Coffee Shop Operators Embrace Budget Meal Scheme Changes

Coffee shop operators in Singapore have expressed approval for recent adjustments to the budget meal initiative, which will no longer be mandatory. This change, effective from January 10, 2024, aligns with efforts by the Housing and Development Board (HDB) to enhance the sustainability of the scheme. Under the new guidelines, existing rental coffee shops are not required to offer budget meals upon tenancy renewal, while privately owned establishments can opt out immediately.

The revised initiative gives coffee shop operators the freedom to choose their participation in exchange for improved discounts on rent or Temporary Occupation Licence (TOL) fees. Additionally, the HDB has standardized meal options, reducing the previous range from two to six budget meals to three specific offerings. These include an economy rice meal consisting of rice, one meat dish, and two vegetable dishes, a halal meal option, and a breakfast item. The requirement to provide two budget drinks remains unchanged, with prices typically around S$3.50 (US$2.70) for meals and S$1.20 for drinks.

Mr. Hong Poh Hin, chairman of the Foochow Coffee Restaurant and Bar Merchants Association, noted that this standardization assists operators in clearly defining what constitutes a budget meal. He pointed out that the lack of clarity previously led to confusion about what qualified as a budget option. Some stalls have offered limited budget meal sets due to low profit margins.

Mr. Hong, who runs a coffee shop in Serangoon, emphasized that extending the 5 percent rental discount for participating coffee shops over the full three-year tenancy term would encourage more operators to join the initiative. Previously, the discount was only available for one year upon participation. “Now they added another two years of discounts… This is an additional benefit to the operator,” he said.

Mr. Glenn Koh, managing director of De Tian, also welcomed the enhanced discounts, stating they would help lower operational costs and incentivize participation. Currently, 15 out of 20 De Tian coffee shops participate in the budget meal initiative, and most are likely to continue doing so. However, Mr. Koh highlighted challenges related to pricing budget drinks, which are set at S$1.20, resulting in slim profit margins. “That is also challenging for operators, because that’s our bread and butter,” he explained. He also noted the difficulty of consistently providing a halal option at each shop, suggesting that a halal-certified Western stall could meet this requirement.

As competition increases with the influx of Chinese cuisine stalls, coffee shops are experiencing a decline in foot traffic. Mr. Koh remarked, “All these added competition, that’s our challenges.”

While some stallholders have welcomed the changes, many reported that the adjustments would not significantly impact them. Most of the eight stallholders interviewed indicated a low take-up rate for budget meals. One worker at an economic rice stall estimated selling only two to three budget meals daily. Others, like Mr. Chua Sai Heng, who sells minced meat noodles for S$3 a bowl at a coffee shop in Bukit Batok, plan to continue offering budget-friendly options regardless of the scheme’s requirements.

“If I raise my prices, there won’t be anybody… I don’t dare to raise,” he noted in Mandarin, adding that his earnings adequately cover daily expenses. Similarly, Mr. Siew Ken Win, who operates a chicken rice stall in an HDB rental coffee shop in Serangoon, stated that they would likely continue to offer their budget meal, a smaller portion of chicken rice priced at S$3.50. “We’re already used to selling it, and customers are also used to buying it,” he added, emphasizing the importance of maintaining their offerings.

Mdm Siti Aishah, 61, who sells Malay food at a coffee shop in Bukit Batok, expressed uncertainty about the need to join the scheme since her nasi lemak is already priced at S$3.50. Nevertheless, she hopes to benefit from the 5 percent rental discount, which would be advantageous given the high rental costs.

As coffee shop operators navigate these changes, the balance between sustainability and profitability remains a critical concern in Singapore’s competitive food service landscape.