Tuesday, 26 February 2013

Beating the Labour Crunch

A new breed of companies has emerged to help food and beverage operators who cannot find enough workers to do work, from cleaning dishes to serving customers. JESSICA LIM finds out how these budding entrepreneurs have built up their businesses
The Straits Times, 25 Feb 2013

He sold his house to start dishwashing company

HE SOLD his terrace house in Pasir Ris for $1.1 million to help fund the purchase of three commercial dishwashers, each as big as an MRT train cabin.

The German machines cost Mr Lawrence Low $120,000 each.

Another $150,000 was spent to set up a factory in Sembawang where six full-time employees clear residual food off crockery before loading them into the stainless- steel dishwashers.

The idea to start Synnovate Solutions was seeded in 2009 when the Government announced that it would be clamping down on the hiring of foreign workers here.

The holder of a diploma in hotel management said: “The first thing that came to my mind was, how would restaurants cope?

Cleaning dishes is the dirtiest and lowest job. Many locals don’t want to do it.”

While Mr Low, 50, believed his outsourcing service would work, the road to making money has proven a long and winding one.

He recalled the first day of operations on Dec 5, 2010. He was raring to go, said the father of two, as he had a deal with NTUC Foodfare to wash 25,000 items a day over the next three years.

The former managing director of a catering firm had hired four people to work the morning shift and another four in the afternoon. But only three showed up.

One hundred and seventy tubs of dirty dishes needed to be returned within 24 hours. His wife, who was pregnant with their second child, had to help out.

“I really felt like dying. I used to be a managing director. Now my wife was washing dishes,” he said, adding that four workers are needed to operate each machine. They did not sleep that night but completed the task.

He tried to hire more workers but failed. “On the third day, I knew I couldn’t go on,” he said. He called to terminate the contract, but the foodcourt chain had let its dishwashers go and needed two weeks to hire new ones.

“We had to hold on till then,” said Mr Low, who enlisted the help of his mother, sister, mother- in-law and brother-in-law.

After the deal was cancelled, he lost another $50,000 on three months’ worth of labour and rental expenses as he tried to hire more staff and get more clients.

While he managed to snag three clients, the work was not sufficient for his machines which could handle up to 15,000 dishes an hour. He was washing only 6,000 dishes a day and losing $20,000 a month.

This went on for nine months until early last year when he signed on six more companies, including Din Tai Fung and Union Farm Eating House. Losses went down to about $7,000 a month.

The turnaround, he said, came only last October. From then to last month, he signed on six more clients. On March 1, another 10 – including Pasta Mania and Strictly Pancakes – will come on board.

He charges $5 to $8 per tub of 150 dirty items. He broke even in terms of operating costs last month. “Now I can breathe each month,” he said. But if the investment amount and losses are factored in, he will break even only in three to five years, he added.

One good sign, he noted, is that restaurant operators are now more amenable to change. “They used to tell me that if they group together and stay strong, the Government would change its mind and give them more foreign workers. I think they’ve realised that that’s not going to happen.”

Helping restaurants save time on slicing and dicing

VEGETABLE supplier Desmond Lee, 40, saw pre-cut vegetables lining shelves in supermarkets in Holland during a trip there in 2010 and an idea sprang to mind.

"Why not cut and wash vegetables for restaurants?" wondered the father of three. "I knew of the labour shortage and thought it was a good time."

"Rents were going up. Restaurants might want more seating capacity instead of having a huge kitchen," added Mr Lee. He went around scouting for machinery.

He set up Project Kitchenomics in 2011, rented a factory site in Admiralty and invested $2 million in 10 machines from Holland, Germany and Taiwan.

The money came from profits from his vegetable supply company as well as a grant from Spring Singapore under a scheme which encourages the development of technology innovation. These machines wash, dry and package vegetables. There are dedicated gadgets for dicing and shredding too.

"It's difficult for us to get workers too but fewer workers are needed to man machines compared to the restaurants to get the same output. One person can manage two machines," he said.

The initial difficulty, said the Ngee Ann Polytechnic diploma holder, was in selling the idea to restaurant owners. A 1kg bag of diced carrots is about double the price of the same weight of the unprocessed vegetable.

"The price was a hurdle. Businesses kept comparing our prices with the price of raw carrots," he said. "We were losing money but we knew we just needed customers to warm up to the idea."

His first client, an airline services company which inked a deal to buy diced and sliced potatoes, came in late 2011. Project Kitchenomics now has 250 customers, including Salad Stop! and Nando's, said Mr Lee, whose first job out of school was as a financial analyst in a commodities market.

Sick of looking at stocks for soya beans and coffee, he left after about three years to join the dot.com boom - a period in the late 1990s that was marked by the surge of Internet-based firms.

He opened an online vegetable grocery store in 2000. It was successful but business waned after a few years when supermarkets here ventured online too. That was when he branched out to supply vegetables to restaurants.

Setting up Project Kitchenomics to sell pre-cut, pre- washed and pre-packed vegetables, he said, seemed to be the next logical step. He now has a turnover of about $100,000 a month. His bestsellers: pre-cut and pre-washed onions, potatoes and carrots. "People don't like to peel those. It's time-consuming and doesn't really add that much value to a finished product," said Mr Lee. He expects a 20 per cent jump in clients in the next six months.

Firm's tablet software helps eateries cut costs

SINGAPORE’S labour-shortage woes prompted Mr Samir Khadepaun, 35, to leave his hometown in India to set up a company here.

Ten months ago, he opened Mobikon Asia, a one-stop solutions firm specifically for the food and beverage industry.

While he had no customers here two months ago, he said, he now has 75, including IndoChine and Swensen’s.

He supplies computer tablets installed with software modules he designed, from e-menus and table reservation systems to customer feedback portals and self-ordering options.

A restaurant, for instance, can prompt guests to fill up a survey on the tablet, such as what their favourite beer is, or if they found service satisfactory. The program will store and organise the data.

“Usually, managers spend one to two hours a day just collating customer data,” said Mr Khadepaun.

According to his studies, the feedback module can save a 50-seater eatery $3,000 in manpower expenses a month.

Customers pay a monthly fee of $100 to $500, depending on the modules needed. Training and consultation is a one-time payment of $1,000 to $2,000.

The business was a $2 million investment, with money raised with the help of SPRING SEEDS Capital, a wholly-owned subsidiary of SPRING Singapore, which helps to co-finance start-ups here that have innovative products and a strong growth potential across international markets.

Angel investors and venture capital firms also contributed to the pot. Mr Khadepaun operates a four-man team and has two business partners who are permanent residents here.

The computer engineering graduate, who hopes to use Singapore as a springboard to expand into South-east Asia, started an online advertising firm in Mumbai in 2009 that morphed into helping clients boost their operational efficiency and customer database.

“We realised these were the main issues they were grappling with,” he said, adding that his customers in India were mainly restaurants too. “Many of the chains we worked with had a presence in Singapore as well.

“They complained about manpower shortages here. They told me that their workers were overworked and they had problems retaining them,” added the employment pass holder whose wife and child will move here this year.

“They told me that systems were not in place here and staff kept changing every three months. It sounded like a good time to come,” said Mr Khadepaun, who expects his business here to be profitable next year.

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