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The cafes in Singapore are growing at a rate of between 20-30 new cafes every month. However, about 15-25 will close during the same period, so the turnover is pretty high. The net growth is about 5-10 cafes per month.
2015 is also the year where new chains are invading Singapore. Examples include Dazzling cafe from Taiwan which recently set up shop at Capitol Piazza and Japan’s Watanabe.
If we are looking at a net growth of 5 cafes per month, then the individual cafes are growing at a faster pace than the big coffee chains (i.e. Starbucks, Costa etc.)
The heartland invasion
Cafes in Singapore are expanding out of the usual quaint districts such as Katong, Dempsey, Tiong Bahru to the heartlands (i.e. The Hideout at Cassia Crescent and even community centres (NOM in Macpherson Community Centre).
The two main drivers are the lack of space in the established “cafe locations” and the lower rents which they will enjoy in the heartlands. Community centers seem to be the “flavor” of the month, with Penny University opening a new outlet in Tampines Community Centre.
What is the café culture in Singapore?
Food served in cafes is still the main draw, more than the coffee. You might have heard of the term “instagrammable food” and this is the sort of trend we are experiencing in Singapore. It’s pretty different from the high street coffee culture in Seattle and Melbourne, where the quality of coffee makes or break a café.
Continuing on the topic of food, current food trend seems to be waffles, I termed it the “waffles of things”. You can have your usual sweet dessert waffles but you can also order savoury waffles paired with fried chicken and garlic sauce.
It does make sense to sell waffles in the café as they command an average pricing of $8 for dessert waffles and it can go up to around $20 for savoury waffles depending on the ingredients used.
Because "pretty" food are still very much in demand, cakes will still be the main stay. Crepe cakes and rainbow cakes are still the “in” cakes while the usual chocolate and strawberry are slightly less in demand. Again, commanding a price of at least $6 and a maximum of $10 per slice, selling cakes will also bring in a good profitable margin.
The whole day breakfast concept had probably waned a little, probably due to the novelty wearing off (it used to be fun having breakfast items during dinnertime right?). Everyone’s doing egg benedicts, so what is so special about yours?
Trivia Facts: Many cafes claimed that they pioneered the whole day breakfast concept in Singapore, but from the look of it, Wild Honey does have a lot of evidence showing that they are the first to start it.
Another thing that you might not see in cafes out of Singapore is the fusion of local food, such as Laksa Churros, and Laksa wraps etc.
So, are cafes making good money in Singapore?
In general, cafes in Singapore will have good sales for the first 6 months, courtesy of food bloggers such as Daniel food dairy, Iron Lady Chef and the legions of cafe hoppers. The tough part is sustaining the novelty moving ahead.
This is what leads to high turnover. Most cafes (4 out of 5) do not see their second year anniversary. But the ones that survive are generally profitable.
In the next article, I will delve more on my thoughts on the key success factors for Cafes’ survival.