80% of S’pore F&B businesses are losing money. The “lucky” ones only make 5 to 7% profits.

The F&B industry in Singapore operates on razor-thin profit margins

Earning a great living while sharing their love for food are the most common drivers for someone to start an F&B business. However, for Singaporean chef-owner Bjorn Shen, making a big buck out of it is impossible, with most businesses failing to survive beyond the two-year mark.

For 5 to 7% profits, you should be thanking your lucky stars and kissing the feet of whoever you worship, because eight out of 10 people are losing money.

According to the ex-Masterchef Singapore judge, many new business owners are ill-informed and often assume that they can make 30% profits in the industry. He added that even if the business is profitable, they are at risk of closure if landlords decide to hike up their monthly rental to increase profits.

Do other F&B owners in Singapore feel the same? We spoke to a couple of them to find out.

Profit margins have thinned out, with some owners taking pay cuts to cope

Things have been far from rosy in Singapore’s F&B scene. The city-state saw the highest number of closures in 20 years in 2024, where over 3,000 establishments closed their doors. As of Aug 2025, more than 1,700 F&B businesses have already followed suit.

While some have beaten the odds, the majority were forced to shut down their businesses entirely. Keat Hwee Khoo, founder of Japanese hawker chain Mentai-Ya, was one of the many casualties of this phenomenon, when he shut down his last outlet in Apr 2025.

Similar to Shen, Khoo shared that businesses that bring in 7 to 8% in profits are considered good. “Nowadays it’s like that,” the 38-year-old shared, adding that the business typically brought in around 10 to 12% before costs increased.

Circumstances include an oversupply of F&B brands, which resulted in about 3,000 to 4,000 new F&B businesses emerging in 2024, he added. This surge is due to the increased availability of F&B rental spaces provided by shopping malls, new mixed development properties, and hawker centres.

“Our population is slowly increasing, but the per capita spending and consumption are not as high as before,” lamented Keat.

To cope with the rising costs, the 38-year-old increased the prices of his dishes. However, sales have dropped by up to 20 to 30%, prompting him to reduce his prices and seek out suppliers offering affordable yet quality ingredients. While the volume of sales came back, it thinned out his profit margins.

CakeInspiration, a homegrown bakery specialising in custom cakes, is also another F&B business that has experienced a sharp decline in profit margins amid rising costs. The business is run by husband-and-wife duo, Zhuo Jia Yi and Chan Kai Yan.

Kai Yang, who handles the business arm of the bakery, shared that the price of cocoa quadrupled at the end of 2023 and has continued to increase since 2024. CakeInspiration’s monthly rental has also increased by 40% since the couple renewed its lease this March.

The 24-year-old shared that raking in about 15 to 20% of profit was possible before costs rose, but as of now, the business is bringing in 5 to 10% on average monthly.

To adapt, Kai Yang shared that CakeInspiration had to expand beyond its traditional B2C model. The business has begun working with B2B clients, making custom bakes for events and hosting workshops, as well as offering simpler cakes for order.

As a custom cake bakery, the man-hours invested in fulfilling each order can be incredibly high, which can result in higher prices.

Kai Yang said that the business had more flexibility in its pricing in the past. However, with the emergence of more custom cake bakeries, resulting in greater competition and price comparisons, they are no longer able to charge as much for their bakes as they used to.

While CakeInspiration generates strong sales during the festive and wedding periods, the low revenues during the off-peak season significantly impact the yearly average. “Sadly, even the high months are not amazingly high that they can cover the low seasons,” lamented Kai Yang.

In general, every cost increased, but sales didn’t increase.

At the extreme, thin margins can also push business owners to take a pay cut to cope.

While this wasn’t the case for CakeInspiration, Kai Yang revealed that he was drawing only S$2,000 to S$3,000 a month even before costs increased.

Unfortunately, the same could not be said for Keat. Toward the end of Mentai-Ya, he stopped drawing a salary entirely and worked part-time at his friend’s F&B business. “Many of my F&B friends also drive Grab to supplement the drop in income, too.”

These might just be two anecdotes, but with thousands of local F&B shutdowns, it is concerning to aspiring entrepreneurs and diners alike. Business owners are losing optimism and passion in an oversaturated field, with a handful struggling to make ends meet.

Could Singapore really continue to call itself a “foodie nation” if local businesses aren’t in an environment to thrive?

Featured Image Credit: Mentai-ya, CakeInspiration