Musings of an Intrepid Business Owner (IV)

I served my last customer exactly one week ago. It is the long summer break again which will stretch from early May until mid of August. What’s more my lease is due for renewal and I am hesitant to renew it without a long term plan for the business. I think this is probably one of the reasons that lead to the closure of many F&B businesses. The end of their lease acts as a logical milestone to evaluate and decide on continuation. I decided not to renew my lease and I have the next two months to decide also whether to find another location, pivot my business model or simply shut it all down. What led to this decision point?

#14 Family Commitments

My husband had supported my dream to start a F&B business. We had hoped that the business would become profitable or at least sustainable such that it can function without me. However neither objectives were met. We were not able to be profitable nor sustainable without my constant attention to it. In the end, it took a toll on the family both in the lack of financial inflow and also time to be with my children. Thankfully we had earlier planned for multiple sources of income and we had the blessing of our extended family to take care of the children. I think it didn’t help that while I’m gaining experience and connections as a first time business owner, many of my peers have continued to develop in their corporate careers and become wealthier. The manifestation of this through their social media posts boasting of their holidays escapades, luxurious homes and other achievements gnawed endlessly at me. It left me questioning my life choices and how much more our savings and investment pot would have been if I still held my job. My husband didn’t like the idea of being the sole breadwinner and seeing our savings begin to dwindle. His constant nagging really annoyed me but the reality is that I really didn’t know how else to turn my passion into profit, and whether keeping at it for another couple of years more would really make the difference.

#15 The Realities of F&B Business

There must be a reason that more than 70% of new F&B businesses in Singapore don’t survive beyond three years and I think I know why now. The barriers of entry into F&B is so low, it’s not difficult to just register your business, rent a place and start selling something to eat. This means that consumers are constantly being bombarded by new food concepts to experiment. Singapore is a small country so it’s not unheard of that Singaporeans will travel all over the island to seek out new and interesting food. But after all is said and done, when the fad dies down, these F&B businesss will not be able to survive without a regular stream of customers. The other reason for the high failure rate is that due to how competitive this industry is, margins are super low. After paying off your landlord, employees and suppliers, the owner is left with barely more than 10% of their revenue. Most of which needs to be pumped back into the business for R&D, marketing and other maintenance works. As a corporate slave, it makes me wonder all the time why I would sacrifice my 5-digit salary for this kind of remuneration.

Based on my analysis, there are probably only three ways to really make it in the F&B space.

One, by systemising your entire F&B operation from menu design, inventory management, production and delivery to customer service so that it can be easily replicated into many other outlets. While you may not make a lot in a single business unit, with the formula in place, it would be much faster for subsequent business units to take flight. That’s when the business starts benefiting from economies of scale and achieve multiplier effect in terms of revenue.

Two, by creating unique product offerings that appeal to consumers. I’m not talking about your daily three meals a day type of restaurant. I’ve come to realise that sustenance type of food is the hardest way to make money because consumers are very budget conscious when it comes to this. On the contrary, consumers are willing to pay a premium for things they value and these come in the form of either beverages (either coffee or alcohol fix) or instagrammable sweet treats (so that they can boast on social media).

Three, staying long enough in the business. This does require your F&B to actually at least breakeven, having deep pockets to keep it going indefinitely, and lots and lots of passion and dedication. Customers are afterall creatures of habit especially when it comes to their daily meals. The less brain cells they need to spend on deciding where to eat, the more efficient they are in other tasks. If you can stay long enough in the business, eventually you will build up a strong core of regular and loyal customers who come like clockwork to eat your food and ensure that you stay in business for their own needs.

#16 Bureaucratic Landlord

My little bistro is located within an educational institution and I realised much too late that my landlord would be a bureaucractic and conversative taskmaster. After the media storm, they required me to undertake several contractual clauses that would severely limit what I wanted to do with the anime themed cafe. I tried to follow their protocols until it became ridiculously unreasonable. Together with an influential content creator who is also a student, we managed to clinch a sponsorship from a game company to host their anniversary celebration at our cafe. It was a wonderful opportunity on many levels since it was the first time this Chinese company was willing to foray into another country. However the institution rejected the proposal and was adamant that approving this celebration would be endorsing some kind of heretic, controversial game just because it contained some gun violence, war and discrimination against monsters. I was mortified. What century are we living in?! We threw in logical arguments and student petitions at the management but they refused to compromise. In the end I chose to continue with the cafe collaboration albeit with some modifications which would allow me to fly under the radar of the legal commitments. Thankfully the collaboration event went on to be so much more successful than I ever imagined… and the school management did NOTHING about it.

I had the misfortune of having a rather problematic neighbour move into the unit next to mine in August. Initially we were pretty friendly and supportive with one another. However things took a turn when the owner started becoming extremely competitive by spying on my business constantly and even copying my menu items. The last straw came when the school issued me a notice to close the door to my bistro to contain food smells from leaking into the main concourse. I was shocked. No one has ever complained about my food smells. On the contrary, all the smell complaints had been levelled at my neighbour as their curry is really pungent in the wrong way. The engineers they sent my way to investigate the smell issue even concurred that I wasn’t the culprit. Nonetheless, the lousy excuse of a landlord concocted some excuse that mandated me closing my door and even sent their ‘minions’ to bother me everyday to do so. They must have so much time on their hands to do this. In fact I learnt that they levelled the same ridiculous treatment on my neighbour and another Japanese restaurant so much so that the latter decided to move out. We’ve seen so many F&B move out of the school in the last year. Goes to show that I’m not the only one suffering from this.

#17 Waning Interests

I started the anime themed cafe as an outlet for me to express my creativity. Over the last two years, I’ve pretty much exhaused all possible ideas I have. Some ideas were really successful, some were duds but all of them gave me a sense of satisfaction. I’ve had official collaborations with animation studios and game companies, I hosted a maid cafe and got into major news for it, I boothed at the largest anime convention in Singapore, I created my own rotational menu with themed food, drinks and campaigns that entertained many customers, and most recently I organised my own cupsleeve event around an otome game. I have also built a community of followers and hopefully helped them find some form of solace from their stressful lives through this group.

To be honest, I am rather tired from running this business entirely on my own for these last two years. In addition, I started the anime themed cafe concept during a time when anime themed events were pretty much blue ocean. Nowadays we have anime conventions happening every other weekend, and many fans are creating their very own fan made pop-up events for the games and anime they love. The anime community has grown tremendously due to the exposure. Like it or not, with this kind of growth, toxicity has started to permeate within the community. It feels like a tumour that threatens to destroy the entire body from inside because this space is hardly regulated. Because of these developments, my interest in this space is starting to wane. Perhaps it was never that strong to begin with. Nonetheless without a strong vision for the business, I really find it harder and harder to keep going.

Applying Jim Colins Hedgehog Theory, my business should ideally be at the intersection of 1. What I love to do, 2. What I can do better than others and 3. What people would be willing to pay me for. I’ve never been a subject matter expert when it comes to cooking, anime, or gaming. I love to play a selected series of games, I watch anime from time to time, but I absolutely have no interest in cooking. I do love to create content such as themed events, though I’m not sure if I can do it better than others. I can journal, analyse and research better than most but I’m not sure the kind of stuff I write about is even interesting to anyone except me, much less pay me for it. Based on my experience running my cafe, themed events for games or anime that are trending or have a strong loyal base can definitely be monetised but the effort is huge.

If there’s anything keeping me from shutting down completely, it is because of the community that I’ve built over the last two years and with it all the hopes and expectations of having a safe space to continue loving their games, anime and art without the toxicity, prejudice, judgement and commercialisation. I’ll have to pray really hard to find that sweet spot.