Foodservice Profile – Singapore

Macroeconomic and consumer foodservice trends

Singapore is a high-income economy with a gross national income of US$82,807 per capita, as of 2022 (The Word Bank, 2024). The country offers a regulatory environment that is highly conducive to local entrepreneurs, making it one of the world's most business-friendly locations. It is consistently ranked among the most competitive economies globally.

In 2023, Singapore's GDP growth was by 1.1% which was slower than the 3.8% expansion in 2022. In the fourth quarter of 2023, the accommodation sector expanded by 1.5% year-on-year, a notable slowdown from the previous quarter's 12.6% growth. The sector's growth persisted, driven by a robust recovery in international visitor arrivals. On the contrary, the food and beverage services sector contracted by 1.5% year-on-year, reversing the 2.9% growth in the third quarter. The decline was attributed to lower sales volumes at various establishments, while food caterers experienced an increase in sales volume. Looking forward, the GDP growth is expected to be maintained at 1.0% to 3.0% in 2024. The ongoing rebound in air travel and tourism will boost growth in Singapore's tourism and aviation sectors. It will also positively impact consumer-facing sectors like retail trade and food and beverage service (Ministry of Trade and Industry Singapore, 2024).

Singapore, recognized for its fast-paced lifestyle and high work demands, is witnessing a shift towards convenience-driven consumption, partly due to an increase in single-person households. This shift is reshaping eating habits, fueling the demand for food delivery services, prepared meals, restaurants, and meal kits. According to a recent survey conducted by Euromonitor International, compared to 20% globally, 28% of Singaporeans report lacking time to cook. Consequently, 49% of Singaporeans, versus 33% globally, frequently opt for takeaway or ready-made meals at least once a week. Furthermore, 56% of Generation Z in Singapore dine out weekly, highlighting a significant trend towards convenience in the city's food consumption patterns (Euromonitor International, 2023).

In Singapore's dynamic foodservice sector, consumer preferences embrace a variety of culinary traditions, including Chinese, Malay, Indian, and Western cuisines. The prominence of health and wellness considerations fuels a demand for organic, natural, and low-calorie options. Technology is ingrained in the industry, with widespread use of mobile apps for food delivery, online reservations, and digital payments. The sector places high value on authenticity and quality, emphasizing genuine flavors and premium ingredients. Social media, particularly Instagram and Facebook, wields significant influence over dining decisions. Post-pandemic, a heightened environmental consciousness among consumers drives a proactive shift toward more sustainable consumption practices. Price sensitivity is notable among Singaporeans, who, amidst numerous foodservice options, readily opt for cost-effective alternatives aligning with their demands (Euromonitor International, 2023). The local consumer base is quick to embrace and share new food trends, particularly those visually appealing, fostering a culture that pushes for sustainable consumer foodservice brands to meet evolving demands (Euromonitor International, 2023).

In 2022, the consumer foodservice sector in Singapore saw significant growth driven by pent-up demand for dining out, with recovery rates varying across locations and channels. Outlets in tourist areas experienced robust growth due to the resurgence of travel, while those in the central business district faced slower recovery due to reduced office foot traffic from hybrid work arrangements. Despite these positive trends, the industry grappled with challenges such as labor shortages and rising inflation, partly due to the pandemic and geopolitical tensions (Euromonitor International, 2023).To combat these challenges, the sector innovated operationally, with a notable shift towards digital and technological solutions to improve efficiency and reduce labor dependency. Examples include Haidilao's collaboration with Panasonic for robot-assisted food preparation and partnerships aimed at reducing food costs sustainably, like Deliveroo's initiative with TreeDots. Additionally, the popularity of food delivery services continued to rise, benefiting from the digital shift and consumer preference for convenience and variety (Euromonitor International, 2023).

The Singapore foodservice market

In 2023, Singapore's consumer foodservice sector witnessed a total of US$9.4 billion in sales for food and drinks. Despite a relatively modest Compound Annual Growth Rate (CAGR) of 0.03% between 2018 and 2023, the industry is poised for a notable upswing. Projections indicate a more robust CAGR of 4.2% from 2023 to 2028, suggesting a significant acceleration in growth anticipated to reach US$11.6 billion by 2028.

The Singaporean government prioritizes improving health literacy and combating diabetes, initiating measures like the Nutri-Grade labeling for packaged drinks in retail since December 2022, extending to beverages in foodservice by 2023. Anticipated to influence consumer behavior, these steps respond to a growing interest in healthier lifestyles, accentuated by the pandemic. Consequently, consumer foodservice entities must adapt to changing preferences and cater to evolving demands, given the local populace's swift adoption of new food trends (Euromonitor International, 2023).

Retail and standalone outlet locations combined accounted for 88.3% of foodservice sales in 2023, followed by travel, lodging, and leisure locations. In 2022, consumer foodservice through travel experienced a notable sales boost following eased border measures and the reopening of Changi Airport Terminal 2. Conversely, standalone consumer foodservice witnessed a sales decline during the same period. Regarding lodging locations, hotel restaurants saw substantial business growth in 2022, driven by increased local patronage during the year-end holiday, with no restrictions on group dining (Euromonitor International, 2023). Over 2023 to 2028, all outlets are expected to see sales growth between 5.1% and 10.0%. Consumer foodservice through lodging is expected to be the best performing category, rising at a CAGR of 10.0% to US$518.1 million in 2028.

In 2023, Singapore's dominant foodservice channel was street stalls/kiosks with sales of US$4.5 billion, which is almost equivalent to the combined sales of all other channels. In comparison to full-service restaurants (FSRs) or cafés/bars, street stalls/kiosks are relatively more affordable offering value-for-money meals. Cafés/bars were the second largest channel with sales of US$1.79 billion. Asian restaurants accounted for 59.4% of FSR sales, followed by European (17.4%), and North American (12.8%). FSRs were the third largest foodservice channel with sales of US$1.75 billion, followed by limited-service restaurants (LSRs) with sales of US$1.39 billion. Top LSR outlets were burger, chicken, convenience stores, and bakery restaurants.

Tourist-centric cafés/bars at locations like Clarke Quay and Marina Bay Sands exhibited signs of recovery, attributed to a surge in tourist numbers. Projected to fully recover by 2024, this rebound is driven by positive consumer sentiment and the continued rise in tourist arrivals. In 2022, FSRs in Singapore demonstrated robust value growth, building on a substantial increase in 2021. The growth was fueled by pent-up demand for out-of-home experiences post-pandemic, aided by the removal of group size limits and safe distancing measures. However, FSR operators grappled with challenges like inflation, labor shortages, global supply chain disruptions due to geopolitical tensions, and protectionist measures in certain countries. Meanwhile, LSRs expanded their offerings, benefiting from the convenience of allowing dine-in options. Self-service cafeterias experienced increased demand in 2022 with eased restrictions and growing foot traffic. Street stalls/kiosks gained accessibility due to hybrid work arrangements, resulting in higher demand (Euromonitor International, 2023).

In the forecast period, international border movements are anticipated to rebound to pre-pandemic levels, boosting foot traffic at consumer foodservice establishments, especially those near tourist attractions. However, local consumption may decline as residents opt for authentic food experiences abroad, reducing dining out in Singapore. The recent increase in GST may restrict demand among middle to lower-income consumers, particularly affecting full-service restaurants. Consumers are expected to cut back on visits, shifting preferences towards lower-priced formats, such as casual dining replacing fine dining, and fast-casual replacing casual dining (Euromonitor International, 2023).

Foodservice sales: chained versus independent

In 2023, independent operators (67.1%) were the largest foodservice providers in Singapore, surpassing chained franchises (32.9%), with sales of US$6.3 billion and US$3.1 billion, respectively. Independent and chained operators are expected to grow at a CAGR of 6.4% and 6.5%, respectively, over the 2023-28 period. Chained operators in Singapore maintained market shares amid escalating food and energy costs, benefiting from established supplier relationships and bulk purchases. Conversely, smaller chains faced greater vulnerability to external cost pressures, prompting menu price hikes that dampened consumer demand. Independent players, like bars and street stalls/kiosks, adopted diverse strategies amid rising inflation. Independent street stalls/kiosks utilized digital solutions, including food delivery, to enhance revenue and expand consumer reach post-dining resumption. Independent full-service restaurants remained popular, driven by Singaporeans' penchant for exploring new food trends, often influenced by extensive social media engagement (Euromonitor International, 2023).

In 2023, independent operators of street stalls/kiosks in Singapore registered total sales of US$4.0 billion, followed by independent sales in cafés/bars (US$1.3 billion), FSRs (US$945.7 million), and LSRs (US$28.7 million). Due in part to the pandemic, most of independent foodservice categories saw sales fall between 2018 and 2023. All independent outlets are expected to see growth over 2023-2028.

In 2023, chained LSRs was the largest chained foodservice category in Singapore with sales of US$1.4 billion, followed by FSRs (US$805.8 million), cafés/bars (US$458.3 million), and street stalls/kiosks (US$447.2 million).

Foodservice fulfillment: eat-in versus delivery and to-go sales

The robust growth in the takeaway and delivery segments of the Singaporean foodservice industry aligns with changing consumer preferences, emphasizing convenience and digital experiences. The remarkable 48.3% CAGR in takeaway online ordering from 2018 to 2023 suggests a significant shift toward mobile and online platforms for ordering meals. The concurrent 32.3% CAGR in delivery online ordering during the same period underscores the increasing reliance on delivery services, including both first-party and third-party options. The steady progress of drive-through sales, with a 9.8% CAGR, indicates a sustained demand for quick and accessible dining options. The anticipated resurgence of the eat-in segment, with a projected 7.2% CAGR from 2023 to 2028, reflects consumer expectations for a balanced and diverse dining experience, combining digital convenience with traditional dine-in settings.

Competitive landscape

The relaxation of dine-in restrictions has positively impacted the demand for numerous foodservice establishments, concurrently fostering increased confidence among businesses to enhance their operations with the resurgence of consumer dining preferences. Conversely, the allure of self-service cafeterias is waning, as consumers increasingly opt for expediency in their fast-paced lifestyles or gravitate towards more upscale dining experiences in full-service restaurants. This shift in consumer preferences poses a challenge for self-service cafeterias, making it challenging for them to resonate with a broader audience and extend their influence within the community (Euromonitor International, 2023).

The foodservice industry in Singapore, as of 2023, displays a diverse landscape across various categories. In Consumer Foodservice, McDonald's Corp leads with a 6.0% market share (US$562.2 million), indicating a competitive market with a fragmented player base. Starbucks Corp dominates Cafés/Bars with a 4.9% share (US$87.7 million), while FSRs are led by Hai Di Lao Hot Pot and Din Tai Fung, contributing 12.1% collectively (US$211.0 million). LSRs are notably top-heavy, with McDonald's Corp holding a significant 40.4% share (US$562.2 million). Self-Service Cafeterias are characterized by Ikea Restaurant's dominant 71.5% market share (US$17.1 million), showcasing limited competition. Street Stalls/Kiosks remain a highly fragmented segment with no single player holding substantial market share.

Opportunities for Canada

Canadian exporters are presented with compelling opportunities in Singapore's dynamic foodservice sector. With Singapore relying on the import of over 90% of its food, there is a considerable demand for foreign suppliers, creating opportunities for Canadian exporters (Government of Canada, 2023).The diverse culinary landscape in Singapore provides a platform for Canadian exporters to introduce unique and high-quality food products, catering to the varied tastes of consumers. The growing emphasis on health and sustainability aligns well with Canadian offerings, encouraging the exploration of organic and health-focused products. Leveraging Canada's expertise in the agri-food sector, exporters can tap into Singapore's market appreciation for premium and diverse agricultural products.

The Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) further enhances Canada's position in the Singaporean market. Notably, the elimination of tariffs, particularly on beer, strengthens Canadian agri-exports. In addition, Canadian exporters of fish and seafood continue to enjoy duty-free access to Singapore(Government of Canada, 2023). The CPTPP not only facilitates trade but also fosters a favorable environment for Canadian investors in Singapore. With Canada's strategic Indo-Pacific engagement, exporters can strengthen partnerships, contributing to the overall vibrancy of Singapore's foodservice sector.

Tim Hortons stands out as a prime example for Canadian companies eyeing opportunities in Singapore's foodservice sector. The renowned Canadian coffee chain has successfully entered the Singaporean market, marking its third Southeast Asian expansion following the Philippines and Thailand (Bloomberg 2023). Tim Hortons' debut in Singapore has elicited an enthusiastic response, culminating in its record-breaking single-day sales globally. Despite facing stiff competition, Tim Hortons has demonstrated remarkable sales performance and consumer acceptance. With four outlets currently operational and plans for further expansion underway, Tim Hortons is strengthening its foothold as a prominent player in Singapore's LSR category. This strategic expansion also aligns with Tim Hortons' broader objectives to penetrate markets in Malaysia and Indonesia, presenting a compelling model for Canadian companies seeking to venture into the Asia-Pacific region.

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Resources

• Bloomberg, November 2023, Tim Hortons Enters Singapore's Crowded Coffee Shop Scene
• Euromonitor International, Data statistics, 2024
• Euromonitor International, October 2023, Megatrends in Singapore
• Euromonitor International, February 2023, Consumer Foodservice By Location in Singapore
• Euromonitor International, February 2023, Cafés/Bars in Singapore
• Euromonitor International, February 2023, Self-Service Cafeterias in Singapore
• Euromonitor International, February 2023, Street Stalls/Kiosks in Singapore
• Euromonitor International, February 2023, Full-Service Restaurants in Singapore
• Euromonitor International, February 2023, Limited-Service Restaurants in Singapore
• Euromonitor International, February 2023, Self-Service Cafeterias in Singapore
• Government of Canada, August 2023,  CPTPP partner: Singapore
• Ministry of Trade and Industry Singapore, February 2024, MTI Maintains 2024 GDP Growth Forecast at "1.0 to 3.0 Per Cent"
• The World Bank Data, 2024

Foodservice Profile – Singapore
Global Analysis Report

Prepared by: Zhi Duo Wang, Market Analyst

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