The Costs and Considerations of Starting a Food Business in Singapore
Many Singaporeans dream of one day being their own boss. Whether it’s an online venture, a service-based start-up, or a traditional brick-and-mortar shop, the idea of pursuing a personal passion and having greater control over one’s time is incredibly appealing. Some realise this dream early. Others may wait years before taking the leap — or never take it at all. What is certain is that starting a business involves much more than passion. It requires careful planning, financial discipline, and a realistic view of the challenges ahead.
Among the wide variety of business ideas, the food and beverage (F&B) industry continues to attract many who love cooking and eating. A number may take over a family business or purchase an established outlet. Franchising is another option — though most who enter this industry prefer to create something of their own. For first-time operators, the realities can be daunting. So, what should an aspiring café or restaurant owner consider before jumping in?
The Realities of the F&B Industry
Singapore’s F&B landscape is vibrant and highly competitive. With countless dining options packed into a small nation, new entrants face pressure to stand out, attract customers, and keep costs under control.
Many new eateries struggle to break even in the first few years, and some do not survive long-term. It can also be challenging to hire and retain staff in a labour-tight market. With rising operating expenses — from rental to utilities to wages — business owners must plan with both caution and creativity to succeed.
Cook Up a Plan
A strong business begins with a strong business plan. Before securing a location or designing a menu, take time to map out essential details, including:
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Business concept and brand identity
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Target customer profile
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Preferred location and expected foot traffic
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Financial projections and pricing strategy
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Marketing and social media plans
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Supplier and inventory management
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Staffing structure and service standards
No plan is perfect, but planning helps you anticipate challenges and evaluate whether your idea is financially viable. It is also wise to set aside contingency funds for unexpected setbacks — an often-overlooked but critical step.
Starting an F&B business requires significant capital due to high rental, renovation, equipment, and manpower costs. Funding typically comes from a mix of personal savings, loans, and support from partners or family. It is advisable to reserve a few months of overhead expenses as working capital to cushion potential slow periods.
The Costs of a Shopfront
For most F&B businesses, rental is the largest expense. Ideally, rent should not exceed around 10% of projected total revenue — but with prices in popular locations continuously rising, this can be difficult to achieve.
For example, securing a 1,000 sq ft ground-floor shophouse unit in busy central districts may cost over S$10,000 a month in rent alone. Even in heartland areas like Ang Mo Kio, rental for similar-sized units frequently exceeds S$5,000 per month.
Once leased, the next major investment is renovation. It takes considerable work — and money — to transform an empty unit into a fully functioning restaurant or café. As a rough guide:
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Renovation & furniture: ~S$100–S$120 per sq ft
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Kitchen equipment: upwards of S$50,000
Additional considerations include:
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Takeover fees when assuming a space from a previous tenant
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Short lease terms (usually 2–3 years), making cost recovery challenging
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Potential rent increases when renewing the lease
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Restoration costs required upon exit
These factors highlight the importance of choosing a site strategically — balancing visibility and customer access with long-term affordability.
Licenses to Operate
To operate legally, F&B businesses must comply with local regulations and obtain the necessary approvals. Common requirements include:
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Business registration with ACRA
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CPF registration for employee contributions
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Food Shop Licence from the Singapore Food Agency (SFA)
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Food hygiene certifications for food handlers and a designated Food Hygiene Officer
Depending on the business concept, additional approvals may apply, such as:
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Halal Certification (MUIS)
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Liquor Licence (Singapore Police Force)
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Import permits for meats, eggs, and certain food products (SFA)
Requirements may change over time, so it is essential to check the latest licensing guidelines on the relevant agency websites.
The Costs of Operations
Even after opening, expenses remain substantial. Monthly operating costs typically include:
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Utilities (gas, electricity, water) — often S$1,000 or more
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Salaries (e.g., service staff ~S$2,000, cooks/chefs ~S$3,000 and above)
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Food ingredients and inventory
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Marketing and promotions
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Maintenance and cleaning services
Controlling cost of goods and manpower while maintaining quality service is an ongoing balancing act.
Other Compliance Factors
There are additional obligations that new owners may not immediately be aware of, such as:
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Pest control contracts, including regular inspections during licence periods
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Fire safety requirements, including a valid Fire Certificate issued by SCDF
If the unit was not previously used for F&B, landlords may not have an existing fire certificate — and this may require time and cost to obtain. It’s advisable to clarify these responsibilities before signing any lease.
Seek Advice from Professionals
The considerations shared here are not exhaustive. Every F&B business comes with unique challenges based on its concept, size, and target audience. Speaking with experienced operators, consultants, and industry mentors can help you avoid costly mistakes and structure your plans more confidently.
Starting an F&B business is a thrilling ambition — but one that demands commitment, discipline, and resilience. With careful planning and a strong support network, your culinary dream has a far better chance of becoming a sustainable reality. PRIME
