BCC3006 Class Test Information:

 7 Essay (Application) Questions

 Answers must have a knowledge basis and analytical views of substances.
 Test duration: 2 hours
 F2F
 11 Dec | Wednesday | 10am – 12noon
 TCA Culinary Theatre

Study Guide
 The challenges in Singapore’s F&B Industry
 What is cloud kitchen?
 Advantages and disadvantages of using cloud kitchen
 What Is the Right Technology for the food business?
 Categories of Technology and trending technology
 What are some common issues facing food businesses?
 How to recruit, motivate and retain staff in F&B businesses?
 Three types of innovations in the food business, what are they, and what examples?
 Understand what a Marketing survey is and its components.
 Market classifications
 Source of market survey
 Forecasting
 What is feasibility? What is a competition analysis?
 Factors that influence menu-planning decisions
 Types & Categories of Menus
 Truth in Menu
 Start-up Cost
 Restaurant/Food business assets – Short-term/Long term
 Three types of depreciations
 Merchant cash advance – what is it? Examples
 The steps to determine CPF contributions.
 Cash flow – why is it so important to the survival of your business? Inflow vs outflow
 Income statement – why is it important to understand this statement?
 Important rules for controlling operating costs.
 Break-even point
 Steps to set up a food business in Singapore.
 What are the promotional/marketing tools for a successful campaign?
 Why Is social media important for the food business?
 Examples of successful social media marketing in the food business
 Potential crises for your group project operation week(s), how do you going to
handle/manage it (them)?

Chapter 1: Overview of F&B

What is mostly in the test
- What are the key drivers for Singapore food services
- Explain key trends of F&B industry in Singapore
- Identify challenges in SG F&B industry
- Cloud kitchen business model
2024 happenings
1) Energy uncertainty because of Ukraine conflict
2) Supply chain and and labour market also uncertain
3) US china policy -> great power competition
4) Climate change increasing
5) Sales of F&B service rising 4.3% in August 2024
6) Total sales of F&B services in august 2024 estimate at 1.0 billion

- GDP decreased heavily when COVID hit during 2020(circuit breaker) but it is slowly
increasing now
How SG evolved DURING COVID
1) Digitalisation
- Digital ordering systems gained popularity for hawkers
- E.x. iChef had a 66 per cent increase in usage in 2020
2) Entrepreneurship against all odds
- More businesses entering the F&B market in 2020
3) Prepared to confront uncertainty with technology

Drivers of the F&B service

1) Rising affluence and dining out culture
- Income increase of population which leads them to dine out more
2) Tourism growth
- Demand for authentic culinary experience -> cultural exploration
- Growth of niche markets
3) Internationalism
- Fusion food/cross-cultural cuisine
- International franchising
4) Food delivery services
- Digitalisation
- Allow customers to be served beyond physical premises

Key trends of F&B industry

 1) Experiential dining
- Engages multiple senses of guests
- Uses storytelling and engages the guest with interactive elements
2) Rise of online dining guides and review sites
- E.x. yelp, tripadvisor
- Enhanced discoverability and increased customer influence
3) Sustainability awareness
- Environmental sustainability -> reduce food wastage
- Social sustainability -> community engagement
- Economic sustainability -> cost efficiency
4) Independent local chains
- Groups of restaurants owned by the same entity but operate under a unified brand.
- Local ownership and brand unification
5) Blurring restaurant formats
- Overlapping and merging traditional restaurant models to create unique dining
experiences
- Concepts from casual dining is merged into fine-dining -> fine-dining place offers bar
menu for after hours
New trends
- F&B companies differentiating themselves by providing a innovative dining
concept/product to give a better dining experience for guests
- Demand for convenient meals increasing as local work long hours -> F&B businesses
can lean into making READY MEALS or exploring VENDING MACHINE concepts
- There are segments of customers who also want artisan/handcrafted/niche food ->
expect customisation of their food
Top 3 business costs accounted for half of total business costs
1) Remuneration
2) Freight and transport costs
3) Subcontract charges / work given out

Challenges faced in the F&B industry

1) Every small business has to suffer annual loss
- E.x. Average small scale business suffers annual loss of 8% -> Takes 30 months to
recoup it back
2) Most businesses do not survive operations in the first five years
- E.x. only 60% survive after the first five years
- This shows the risk of starting a F&B business
3) F&B businesses are easily replaced
- 1 in 3 F&B businesses are replaced every year
4) Job vacancy is common in the F&B industry
 - Job vacancy rate in 2015 was 5.4% which is the highest among other industry
5) Rising labour costs / manpower shortage

How to get over challenges with technology

1) Diners can order food on their phones and also pay digitally
2) Artificial technology and robots -> coffee barista, chef robots (front of house, back of
house)
3) Face scanning technology -> ordering system

How SG F&B industry needs to diversify to survive

1) Feed off promise
- Increased investment in off-premise dining
- Delivery only popular in fast food restaurants (not really among full-service
restaurants)
2) Feed off innovation -> develop new revenue streams
- Restaurant platforms collaborating with other platforms like taxi companies to offer
delivery
- Saladstop introduced a service for delivering farm fresh produce and essentials
3) Feed with technology
- Contactless payment
- Starbucks allows customers to pay from app and collect in store
- E.x. ready made meals, vending machines, kiosk model operation, online food
delivery platform, p2p/b2p/b2b service/delivery, cloud kitchen

Cloud kitchen business model

- They are restaurants that sell food through DELIVERY ONLY
- Do not have physical dining space/Do not offer pick up services
- Customers order through food delivery apps or websites
- Was the most popular during COVID where it was valued at over 40 billion U.S.
dollars

Online food delivery business model

1) Restaurant to consumer delivery
- Includes the delivery of meals carried out directly by the restaurants. The order may
be made via platforms (e.g. FoodPanda) or directly through a restaurant website
(e.g. Domino's)
2) Platform to consumer delivery
 - Focuses on online delivery services that provide customers with meals from partner
restaurants that do not necessarily have to offer food delivery themselves.

Chapter 2: Admin & HR

What is mostly in the test
- Checklist for setting up a restaurant
- 6 essential functions of HR
- Strategies to retain staff

Legal checklist for setting up restaurants

1) Incorporate company
- Must register with proper authorities (ACRA)
- Self registration - $115
- After self-registration, must provide business name, business address, residential
address, type of business
- Agency package - $300 to $1000
- Licenses -> on average, it costs a few hundred dollars
2) Identify restaurant premise
- Must need to have a landlord that understands the premise of F&B business
- Letter of intent -> indicates intention to rent a space for a certain rental amount
- May need to put up a deposit
- May need to apply for planning permission
3) Comply with code of practice
- Must follow code of practice for environmental health by NEA and must get
landlord to agree before starting to implement this code
4) Apply for Food Shop License
- Carrying out inspections on the premises
- Giving you specific requirements to comply with
- Inviting you to pay the licence fee
- Issuing you the licence
5) Sign tenancy agreement
- Must sign with landlord at the end of securing food shop license
- Lease usually at least 2 years
- Should demand a copy of the landlord’s title to the property
6) Review fire certificate
- Previous owner of property or landlord should have a current fire certification
- Fire certificate must be renewed every time SCDF visits, and it is an offence if an
owner of property does not have it
- Will have to engage professional specialists to do cleaning and maintenance of
exhaust ducts, kitchen hoods at least once a year
7) Insure business
 - Property
- Employees
- Legal liability
8) Import food ingredients
- Obtain import/export license
9) Apply liquor license / halal certification
- For liquor, apply to Singapore Police Force
- For Halal, must apply to MUIS and pay fees to obtain halal certification (takes
over a month)
10) Register for GST
- If it generates an annual revenue of more than 1 million dollars, must register for
payment of GST
11) Hire staff
- All staff must have food safety hygiene certification
- For foreign staff -> obtain work permits
- Must register with CPA and IRAS to submit staff’s details so they can be paid
Financing
1) Bootstrapping
- Funding your business start-up costs with your own savings
- No cost
2) Getting investor
- Investor returns
- Raise capital you need to repay investors (shares, dividends)
3) Bank loan
- Loan interest charges / registration fees

Six essential functions of HR

1) Recruitment and hiring
2) Training and development
3) Employer-employee relations
4) Maintain company culture
5) Manage employee benefits
6) Create safe work environment
7) Handle disciplinary actions

How to hire staff well

Creating A Human Resource Structure
1) Determining The Requirements
- This is done so we don’t over hire
2) Sourcing The Right Candidates
 - Word of mouth
- Newspaper ads
- Social media
- Referrals
- Job portals
3) Conducting Job Interviews
- See if his/her thoughts align with the goals of the restaurant
- Ask for their previous place of employment
4) Hiring Part-time Staff
- Keep labour costs in check
5) Staff training
- Prepare staff training manual
- Cross train staff
6) Staff management
- Manage staff shift efficiently
- Monitor staff performance
- Ensure staff happiness
Strategies to retain staff
- Offer compensation and benefits
- Include perks such as bonuses, insurance and meal allowances
- Foster supportive work environment
- Offer training programmes
- Clear career development opportunities
- Recognise and reward employee contribution
- Flexible work schedules
Chapter 3: Business development and feasibility study
 Understand what a Marketing survey is and its components.
 Market classifications
 Source of market survey
 Forecasting
 What is feasibility? What is a competition analysis?
 Why Is social media important for the food business?
 Examples of successful social media marketing in the food business
 Key elements of marketing campaign

Different cloud kitchen models

- Standalone Cloud Kitchen - The Independent
- Multi-brand Cloud kitchen - The Multi-concepts
- The Hybrid Cloud Kitchen - Single brand, single kitchen with store front
- Commissary (Aggregator) - The “Shell” - The cloud kitchen owned by delivery
apps.
- Outsourced Cloud Kitchen - Third party prepares the food or ingredients for main
users.
- Co-Working Cloud Kitchen - e.g. Smart City

Benefits of marketing survey

- Focuses on products and related services
- Concentrate on market analysis / target market
- Understand competition
- Create competitive marketing strategies
- Understanding the demand and supply chain of
the target market
- Developing well-thought marketing plans
- Figure out customer expectations and needs
- Accurate launch of new products:
- Obtain information about customer
demographics

Market survey components

1) Market analysis
- Levels of markets
- SMERF market -> Social, military, education, religious, fraternal events
- business market -> meetings, conventions, new product launch events
- association market -> Singapore chef’s association
- Low end -> Limited resource, value seekers
- Midlevel -> Value conscious but holds strong on quality
 - High end -> Fancy upscale, cost is non issue
2) Customer analysis
- Identify customer -> measure retention, measure loyalty
- discover their needs -> interviews, social media
- develop customer profiles -> background, demographics, communication
-
3) Situation analysis
- Evaluate micro and macro environment (political and economy values)
4) Labour analysis
- Employment and labour costs
- Labour pool (who is doing the labour)
5) Competition analysis
- Identify competitors
- Understand rivalry
- Identify new market segment
- No. of employees
- Ave. check
6) Marketing budget
- Amount of money needed Advertising, promotion, public relations
- Word of mouth

Market classifications
- Low end -> Limited resource, value seekers, short lead time and multiple offers
- Midlevel -> Value conscious but holds strong on quality, can quickly lead to
repeat business
- High end -> Fancy upscale, cost is non issue, short notice

Source of Market Survey

- Questionaire
- Face to face interview
- Guest feedback form
- Feedback from staff
- Mystery shopper program

Types of survey questions

- Who is the target market that needs product in the community?
- Will target market perceive value for money?
- Will business be competive with others selling similar products?
Forecasting
- F&B operators must maintain adequate records that helps them determine sales
revenue and profits they expect to earn in future
- E.x. daily sales, promotion history for special dates/occasions, sale comparison to
previous month/year, accumulate up/down compared to previous month/year
Competition
Analyse by
- Pricing analysis
- Availability
- Location
- Service
- Guest need fulfilment analysis
- Facilities analysis
- Hospitality ratings

Feasibility
- Question how feasible business is
- Why pick the business unit at that location/property ?
- Is it value for money for the proposed concept/menu?
- How much should the business charge the products/service?
- How many quality and efficient staff will manage the business unit?
- Are there any factors that would deter the business plan?
- Is the location accessible, safe and has parking facilities?
- Is the chosen location available for your business unit?
- Will the potential target market enjoy the facilities and amenities provided?
- Can the community support the business unit?

Why Is social media important for the food business?

- Provides information and opens communication with customers
- Gives business opportunity to be found online
- Adds professionalism to the restaurant
- Allows to share food online

Examples of successful social media marketing in the food business

 - Post high quality of food
- Post seasonal menus
- Communicate with customers
- Show behind the scenes videos
- Highlight employees
1) Sweetgreen, National chain
- Creates consistent voice
2) Chop shop, Colorado
- Responds to online reviews
3) Wingstop
- User-generated content
4) Sandwich hag
- Highlights employees

Key elements in marketing campaign

1) Identify target market first and profiles
2) Promotional tools
- Social media
- Email marketing
- Contests
- App/website for ordering
- Physical/offline promotion -> distribute flyers, vouchers and sponsor events
3) Outcomes
- Increased food orders
- Strong brand loyalty
- Increased brand awareness

Chapter 4: Menu & product development

  Factors that influence menu-planning decisions
 Types & Categories of Menus
 Truth in Menu
 Stages of menu development planning
 4 principles of recipe development

Stages of menu development planning

- Know the occasion
- Plan the recipe
- Trial
- Final menu
4 principles of recipe development
- Availability of resources
- Food habits
- Types of customers
- Occasions

Factors that influence menu planning decisions

- Target audience
- Cost and pricing
- Operational capabilities
- Food trends and innovations
- Nutrition and dietary requirement

Product categories
1) Food system position -> production, processing, consumption
2) Market they serve
3) Processing technology used to manufacture them
4) Basic common characteristics -> nutrition/health, taste pairing
5) Product platforms
6) Level of innovation
Three groups of food products
1) Primary products from sea or land
2) Industrial ingredients from food processor
3) Consumer products from food manufacturers and food services

Types of menu
 1) Static menus
- Stays the same every day
- Common in quick service/casual restaurants
- Presented on a menu board
- Choices are limited in quick service places like MCD and KFC
- GOOD because Easier for forecasting, purchasing, labour scheduling
- BAD because predictable
2) Cycle menus
- Commonly used in schools, healthcare centres (non-commercial foodservice
operations)
- Serves same group of customers everyday
- Follows a pattern that suits customers’ needs (repeats it on a regular basis)
3) Daily menus
- Menu change on a daily basis
- May be used at a special event for ONE-TIME USE
- Often used in FINE-DINING RESTAURANTS
- GOOD because most flexible, can be easily changed to market price, offers a new
dining experience to guests

Other categories of menu

1) Function of menu
- Tasting menu, catering, room service
2) Meal/time period
- Breakfast, lunch, dinner, happy hour
3) Style of service
- American, French
4) Pricing styles
- A la carte, table d’hôte (a selection of complete meals offered at set prices), prix
fixe (one price for the entire menu),
5) Amount of selection
- Selection -> Customer has many choices (casual restaurant)
- Non-selection -> No choice (tasting menu)

Truth in menu
- Refers to “accuracy in menus” which is a best practice in planning and sharing
menus
Addreses
1) Quantity
2) Quality
3) Price
4) Brand names
 5) Production identification
6) Points of origin
7) Merchandising terms
8) Food preperation
9) Verbal/visual presentation
10) Dietary/nutritional concerns

Chapter 5: Financials
 Start-up Cost
 Restaurant/Food business assets – Short-term/Long term
 Three types of depreciations
 Merchant cash advance – what is it? Examples
 The steps to determine CPF contributions.
 Cash flow – why is it so important to the survival of your business? Inflow vs
outflow
 Income statement – why is it important to understand this statement?
 Important rules for controlling operating costs.
 Break-even point

Financial planning
1) Start up grants
2) Start-up cost
3) Assets and depreciation
4) Bank loan and interest
5) Salaries
6) Planned income statement
7) Cash flow analysis
8) Profit loss statement
What do business overspend in start-up cost
1) New equipment costs
2) Technology
3) Sales and marketing
4) Remodeling
5) Food cost

What start up cost should consist of

1) Lease
 2) Equipment (kitchen & bar)
3) Furniture
4) Food cost
5) Office equipment
6) POS, mobile device
7) Uniforms
8) Licenses
9) Marketing expenses
10) Online ordering platform fees

Short term assets vs long term assets

- Food business’s assets in accounting are the resources it uses to run its
operations and serve its guests
1) Short term assets
- Assets restaurant expects to use or convert to cash within a year
- Assets include cash, inventory, accounts receivable, short term investments
- Cash -> physical currency at hand
- Accounts receivable -> money customers/credit card owners owe the food
business
- Inventory -> cost of ingredients, food inventory, wine, merchandise
- Short term assets cannot be DEPRECIATED IN THE SAME WAY LONG TERM
ASSETS CAN
2) Long-term assets
- Resources food business expects to own past a year
- Assets include fixed/physical assets -> kitchen equipment, booths, cash register,
buildings
- Also includes intangible assets -> Patents
- Long term assets can be depreciated over time

Types of depreciation
- Depreciation requires knowledge of cost of equipment and its useful life, salvage
value (amount equipment can be sold at the end of its use)
1) Straight line depreciation
- (cost - salvage value) / useful life years
- Lets you deduct same amount of depreciation each year
- Easier to calculate and looks better on financial statements
- Usually used for FINANCIAL STATEMENTS
2) Accelerated depreciation
- Align the recognised rate of an asset’s depreciation with its actual use
- Used for taxation purpose because income is lower in earlier periods
 - 150 percent method -> same as straight line but rate is 150 percent of straight
line
- 200 percent method -> rate is 200 percent of straight line
- Used to lessen net income
- Usually used for INCOME TAX RETURNS

Merchant cash advantage

- Lump sum payment to a borrower
- Borrower uses percentage of credit card sales to repay debt
- Not loans
Steps to determine CPF
- Identify employees
- Find out which wage payments attract CPF contributions
- Classify wages as ordinary wages and additional wages.
- Apply the CPF contribution rates.

Cash flow report

- Tracks flow of cash into and out of the restaurant
- Purpose -> to show you how much money your
restaurant currently has and whether or not the flow of cash through
your business is enough to sustain operations
Cash flow analysis
- Helps pay bills, buy equipment and handle other costs
- Total cash flow = cash inflows – cash outflows
1) Cash inflows
- Cash received from customers, money received from selling assets
- E.x. cash from food sales, merchandising sales, money from catering a party,
proceeds from disposing a fridge
2) Cash outflows
- Cash spent operating costs, money used to pay for assets to financing sources
(dividends)
- E.x. cost of ingredients, wages, rent, utilities, insurance
P&L statement
- Contains itemised sales breakdown, cost of goods sold, labour expenses,
operating expenses
- Sales - Cost of Goods Sold - Expenses = Net Profit/Loss
- Shows a food business’s performance over a period of time, taking all operation
expenses into account– from prepaid to future expenses – and weighs them
against business’s sales and the costs of goods sold

Important rules for controlling operating costs

1) Proportion rather than numbers
2) 3 major costs should not exceed 70% of revenue (manpower, rent, COGS)
3) Rent must be less than 20%
4) COGS + manpower must be kept below 60%
5) Total cost must add up to less than 85%

Break-even point
- How much it takes for business to star making profit
- Fixed Costs divided by (1 - Variable costs/Controllable expense)

Chapter 6: Innovation & technology

- Categories of Technology and trending technology
- What Is the Right Technology for the food business?
- Three types of innovations in the food business, what are they, and what
examples?

Trending technology in F&B industry

 Automated kitchens
•Smart kitchen appliances
• Robot waiters
• High-tech, sustainable food
• Vending machines
• Delivery apps
• Robotic baristas, bartenders
• Use of chatbots for customer service
and online delivery
 • HR management app for employee
and employer
• iOT enabled sensors for temperature
control in storage and transportation

What Is the Right Technology for the food business?

- Technology that aids food production -> can help prepare cooking, delivery, serving
- Used for these tasks that contain speed, consistency, sanitation control, repetition in
an efficient matter
- Restaurant operators must consider cost and benefit of technology and CUSTOMERS
REACTIONS to procedural changes
- Cannot choose technology that damages customer satisfaction

Issues with technology in F&B industry

- Mobile pay isn’t there for full service operations
- Full-service apps are not there yet
- Websites must be mobile friendly
- Implementation of technology varies among diff operators

Three types of innovations in the food business

1) Configuration
 Profit model on how you make money
- E.x. Souvla offers chef made meals at a lower because customers required to order
from counter and take the food to go (less service staff)
 Network mode -> connection with others to create value
- E.x. Competing restaurants in Shanghai joined forces to reduce food waste by using
leftovers for another business ‘repizzas’
 Structure mode -> alignment of talents/assets
- E.x. feedr connects corporate business looking for catering with local food vendors
 Process model -> Superior methods used to do work
- E.x. pizza hut building a pizza-delivery car and robo chef in one to reduce costs and
increase speed for deliveries
2) Offering
 Product performance model -> Distinguishing features/functionality
- E.x. garlidoux made a garlic paste to replicate garlic taste without the garlic scent
that lingers in your breath
- E.x. spotify create music streaming platform that laps competitors because of its
speed and user experience
  Product system model
- E.x. apple build extensive ecosystem of products that work together to create value
for customers
3) Experience
 Service -> supports enhancements that surround offerings
- E.x. starbucks working on ambience/décor to encourage diners to dine in
 Channel -> how offerings are delivered to customers
- E.x. Eatwith suggests cuisine for travellers to not only sample, but cook with recipes
 Customer engagement -> distinctive interactions you foster
- E.x. Avocado show targets fitness influencers who are health driven by offering
healthy avocado dishes and promote them via Instagram
 Brand -> representation of offerings and business
- E.x. feel the peel takes the rind after juice is squeezed and makes cups by those rinds

Chapter 7:Operation planning and crisis management

 Cloud kitchen business model
 Advantages and disadvantages of using cloud kitchen
 Operational process in setting up a cloud kitchen
 Potential crisis for your group project operation week(s), how do you going to
handle/manage it (them)?

Cloud kitchen business model

- They are restaurants that sell food through DELIVERY ONLY
- Do not have physical dining space/Do not offer pick up services
- Customers order through food delivery apps or websites
- Was the most popular during COVID where it was valued at over 40 billion U.S.
dollars
Advantages and disadvantages of using cloud kitchen
Advantages:
1) Lower operating costs
2) Can be quickly set up
3) Can reach wider range of audience
4) Delivery is more efficient and convenient for customer
5) Better inventory management because of centralised operations
Disadavantages:
1) Too much dependence on delivery platforms (no physical storefront)
2) Lack of consumer interaction
 3) Intense competition
4) Hard to build brand loyalty/customer loyalty
5) Over the last few years post COVID, more customers prefer dining out

Operational process in setting up a cloud kitchen

1. Inventory management
- Choose best ingredients -> choose best suppliers
- Helps to streamline all requirements of business
2. Kitchen management
- Keep a record and tracking system on items
- First In First Out system
3. Staffing
- Min. 6 people (head chef, 2 CDP, 2 helpers, 1 housekeeper)
- Hire well trained employees and create staffing plan
4. Automation
- Implement automation (robots) to help cooking more efficient and precise
- Cloud kitchen software -> inventory management , reporting, recipe tracking
- Kitchen order display -> swift order management
5. Order management / accept online orders centrally
- Ordering system helps keep track of orders more efficiently (ordering website)
- Cloud kitchen POS system -> helps streamline order taking process
6. Maintain consistency
- Menu standardisation
- Recipe management
- Central kitchen management
- Multi-store management
- Can create a base kitchen
7. Enhance packaging process
- Must have proper packaging so food doesn’t spill
- Must have unique packaging to make business stand out (stickers, logos)
8. Delivery system
- Set proper procedures in handling orders from delivery systems (resolve any issues
that arise)

Potential crisis for your group project operation week(s)

- Customer might find an insect in our food (food safety issues)
- Supply chain disruption
- Equipment/technological failure (POS system might break down)
- Employees may drop food or break something
- Reputational damage because customers are unsatisfied with the food

How do you going to handle/manage it (them)?

Develop crisis management plan
1) Write crisis statement (any problems that may occur)
2)

3) Evaluate insurance policy

4) Check inventory is current and complete -> must always update and document
inventory
5) Create restaurant crisis management team -> all employees must be aware how to
deal with crisis
6) Create communication plan -> so it is organised and everyone knows the plan
7) Create risk assessment plan -> anticipate crisis and response to it
8) Create food and water plan
9) Create emergency kit
10) Prepare for supply interruptions
Develop crisis management plan more catered to food business
- Backup back ups (payroll records)
- Take test runs
- Create planning and prep action checklist
- Response -> what you want to disclose to guests (restrict access to social media
accounts)
- Recovery -> contact suppliers to help (contractual obligations)
- After the fact -> Procedures taken after recovery (inform guests what’s next)
- Re-evaluate plan for next time (make necessary changes to crisis management
plan)