Since 2010, the café industry in Singapore has taken off and started booming with hundreds of new cafes opening every year. However, as the market gets more crowded and competitive, the survival and profitability of these cafes have been called into question. According to Singapore’s Accounting and Corporate Regulatory Authority (ACRA), nearly a quarter of the 391 cafes that opened in 2014 have already shut its doors.
If you are a café owner or a person who is aspiring to become one, we would like to share some relevant management tips and unique differentiating factors on how you can emerge stronger from the competition, continue to stay afloat and even thrive in such a competitive environment.
Quality over novelty
Many café owners decided to spend big money on décor and interior design with the hope of drawing the crowds through these unique features. However, we know that one of the key reasons why customers are drawn back again to cafés is quite simple: they look for consistency and excellence in the quality of food and drinks being served.
Having a novel concept or menu may attract customers and arouse some curious ones to check out the hip factor, but if you intend to run a sustainable business, your café will have to deliver quality and consistency day in and day out.
Excellent customer service (more than just good customer service)
Everyone loves to see a familiar face behind the kitchen or coffee machine. Most cafes are built to create conversations and set up for people to connect with one another. If your café is focused on building long-term relationships with your staff and customers, the results will start showing over some time.
Partnerships and collaborations
Partnering with complementary products or concepts will help to draw the crowds, raise the business profile and ultimately increase your revenue. In most cases, sharing the space with a bakery, pastries or dessert outfit would usually work out pretty well. Introducing merchandise items and integrating your space with a feasible retail concept would also be an idea worth exploring.
Strong unique value proposition
Is there a unique theme that creates buzz and talking points about your café? Does your café exude a vintage or retro charm that has a nostalgic effect? Or perhaps your setup is meant to attract a certain type of community (e.g. pet lovers, dating couples, bikers etc.)
Having a unique value proposition that is able to capture the hearts of your target audience and resonating with their needs will set your establishment apart from the rest.
According to a study conducted by SPRING Singapore, only 60% of the smaller F&B businesses survive the first five years of operations, while others are constantly being replaced.
It was found that lean workflow, menu engineering and financial management are some of the ways such owners can turn passion into profits. These included relying on automation and technology to enable owners to simplify labour-intensive or inefficient processes. (Source: http://www.channelnewsasia.com/news/business/singapore/how-smaller-f-b/2010364.html)
At the moment, the café trend continues to stay strong as busy Singaporeans are seeking for hideouts to chill and catch up with friends and family. As the scene evolves, newer cafes will have to stand out from the rest to grow and survive while the existing ones will have to maintain consistency in quality and strengthen relationships.