Singapore Budget 2018 Guide for F&B Businesses


Singapore Budget 2018 Guide for F&B Businesses

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How does Budget 2018 impact your F&B business?

The Budget announced on 19 February includes new grants and a rise in GST, among other things. What does this mean for food businesses? And what can you do about it?


Productivity Solutions Grant

With PIC (Productivity & Innovation Credit Scheme) ending, a new grant called the Productivity Solutions Grant (PSG), has emerged.

What you need to know about the PSG:

  • The grant is for up to 70% funding support

  • There will be a pre-approved list of off-the-shelf productivity-enhancing tech or solutions that you have to choose from

  • Application for this grant will be open on 1 April, via the Business Grants Portal


Enterprise Development Grant

The EDG is made up of two existing grants – the Capability Development Grant (CDG) under SPRING and the Global Company Partnership Grant (GCP) under IE Singapore.

What you need to know about the EDG:

  • Funding support for up to 70% of qualifying costs

  • Only applicable for company expansions overseas (as detailed in the Global Company Partnership Grant)

  • Launching in fourth quarter of 2018

  • Therefore CDG will not be available from the fourth quarter of 2018

  • SPRING and IE Singapore are merging to form Enterprise Singapore, the new statutory board under the Ministry of Trade and Industry administering the EDG


GST increase

GST will go up from 7 to 9% sometime in the period between 2021 and 2025.

The exact timing of when the GST increase will kick in depends on the “state of the economy, how much our expenditures grow and how buoyant our existing taxes are”.

We know that the GST increase is something everyone has been dreading and the rising cost of ingredients is a bigger challenge than ever for F&B businesses.

What you can do about it

We have over 3 years before the GST is planned to increase and if you proactively prepare for the hike, it will be much smoother sailing for you when the time comes.

Of course, you can expect consumers to be more frugal initially. But that will only last until they grow used to the idea of the higher GST and it becomes the new norm. So the question is, can your business last through the penny pinching period and be around for when people are ready to spend?


1. Reduce your costs

This is a no-brainer when costs are going up. Many restaurants have failed because costs are not managed well even when there is not GST hike.

These are some ways you can keep costs consistent despite the GST increase:

  • Portion control. Monitor the amount of food left over when your diners leave – if there’s always excess, you can reduce the portion size.

  • Start charging for disposables like takeaway containers and cutlery. Many hawkers already do this to defray their costs, plus you would be supporting environmental health. In turn you can encourage customers to bring their own containers.

  • Buy in bulk. If you know other F&B business owners who use the same ingredients, you could make use of economies of scale and order together at a better price from suppliers.


2. Don’t cheapen your business, offer more value instead

With GST increasing, people will start looking for ways to “cut down” or save. That doesn’t mean you can’t still attract them; work on doing something different.

  • Cheaper cuts of meat or cheaper vegetables doesn’t mean less quality; show your customers they are still getting good value by investing in their preparation and cooking techniques.

  • Beyond just food, you can pay attention to details that determine the value your customers perceive, like the ambience and service standards.



3. Look after your staff

  • GST increasing will hurt your employees too. Make life a little easier for them by providing staff meals (if you don’t already) – it’s also a good way to minimise food wastage.

  • Incentivise a good work ethic or hitting a sales target with bonuses or transport vouchers.


4. Adjust your concept

  • Embrace the fact that people will try to do more home cooking. If you have decent branding and differentiated items, consider selling ready-made/ ready-to-eat food (like Soup Spoon), or condiments (like soup bases e.g. Hai Di Lao)

  • Gear your menu options toward people who have to eat out (busy professionals, gatherings, unavoidable big-budget spending like celebrations)

  • Cafes will suffer because people will reconsider shelling out $6 - 7 for a latte and opt for cheaper options like local kopi or getting a Nespresso machine. One option for cafes to continue being sustainable is to build on their ready-to-eat options (think Pret-a-Manger) with high quality meals.



5. Offset your GST

  • If your business is not GST registered yet, you may want to consider volunteering to register for GST (even if your annual turnover is below $1 million). The benefit of doing this is that you can claim the GST incurred on your purchases, subject to the conditions for claiming input tax.


6. Keep your regular customers

  • Make use of loyalty or reward points to give customers a reason to return and become regulars (check out iCHEF's Customer Cloning System – it's included in our F&B POS system)

  • Customer relationship management systems can help you keep track of your customer data such as previous orders and favourites so that each customer feels remembered and special

  • With good analytics from your POS system, you can tailor promotions that suit your most important customers best


7. Tweak your menu

  • Do basic menu engineering by identifying which of your items has the lowest profit margin and lowest order rates, and improve them or remove them.

  • Customisable foods like salad and grain bowls allow you to use cheaper ingredients for the standard and offer premium ingredients at a higher price. This way, the extra expense is entirely optional and passed on to the customer.


8. Increasing your menu prices should be your last resort

  • It’s better to do several rounds of smaller menu price changes than to make one dramatic change, which could drive customers away

  • Customers have thresholds for how much they are willing to pay at your establishment – increasing the price from $7.60 to $7.99 is usually more palatable than changing it to $8.10.


Cheryl Tay is the editor and marketer at iCHEF Singapore. She also manages iCHEF Club, a growing community of F&B owners in Singapore – organising events, the blog, an online newsletter and the F&B Entrepreneur Bootcamp, the only regular workshop on opening a new restaurant in the country. In her spare time, she attempts to read every book that’s ever won a literary prize and watches cat videos. Like any proper Singaporean, her love for food runs deep – especially spicy food. Chili is life. 


New F&B Owner FAQ: How many foreign workers can I hire?


New F&B Owner FAQ: How many foreign workers can I hire?


New F&B owner FAQ: How many foreign workers can I hire?


Your foreign worker quota can be confusing because there are different permits and levies, depending on nationality and skill level. 

First, it depends on the number of full-time local employees you have (the quota is a percentage of the number of local workers you hire). 

Second, you have to pay a monthly levy for each foreign worker employed, and this levy is tiered. 

Which levy tier depends on the number of foreign workers you have in employment – the closer you are to the maximum quota, the higher the levy.

So what combinations of local and foreign workers will be enough for your manpower needs? 


Before we begin, some basics you need to know


1. Types of work passes/ permits available

Employment pass: For professionals, managers, and executives. Candidates must earn at least $3,600 a month. No quota/ levy.

S Pass: For mid-level skilled staff. Candidates need to earn at least $2,200 a month.

Work permit: No minimum qualifying salary. Valid for up to 2 years.


Dependant’s Pass: For spouse or unmarried children under 21 years of eligible Employment Pass to S Pass holders. 

Dependants of Employment Pass holders can get a Letter of Consent to work in Singapore if they find a job here.

Dependants of S Pass holders will need to apply for a Work Permit, S Pass or Employment Pass instead. They will have to meet the eligibility criteria for these passes.


2. Levy (Tiered)

As long as you employ work permit holders, you will have to pay the levy, which starts from the day the Temporary Work Permit or Work Permit is issued, whichever is earlier.

The levy payment is via GIRO and will be deducted on the 17th of the following month. 

If you don’t pay the full levy on time, you may face the following penalties:

  • You will be charged a late payment penalty of 2% per month or $20, whichever is higher, for late payment.
  • Your existing Work Permits will be cancelled.
  • You won’t be allowed to apply for or issue Work Permits, or renew existing Work Permits.
  • You may face legal action to recover the unpaid levy.
  • If you, your partners or directors head other companies, these companies will not be allowed to apply for Work Permits.

Read about levy waivers here


3. The levy for higher skilled workers is cheaper 

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4. Non-Malaysian work permit holders require a security bond


You need to buy a security bond of $5,000 before the worker arrives in Singapore.

The bond is in the form of a banker’s or insurance guarantee to support the security bond.

It will be forfeited if you violate conditions such as failing to pay salaries on time, failing to send employee back when work permits are expired or revoked, or if your worker goes missing.


5. The foreign worker quota  (based on the number of local employees)

Your foreign worker quota is calculated based on the latest 3-month average number of local employees in your company. Use the foreign quota calculator to find out how many you can employ.

Any late or non-payment of CPF contributions will affect your quota and may cause your workers to be allocated higher levy tiers.

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  • Local full-time employees are defined as Singaporeans or PRs under a contract of service with a minimum salary of $1,100/ month. 2 local part-time employees (earning $550 - $1,099/ month) count as 1 full-time employee.
  • The company director is considered a full-time employee if he/ she earns at least $1,100.

Business owners of sole proprietorships or partnerships and employees who receive CPF contributions from three or more employers are not counted when calculating your foreign worker quota.


6. For newly set up companies

If you haven’t made any CPF contributions yet, your quota for first month will be calculated based on your first CPF contribution, instead of the normal 3-month average.


Examples of F&B setups

and the number of foreign workers you can employ



Kiosk/ cafe with no seating, takeaway only

No. of employees needed: 3 (2 in the outlet on any given day)

Breakdown: 1 local full time employee, 1 work permit holder (Levy = Tier 3, $800/mth), 1 PT


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Small cafe with seating (no hot kitchen)

No. of employees needed: 5 (min. 3 in the outlet on any given day)

Breakdown: 2 local FT, 1 work permit holder (Levy = Tier 2, $600/month), 2 PT (equivalent to 1 FT local)


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Small restaurant/ bistro

No. of employees needed: 4 BOH (3 cooks, 1 dishwasher) + 4 FOH

Breakdown: 3 local FT, 2 work permit (Levy = 1x Tier 2 + 1x Tier 3 = $1400), 3 PT (equivalent to 1.5 local FT)



Full-service restaurant

No. of employees needed: 6 BOH (4 cooks, 2 dishwashers) + 6 FOH 

Breakdown: 6 local FT, 4 work permit (Levy: 1x Tier 1 + 1x Tier 2 + 2x Tier 3 = $2650) , 2 PT


7. Working hours

Employees are not allowed to work more than 12 hours per day.

Off days: You must provide at least 1 rest day per week. If the rest day is not a Sunday, you should prepare a monthly roster and inform your employee of the rest days before the start of each month. The maximum interval allowed between 2 rest days is 12 days.


Cheryl Tay is the editor and marketer at iCHEF Singapore. She also manages iCHEF Club, a growing community of F&B owners in Singapore – organising events, the blog, an online newsletter and the F&B Entrepreneur Bootcamp, the only regular workshop on opening a new restaurant in the country. In her spare time, she attempts to read every book that’s ever won a literary prize and watches cat videos. Like any proper Singaporean, her love for food runs deep – especially spicy food. Chili is life. 


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