slow cook the ingredients.
  3. add in the laksa broth, sambal belacan (according to your spiciness level), and curry leaves.
  4. Serve hot.

Alternative ingredients to enhance flavour and texture

  • cooked blood cockle, shelled

Pickled red ginger method

ingredients and method

  1. shred 230 g fresh young and peeled ginger root into strands; place them into bowl, spinkle 1 1/2 tsp salt, stir to coat and stand for 30 min. Next, transfer to a clean jar.
  2. In a saucepan,stir in 1 cup of rice vinegar and 1/3 cup of sugar until latter is dissolved. Bring to simmer and pour the boiling liquid over the ginger root shreds in the jar.
  3. Allow the mix to cool and then cap and store in fridge > 1 week to age. The liquid will change to pinkish in colour.
  4. Ready to serve.

DIY Yu Sheng (Chinese Prosperity Toss)

-ingredients

  • 100 g white radish, shredded
  • 100 g carrot, shredded
  • 100 g unripe mango, shredded
  • 75 g pickled papaya, shredded
  • 50 g spring onions, shredded
  • 1 red chilli, shredded
  • 6 pickled leeks, shredded
  • 100 g pomelo wedges, peeled & separated the sacs
  • 4 kaffir lime leaves, finely shredded
  • 20 g young ginger, finely shredded
  • 1 pair yao char kwai (cruller), sliced thinly and deep dried til crispy
  • 100 g sweet potatoes, finely shredded
  • 50 g toasted sesame seeds
  • 70 g roasted peanut, pounded

-sauce ingredients

  • 300 g plum sauce
  • 1 tbsp lime juide
  • 3 tbsp honey
  • 1 tbsp sesame paste
  • 1 tsp sesame oil
  • 1/2 tsp salt to taste
  • 10 g Chinese five spice powder (in red packet)

-method

  1. deep fry shredded sweet potatoes in hot oil until crispy. Remove from oil & drain well.
  2. combine the sauce ingredients in a small saucepan. Bring to a to a low simmer. leave aside to cook completely.
  3. arrange the shredded ingredients attractively on a big round platter.
  4. to serve, pour the sauce over the yu sheng and sprinkle with five spices powder. Add a sprinkle of sesame seeds and roasted peanuts.

other subtitute ingredients

  • seng kuang (chinese turnip)
  • grapefruit (substitutes pomelo)
  • pickled red ginger (recipe)
  • chinese pear
  • water chestnut

Simple meat marinate

-ingredients

  • 1/4 cup soy sauce
  • 2 inch ginger, peeled and grated
  • 3 cloves garlic, chopped
  • 1 tsp sesame oil
  • 1/2 tsp crushed red pepper
  • 1/2 tsp black pepper (and more for seasoning later)
  • salt

-method

  1. add all the above to mix
  2. add meat to marinate
  3. keep marinated meat refrigerated, > 2 hrs to 24 hrs
  4. remove from fridge to equilibrate to room temperature, 30 min

 

Nasi lemak with dried anchovies sambal

-ingredients

  • coconut rice
  • dried anchovies sambal (see below)
  • cucumber, sliced
  • fried anchovies
  • fried peanuts
  • hard-boiled eggs, halved

coconut rice

-ingredients

  • 400 g (2 cups) rice, washed and drained
  • 3 screwpine leaves (pandan), washed and knotted
  • 1 shallot, peeled and thickly sliced
  • 1 tsp salt
  • 400 ml coconut milk
  • 200 ml water

-method

  1. place all ingredients into a rice cooker
  2. cook as per cooker’s instruction

fried anchovies sambals

-ingredients

  • 50 g deep fried anchovies
  • 1 large red onion (approx 210 g), quartered and sliced thinly
  • 60 to 70 g light brown sugar
  • 15 g tamarind paste mixed with 1 cup of water, discard the sediment later (or strained)
  • 1 1/2 tsp salt
  • 1/2 cup cooking oil

spice paste

  • 100 g shallots peeled and coarsely chopped
  • 1 bug yellow onion, chopped
  • 40 g dried red chillies, soaked in boiling water and drained
  • 1 tsp roasted shrimp paste (belacan)

-method

  1. blend spice paste ingredients
  2. saute in moderate heat with oil
  3. stir until fragrant (and oil separated from paste)
  4. add red onion and stir briefly
  5. mix in tamarind juice, sugar and cook, 20-25 min
  6. mix in fried anchovies and cook for 15 min
  7. season with sugar/salt to taste