Among many other things, Singapore is renowned for its hawker culture. Its street food culture is so popular that UNESCO recognises it as an intangible heritage. These street food ventures hold many prospects and opportunities for entrepreneurs looking to start up a business in the Food & Beverage (F&B) industry.
As appealing as it may seem to open and run a restaurant, the start-up and operational costs are on the high side. A more viable alternative can be found in hawker stalls. Yes, hawker stalls, and why not? These stalls are usually located around residential areas, giving the business a financial advantage. Since street food is part of Singapore’s culture, you wouldn’t have to worry too much about patronage (as long as you keep to your end of the bargain with quality meals). Also, rent is relatively a lot cheaper when compared to that of restaurants.
Having established the profitability of running hawker stalls in Singapore, this article gives an in-depth look at all it takes to get you started.
Are You Eligible?
As promising as the prospect of opening and running a hawker stall is, you’ll only be able to get it realised if you’re deemed eligible. However, the requirements for eligibility are pretty basic. You’ll need to prove that you’re:
- A Singapore citizen or a Permanent Resident
- 21 years old or older
In addition to the above, you’ll only be eligible if you’re not:
- A former assistant or nominee who has never been de-registered by the National Environment Agency (NEA)
- An undischarged bankrupt
- Already renting or a joint operator of 2 cooked stalls being managed by NEA
- Banned by the NEA from obtaining a hawker license
- Banned by any government or statutory boards from participating in any business tender
What Are Your Opportunity Costs?
Opportunity cost is a common term used in microeconomics, referring to the value or benefit you choose to give up in order to engage in another activity. More simply, if you choose to do one activity, you are giving up the opportunity to do another thing.
So, what does this do with setting up a hawker stall?
Well, if you have no experience in the F&B industry or running restaurants and food stalls, you’ll need to learn the nitty-gritty of the business before you can be qualified to run one. One good way to get such an experience is learning from hawkers in the street. You know, gaining first-hand experience. Then, there are also cooking classes and apprenticeship workshops you’re expected to attend. This will also include completing the Basic Food Hygiene Course (BFHC) if you’ll be selling cooked food. If you have an assistant working with you, they, too, would be expected to undergo these hygiene courses and training.
Since the process of getting experience would differ from individual to individual, it’s pretty hard to put a fixed price on it. In addition, you’ll be required to obtain a Hawker License before you are allowed to run a stall.
Bidding For A Stall Under NEA’s Hawker Tender
Once you’re done gaining the necessary experience, the next step is to find a hawker stall to call your own. Hawker stalls are under the management of the NEA, and you’ll need to send in a bid to rent one of them. NEA tenders are held monthly between the 16th and 26th of each month under the monthly tender scheme.
To do this, you’ll need to purchase a tender form and Submission Envelopes A and B. You can get the form and envelopes for $10 at NEA’s One-Stop Information and Service Center (OSISC), located in the HDB Hub East Wing. In addition to the bid form and envelopes, you’ll also need to purchase a cashier’s order from a bank and a postage stamp.
There’s no fixed amount for hawker stall bids, as it will vary depending on the location and size of the stall. However, if we go with NEA’s average successful bid amount, this puts it around $1,500.
What Happens When a Bid is Unsuccessful?
Like any tender bidding, there are situations when someone else would place a higher bid and get awarded the stall by NEA. However, if this happens, NEA will return your cashier’s order (your bid amount) 3-4 weeks after the end of the tender.
What Happens When a Bid is Successful?
The NEA will issue you a Letter of Offer 3-4 weeks after the end of the tender. This means the NEA has approved your request for a hawker stall and will allow you to rent the stall for three years. The NEA would also communicate the time of your scheduled appointment to sign the tenancy agreement. Once the tenancy agreement is signed, the NEA gives a period of about three months for you to start running the business.
At the point of signing the tenancy agreement, you’ll be required to make certain payments. The payments and estimated amounts include:
- First month’s stall rental: There is no fixed amount for this, as it depends on your winning bid. So, let’s go with NEA’s average price of $1,500
- First month’s Service & Conservancy Charges (S&CC): This is estimated at around $210
- A deposit of two months’ rent: This is required to ensure you do not default in the first two months as the business begins to pick up. Since the amount is double the stall’s rent, that’s an estimated $3,000
- Hawker License: This has a validity of three years and is estimated at $39
- Table cleaning fees: This is only applicable if you’re running a cooked food stall and is put at an estimated $600
This brings the total estimated amount you need to pay to $5,349.
Setting Up The Hawker Stall
Having been given the green light by the NEA, it’s now up to you to set up the hawker stall and get it running within three months. A large percentage of the total cost will go into purchasing the equipment and materials for running the stall. It’s practically impossible to give estimates on each item, especially since prices differ between brands and also depend on whether the items are new or used. So, here’s an example of a list of things needed for a hawker stall selling cooked food:
- Kitchen equipment: This will cover ovens, stoves, microwaves, etc.
- Metalwork: This will include food preparation surfaces, hoods, kitchen counters, tables, chairs, etc.
- Utensils: Cups, glasses, plates, bowls, cutlery, etc.
Since giving a higher projection is better, we can safely put the entire cost at between $10,000 to $12,000. This takes into account the rising cost of living and expenses.
Operating Cost Of Running A Hawker Stall
This is the cost needed for the day-to-day running of the stall. Let’s give an overview of what this could look like and put out some estimates for them.
- Monthly rent: Although the first three months’ rent is settled at the point of signing the tenancy agreement, you’ll have to continue making the payment for the remainder of the three years. So, that’s an estimated $1,500 every month.
- Table cleaning, refuse disposal, etc.: It should go without saying that these are necessary services for a hawker food stall. However, most entrepreneurs fail to factor it into their monthly operating costs. If we factor in the $600 for table cleaning, $210 for S&CC and refuse disposal, along with various other charges, it will be an estimated $1,200 for monthly service charges.
- Raw materials: What type of meals would you be selling? The price of food materials and ingredients will differ by availability and demand. With soaring costs of certain food commodities, it’s safe to put your monthly raw material expenses at between $8,000 and $12,000 (depending on the scale of the business).
- Salaries: If you plan to serve a lot of customers, you’ll need to hire an assistant. Assistants don’t come cheap, especially because they’re expected to work almost the same hours as you. The assistant(s) will be paid a monthly salary. So, let’s estimate this to be between $1,800 to $2,400.
Considering all these, you can expect a monthly operating cost of about $12,500 to $17,100. Then, to determine the revenue prospects, let’s assume the hawker stall services about 200 customers daily. If each of these customers buys food worth $5, and you keep the stall open for about 22 days a month, total revenue comes to $22,000.
Note: All calculations shown are only meant to be examples and not a standard for estimating the profitability of running hawker stalls.
Hawker Grants And Schemes To Use To Your Advantage
Singapore is always committed to providing support for small businesses and start-ups. As such, there are grants and schemes in place that hawker stall owners can capitalise on. Some of these include:
- Incubation Stall Programme
- Productivity Solutions Grant (PSG)
- Hawker Productivity Grant
- Hawker’s Development Programme
- Inclusive Growth Programme
Singapore’s hawker culture is one of the things the nation is famous for. Not only does it bring about the integration of communities, but it also offers many business opportunities to young entrepreneurs. To ensure that health and environmental standards are met, the NEA manages most hawker stalls and allows tender bids from prospective stall owners. This article gives insights on how to acquire and run these hawker stalls.
If you are keen on setting up a hawker stall in Singapore, you can connect with a company incorporation provider to help you through the process. It’s the most hassle-free and convenient way to give your business shape and turn your dream into reality. So contact HeySara today to register your company, get the required licenses as well as get advice on the different grants and schemes you are eligible for.