The Real Cost of Staying Open: Why F&B Passion Alone No Longer Pays

Running a food business today takes more than passion for cooking. Behind every successful restaurant or café is a careful balance of cost control, smart planning and operational discipline.

Managing food costs is not just about saving money; it is about sustaining quality, people and profit in the long run

When Cost Catches Up: Entrepreneurs Grapple with Squeezed Margins in Singapore’s Food Scene

It often begins with a dream: serving good food, building a community, turning passion into profit.

But for many food entrepreneurs in Singapore today, that dream has become a daily balancing act between creativity and cost.

As consumer spending slows and operational expenses rise, the question is no longer how to grow but how to survive sustainably.

According to recent reports, Singapore’s food and beverage closures have continued at a worrying pace, even as new cafés and eateries open each month.

When a Full House Still Means Empty Profits

For many restaurant owners, full tables no longer guarantee healthy margins.

Rising rent, electricity bills and raw ingredient prices can eat into profits faster than sales can replenish them.

In a 2025 industry survey, up to 80 per cent of F&B operators reported operating at a loss, with only a handful achieving net margins above 5 per cent.

One café owner in Bugis shared that a 10 per cent spike in milk prices last quarter wiped out her entire monthly profit. “It’s not about making money anymore,” she said. “It’s about staying open.”

Rent and Manpower: The Twin Throttles

Rental renewals remain the toughest hurdle.

Some tenants have faced rent hikes of up to 50 per cent, forcing difficult decisions such as downsizing, moving to smaller units or switching to delivery-only models.

Manpower is the other squeeze. As larger chains offer higher wages and structured career paths, small operators often struggle to retain talent.

To cope, many business owners have taken on hands-on roles, from cooking to washing up, just to keep payroll manageable.

Yet long hours and constant stress come at a cost to wellbeing and morale, leading to fatigue and turnover.

When Dining Out Turns into a Luxury

Raising menu prices is a delicate balancing act. Singapore diners are price-sensitive, and even small adjustments can affect demand.

The Forbes 2025 Restaurant Report found that restaurants raising prices beyond 10 per cent often experienced lower customer traffic.

In Singapore, eating out is increasingly seen as a treat rather than a weekly routine (Source: Reuters).

To hold on to regulars, many operators are designing value sets, smaller portions and prix-fixe menus that preserve affordability without eroding profits.

It is about protecting perceived value while keeping the business sustainable.

The Hidden Cost of Waste

Behind every profitable kitchen lies a well-managed storage and forecasting system. Food waste remains one of the most overlooked drains on revenue.

Singapore generated 784,000 tonnes of food waste in 2024, accounting for about 12 per cent of total national waste, a costly reminder of inefficiency.

More eateries are now investing in digital inventory tools and POS-linked forecasting that track usage trends, reduce over-preparation and alert managers to anomalies.

Some even turn surplus ingredients into daily specials — creative, sustainable and margin-friendly.

Adapting Business Models to Stay Viable

The toughest operators are not just trimming costs but rethinking their business models altogether.

A 2025 report by SS&C Blue Prism revealed that over 70 per cent of Singapore SMEs plan to redesign operations to stay resilient amid uncertainty.

In the F&B world, that means exploring hybrid models that combine dine-in, take-away and catering, or leveraging automation and digital ordering to manage manpower shortages.

Cloud kitchens, subscription-based meal plans and co-sharing kitchens are also emerging as practical alternatives for keeping overheads low.

Still, transformation requires both mindset and skills. Some business owners cite a lack of digital know-how as a key barrier, showing why capability building is as vital as cost control.

Mindset Matters: Balancing People, Planet and Profit

True success now extends beyond profit margins. Many entrepreneurs are embracing a “triple bottom line”, caring for people, planet and profit together.

That means looking after staff wellbeing, sourcing responsibly and building long-term customer trust.

A disciplined mindset helps too. Entrepreneurs who track metrics weekly, hold team huddles and maintain open communication tend to spot inefficiencies early and sustain morale through tough seasons.

It is not just about managing costs; it is about leading with clarity and compassion.

Looking Ahead: Turning Pressure into Purpose

Yes, the current climate is challenging, but it is also a turning point. Entrepreneurs who combine creativity with strong business fundamentals will not only endure but emerge sharper.

Start lean. Plan for uncertainty. Build systems that scale with you.The path forward may not be easy, but it can still be meaningful. In today’s food business, profitability is not the destination — it is the outcome of purpose-driven, disciplined work.

Disclaimer

The information contained herein is provided for general informational purposes only. While every reasonable effort has been made to ensure the accuracy of the information, inadvertent errors or omissions may occur. No representations or warranties, express or implied, are made regarding the accuracy, completeness, or suitability of the information provided. The authors expressly disclaim any and all liability arising from, or in connection with, any errors or omissions. Recipients are advised to seek independent legal counsel for advice pertaining to their individual circumstances.