THE beginnings of the birth pangs of continued inflation leading to stagflation – defined as “a period when slow economic growth and joblessness coincide with soaring prices” – are beginning to show.
This is despite the recent fleeting euphoria of heightened feel-good Ramadhan spending which left many food & beverage (F&B) cash registers ringing in robust sales.
Amid the “new normal”, the F&B industry is anticipated to be the fastest growing or one of the fastest growing sectors as people now tend to eat out and with tourism poised to make a comeback, according to Malaysia Retail Chain Association (MRCA) former president Datuk Seri Garry Chua.
“People are back with ‘revenge buying’ and ‘revenge dining’,” he told FocusM at his newly-opened restaurant with a million-dollar view perched on the rooftop of Avante hotel.
He added that the spending patterns of people now are vastly different in how they “think and take life very differently now” as seen in the spike in the prices of luxury goods like Louis Vuitton by 20%–30% with car sales also peaking.
And, while restaurant owners hope that this trend would continue, they are also battling soaring prices of imported goods as in seafood and many essential F&B items (due to increase in demand but this round is different stemming from supply chain and logistics issues) which they need to absorb in the interim period.
With the rising cost of living coupled by bank loans and interest rates having gone up, (having already gone up by half a percentage point in the US) everything will be more expensive. Furthermore, salaries are not rising up in tandem.
“The biggest worry now is the worldwide scenario with the US facing inflation compounded by The Ukraine war which has complicated things,” Chua remarked.
Noting that with the supply chain affected and China facing the big lockdown – “things are going to be very serious eventually” as he reasoned that “just a one-month lockdown alone will result in a very huge delay of supplies”.
“In a way, people are getting poorer and their buying power will be much less already except for those who have already made their money,” he said.
Tourism, meanwhile, is anticipated to take another year or so to make a comeback in Malaysia.
This is with Thailand’s tourism industry being less than half of the peak level in Malaysia which should tap on the high value of medical tourism which is the fastest growing in the world.
And, while the opening of the international borders have seen Singaporeans coming in, what is needed are international tourists. Retail-wise, many are still facing challenges, with some still in rental arrears which they incurred as far back as the pre-COVID-19 era which will take time to settle.
“Some landlords have been very kind in giving very big rebates so these tenants are living on the goodwill of these landlords,” Chua added.
For many big F&B retailers, the bigger they are the more they will suffer because there are so many outlets to manage besides the challenge to keep staff employed.
Rental remains a big challenge for bigger chains which will slow down bigger chain expansions in the foreseeable future. Smaller chains have a better advantage as they are expanding rapidly as seen in examples like Italian-inspired restaurant Roberto’s which is expanding to Kenny Hills.
And then there’s Shu Da Xia and Beauty in The Pot – Chinese hot pot restaurants – and Omakase-themed restaurants including Sushi Hiro and Chef Wan and not to mention Chateau de Canter and Maria’s Steakhouse which do not have many outlets and with now being the right time to expand.
A recent trend also sees those experiencing shortage of funds collaborating with different parties, partners and new investors while using the same outlet names.
Moving away from traditionally-run F&B restaurant concepts, Chua has devised a different model approach to this business with an emphasis on “developing more concepts, venues and new retail places”.
“The first which will be on stream within the next three months by end-July would be The Taman Tun (TT) Gardens leveraging on six concepts including Chef Wan, Galah Galah Seafood, Omakase Japanese, Omakase Vineyard and Fresco Italian casual dining and cafe as well as Kelantan Delights,” he said.
The second concept he shared, will follow the Sky Forest theme situated beside One Utama with Chateau de Canter, Extra Super Tanker, Maria Steakhouse, Vineyard, Sky Forest Café and Shu Da Xia on board within the next three months.
“We’re also going to have Courtyard by Marriott in Setia Alam where we’re going to manage four to five concepts by year end,” Chua added. – May 27, 2022
Yvonne Yoong is Focus Malaysia’s contributing Property & Lifestyle Editor who is seasoned in covering the property beat and other industries.
The views expressed are solely of the author and do not necessarily reflect those of Focus Malaysia.
