The onslaught of COVID-19 struck the F&B establishments especially hard, with the sector reporting inordinate losses during 2020. However, a few months ago, the F&B industry witnessed somewhat of a comeback as the country transitioned away from circuit-breaker procedures and eased into safely and gradually reopening the economy.
And now, as year-end 2021 approaches, we reflect on how F&B businesses can better position themselves for long term growth and profitability. For many years, analysts have highlighted the importance of digitalization and technology investments. Going forward, however, COVID-19 proved to be the catalyst in displaying to companies that digital revolution, innovation, and future technologies were essential for survival, especially in the F&B industry.
This attitude was shared by Mr. Chan Chun Sing, Minister for Trade & Industry, who stated that because the pandemic was worsening, the F&B industry needed to expedite their digitalization efforts to stay competitive.
The state of F&B establishments
Singapore has always been regarded as a worldwide metropolis with a thriving F&B sector. It is recognized as Asia's gastronomic capital, with cuisines from all over the world finding a home here with approximately 6,500 businesses and a 1% contribution to the country's GDP. With dining out as a national pastime, more Singaporeans working longer hours, and the ever-expanding tourism industry, the F&B sector is poised to grow even further, post-pandemic.
Challenges faced by non-digitalized F&B outlets
The massive spread of the coronavirus has resulted in a paradigm shift in what the globe has begun to consider the new 'normal.' With an estimated 219 million positive cases worldwide, COVID-19 has already sent dreadful shock waves, devastating not just lives but also the economy of most nations, given the strict implementation of lockdowns around the world. Here are some salient ways in which F&B establishments were affected.
Accessing Working Capital
When you examine all of the expenditures associated with running a restaurant, it may be daunting. Most restaurants have experienced financial difficulties during the pandemic owing to low profit margins and rising operational costs. In the restaurant sector, a business loan may be an economic lifeline.
A business cash line might be your best choice if you need additional money to help with operating expenditures or complete a project you've been planning. Some food businesses that can not afford to fund new initiatives with cash flow, such as renovations or expansions, seek bank loans to sustain, and grow, their operations. However, to avail a working capital facility from a traditional bank is quite challenging for a small business because of the stringent requirements for the same.
Sending Money Overseas
Owing to their incredible culinary diversity, F&B outlets also need to purchase their supplies from overseas. As such they need to pay their suppliers using money transfer services from traditional banks. At this point, the huge difference in exchange rates and variable fees can seriously eat into the profits of F&B establishments. And these businesses get squeezed further beyond the drastic impact that COVID-19 has on them. Not to mention the time delay they experience as a result before their overseas contacts actually receive the money sent to them.
Managing Corporate Spend
A continuous challenge for non-digitalized F&B outlets is the need to have transparency on their business expenditure. Such a feat has not been possible for them previously and as such they could not know how to have visibility on their business cash flow. Despite the grueling hours and hard work, they have remained oblivious as their outgoing payment sources have remained scattered. There could also be multiple partners or staff members who purchase on behalf of these F&B establishments which does not help bring visibility to their corporate spend.
Have you ever noticed your financial transactions to not make sense after a hectic day of interacting with a large number of customers? If you have, it is time for you to install a POS system to assist you in managing all transactions and other activities using an automated system. Manually taking orders, managing food item inventories, and receiving payments are prone to calculation or verification mistakes. A POS system can decrease the likelihood of such errors, as well as reduce your workload.
Neobanks as enablers for digitalization?
Neobanks are highly responsive. Full service organizations like INFT can provide F&B businesses with a business cash line at a much more competitive interest rate. And the funds can be disbursed to clients within 3 business hours from approval. Using artificial intelligence and machine learning technology, they can also help you build your credit and business reputation.
You can use the neobank’s online platform and app to transfer money overseas and save up to 70% off of bank fees. You can also get real-time exchange rates, the lowest flat-rate service fee, and most of the time the funds are available to recipients within a matter of minutes.
With an integrated Visa debit card, F&B establishments can be issued complimentary unlimited cards. They can also see all their business expenses from a single platform and have total visibility on the cash flow to better manage their finances and set spend limits.
Neobanks like INFT go beyond just finance. Working closely with partners, they also help F&B businesses with POS financing and guide F&B outlets in availing the relevant government grants so they can focus more on growing their business and be more profitable.
The perfect facilitators to help F&B establishments
Just on the surface, the solution offerings by neobanks may appear unclear to many startups and SMEs because the field is relatively new. Years ago, many traditional banks began to provide online financial services. Today, their mobile apps may be found on the smartphone screens of millions of consumers, including yours. However, digital-only neobanks, also known as challenger banks, have created waves in places ranging from the EU to Brazil. They are disrupting banking in Southeast Asia and helping businesses, including F&B, improve their business operations.
Neobanks combine innovative product restructuring with excellent integrated services. For this reason, startups and SMEs prefer to work with neobanks like INFT. In general, Singapore neobanks are benefiting from technological, financial, manpower expertise of western neobanks while remaining uniquely Singaporean and understanding the needs of local businesses much better.
INFT is Asia’s first community-driven digital business account for startups and SMEs. It is a truly user-friendly suite of exceptional business experiences comprising finance and much more. At INFT, we enable digital entrepreneurship.