Foodservice Profile – Singapore

Macroeconomic profile and consumer foodservice trends

Singapore's estimated 2022 population is 5.9 million. The country's 2021 gross domestic product (GDP) was US$397.0 billion with real annual GDP growth of 7.6%. Singapore is one of the wealthiest countries in the world with a per capita GDP of over $100,000.

Singapore has implemented a plan to treat COVID-19 as endemic, which means greater socialising and eating out is permitted. According to the Singapore Ministry of Health, at the time of writing, all persons in Singapore must wear a mask in indoor public settings but without indoor group size limits, including restaurants for those fully vaccinated. Those unvaccinated may not dine-in. Fully vaccinated travellers do not require approval to enter Singapore.

With a high vaccination rate (93%+) amongst working adults, a hybrid pattern of on-site and off-site attendance is expected to become the "new normal" in Singapore. As such, with many staff returning to the office, foodservice outlets located in business districts are expected to recover from the pandemic. Foodservice in tourist areas is also expected to recover with the return of (fully vaccinated) tourists.

Consumer foodservice in 2021 saw much innovation based on changing preferences in the wake of the pandemic. Foodservice operators are increasingly incorporating plant-based alternatives into their menus: for example, convenience stores LSR chain 7-Eleven entered into a partnership with plant-based meat substitute company Impossible Foods to create a line of plant-based ready meals and packaged foods. Furthermore, products such as Impossible Pork and Green Monday's OmniMeat are being adopted by many Asian FSRs such as Tung Lok Restaurants, Tasty Loong, and New Ubin Seafood.

Food delivery continues to help operators expand their consumer reach. Online delivery has also helped remove the location difference between foodservice establishments, as it helps them to expand their offer beyond their physical location. Ghost kitchens continue to increase in numbers as a means to reduce the burden on restaurants' capacity as well as to allow many virtual brands to grow without a physical presence. Due to physical distancing measures during the pandemic, some foodservice chains consolidated their outlet numbers and instead made use of ghost kitchens for order fulfilment in areas where their outlets were no longer in operation.

The Singapore foodservice market

In 2021, Singapore's consumer foodservice food and drink sales totalled US$7.9 billion. Between 2016 and 2021, foodservice sales decreased by a CAGR of 2.3% with a dip in sales during the pandemic. Both food and drink foodservice categories are expected to register a CAGR of 6.0% over 2021-2026 to reach US$10.7 billion in 2026.

Retail and standalone outlet locations combined accounted for over 90% of foodservice sales in 2021, followed by Travel, and lodging locations. Most locations saw sales decline between 2016 and 2021 with leisure and lodging declining the fastest. Over 2021-2026, all outlets are expected to see sales growth between 1.9% and 20.0% with highest growth coming from locations hardest hit during the pandemic.

Since the pandemic, consumers in Singapore have become increasingly focused on healthier and more sustainable lifestyles, leading to changing attitudes towards health-focused food and beverages within consumer foodservice. This trend has especially gained greater momentum in LSRs and street stalls/kiosks, which are major players in consumer foodservice in Singapore.

Healthy eating is also promoted by the Singapore Ministry of Health through a ban on partially hydrogenated oils from June 2021, and the Health Promotion Board launching stricter nutritional value targets for Healthier Choice labelling across food and beverages through both retail and foodservice in 2022. As a result, it is expected that consumer foodservice players, especially street stalls/kiosks and LSRs, will pay greater attention to nutritional values, from adapting healthier recipes to venturing into plant-based eating.

In 2021, Singapore's dominant foodservice channel was street stalls/kiosks with sales of US$3.9 billion, which is almost equivalent to the combined sales of all other channels. In comparison to FSRs or cafés/bars, street stalls/kiosks are relatively more affordable offering value for money meals. FSRs were the second largest channel with sales of US$1.5 billion. Asian restaurants accounted for 57.5% of FSR sales, followed by European (18.7%), and North American (13.5%). Cafés/bars were the third largest foodservice channel with sales of US$1.4 billion, followed by LSRs with sales of US$1.1 billion. Top LSR outlets were burger, chicken, bakery, and convenience store restaurants.

Compared to other foodservice channels, with generally simple menus that can be quickly prepared, food stalls/kiosks and LSRs are likely to continue to adapt and further innovate dishes, catering to changing consumer interests. Furthermore, with the return to an increasingly fast pace of life, street stalls/kiosks and LSRs, with a greater variety of new menus, could be the balance point of quick consumption and quality food. This could motivate operators, especially of chained outlets, to move away from the unhealthy image of "fast food". FSRs have also tried to adjust to meet consumers' changing demands for healthier and more sustainable plant-based alternatives. For example, as pork is heavily used in Asian cuisine, products such as Impossible Pork and Green Monday's OmniMeat are now being adopted by many Asian FSRs such as Tung Lok Restaurants, Tasty Loong, and New Ubin Seafood. In November 2021, Impossible Foods, the US-based food tech company, debuted its Impossible Pork products across more than 120 restaurants in Singapore. Together with the existing offer of Impossible Beef, Impossible Pork can be used for Western-style cuisine such as pizza and pasta, as seen in Da Paolo's restaurants. However, dishes made with plant-based alternatives cost more than meat and the sustainability of the plant-based offer is still largely dependent on the ability of food tech companies to lower the price of their products, which in turn can result in passing the cost-savings to consumers in terms of more affordable menu options.

Foodservice sales: independent versus chained operators

In 2021, independent operators (63.6%) were the largest foodservice providers over chained franchises (30.1%) in Singapore with sales of US$5.6 billion and US$2.4 billion, respectively. Both independent and chained operators saw equivalent declines during the pandemic. Independent and chained operators are expected to see equivalent recoveries of 5.7%-6.1% over 2021-26.

In 2021, independent operators of street stalls/kiosks in Singapore registered total sales of US$3.5 billion, followed by independent sales in cafés/bars (US$1.1 billion), FSRs (US$958 million), and LSRs (US$24.2 million). Due in part to the pandemic, all independent foodservice categories saw sales fall between 2016 and 2021. All independent outlets are expected to see growth over 2021-2026.

Chained LSRs was the largest chained foodservice category in Singapore with sales of US$1.1 billion, followed by FSRs (US$562.8 million), street stalls/kiosks (US$413.0 million), and cafés/bars (US$322.9 million) in 2021. During the pandemic, chained foodservice categories used new/existing food delivery options to stay afloat despite broad based sales declines except for in pizza, fish, and burger LSRs.

Foodservice: Eat-in versus delivery and to-go sales

Eat-in foodservice sales remained the highest at US$3.6 billion in 2021, despite being hit hard by pandemic restrictions. Home delivery was next at US$2.6 billion, followed by takeaway (US$1.8 billion), and drive-through (US$11.0 million) in sales in 2021.

Home delivery sales grew fastest by 58.7% over 2016-21, while eat in sales decreased across all channel sectors party due to pandemic lockdown restrictions. Street stalls/kiosks home delivery sales grew fastest (131.0%), followed by cafes/bars (77.2%), FSRs (51.2%), and LSRs (29.9%). Sales growth in all channel sectors are expected to moderate over 2022-26 as Singapore adjusts to its post pandemic new normal.

Food delivery platforms have especially helped FSRs reach new customers. In doing so, many FSRs are leveraging ghost kitchens for online delivery fulfilment, in an attempt to reduce the load on their own kitchens' capacity. Ghost kitchens, together with city wide delivery offered by food delivery platforms such as foodpanda and GrabFood, have helped FSRs stay afloat. However, the sustainability of this approach remains in question, as delivery platforms' fees are considerably high, approximately 30% of order value, which could affect profits of FSRs in the long term.

Foodservice sales: Offline versus online

Offline sales totaled US$5.2 billion versus online sales of US$2.8 billion in 2021. Significant growth in online sales occurred in street stalls/kiosks (140.4%), cafés/bars (94.2%), FSRs (52.1%), and LSRs (41.9%) between 2016 and 2021. Except for LSRs, offline sales remain most popular but with online sales gaining ground, online sales are expected to make up half of offline sales across all channel sectors. LSR online sales are only expected to continue exceeding offline sales by 2026.

Top chained foodservice companies in Singapore

McDonald's is Singapore's top chained foodservice brand with sales of US$446.8 million, representing a 18.5% share of the foodservice market. KFC was the second largest foodservice brand with sales of US$129.5 million (5.4%), followed by Din Tai Fung at US$84.0 million (3.5%), 7-Eleven at US$72.7 million (3.0%), and Pizza Hut at US$70.7 million (2.9%) in 2021. The top 15 brands account for around half of the total chained foodservice market in Singapore.

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Resources

• Euromonitor International:
  • Consumer Foodservice in Singapore (March 2022)
  • Street stalls/kiosks in Singapore (March 2022)
  • Limited service restaurants in Singapore (March 2022)
  • Full service restaurants in Singapore (March 2022)
• CIA world fact book - Singapore
• Singapore Ministry of Health
  • COVID-19 Phase Advisory
  • Vaccination statistics

Foodservice Profile – Singapore
Global Analysis Report

Prepared by: Kris Clipsham, Market Analyst

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