![\"\"](\"https:\/\/dollarsandsense.sg\/business\/wp-content\/uploads\/2023\/07\/Just-Dough-Closure-FB-1024x576.jpg\")
Cost Inflation Reduced Profit Margins<\/strong><\/h3>\n\n\n\nWith inflation staying at an elevated level of 4.7%<\/a> in May 2023, F&B businesses have to deal with higher costs of production, from raw materials to running expenses like electricity and waste management fees.<\/p>\n\n\n\nThe prolonged war between Russia and Ukraine has disrupted supply chains around the world with an increase in the prices of commodities including fertilisers, food products, and oil & gas. This has led to food inflation rising to 6.8% year-on-year<\/a>. <\/p>\n\n\n\nDespite the higher costs, Just Dough generally maintained the selling price of their mantou buns at under $3, similar to their 2018 pricing. While we may assume a price increase is justified, for some businesses, it may not be straightforward. They may hesitate for fear that any price increase may alienate their long-term customers or push consumers to competitors.<\/p>\n\n\n\n
![\"\"](\"https:\/\/dollarsandsense.sg\/business\/wp-content\/uploads\/2023\/07\/Just-Dough-Products-Prices-2018-1024x724.jpg\")
Source: Just Dough Facebook<\/a> (2018 \u2013 Pricing)<\/figcaption><\/figure><\/div>\n\n\n\n![\"\"](\"https:\/\/dollarsandsense.sg\/business\/wp-content\/uploads\/2023\/07\/Just-Dough-Product-Pricing-2021-1024x727.png\")
Source: Just Dough Facebook<\/a> (2021 \u2013 Pricing)<\/figcaption><\/figure><\/div>\n\n\n\nThis might have led to a lower profit margin, making the business less competitive and unsustainable amid the elevated cost pressure.<\/p>\n\n\n\n
Tight Labour Markets Led To Cuts In Products And Services<\/strong><\/h3>\n\n\n\nAnother reason that Just Dough mentioned for its closure was the challenging manpower issues. The industry as a whole has a high job vacancy rate of 7%, based on the Q12023 Labour Report<\/a>. The manpower crunch was further exacerbated by the lowering of the foreign worker quota to 35% or less for the services sector in 2021. Furthermore, a minimum wage was also set for local employees under the progressive wage model (PWM) in May 2023, adding to the cost pressures faced by food service businesses.<\/p>\n\n\n\nFor instance, Just Dough offered between $1,800 and $2,200 for a baker\/senior baker position as per their Facebook post below in September 2020. However, under the PWM, companies hiring local food services workers must offer at least $2,000 from 1 March 2023. This represents a wage increase of at least 10%.<\/p>\n\n\n\n
![\"\"](\"https:\/\/dollarsandsense.sg\/business\/wp-content\/uploads\/2023\/07\/Just-Dough-Hire.png\")
Source: Just Dough F<\/a>a<\/a>cebook<\/a><\/figcaption><\/figure><\/div>\n\n\n\n![\"\"](\"https:\/\/dollarsandsense.sg\/business\/wp-content\/uploads\/2023\/07\/MOM-PWM-Food-Services-Salary.png\")
Source: MOM<\/a> \u2013 Full-time food services workers<\/figcaption><\/figure><\/div>\n\n\n\nAs all companies begin paying at least the minimum wage, those with urgent manpower needs would need to pay higher to attract and retain local workers amid the tight labour market. This puts further cost pressure on businesses. For Just Dough, the shortage of manpower not only prompted it to cease its delivery services in May 2021 but also limited its mantou offerings due to a lack of bakers in June 2022. This may have had the double effect of increasing costs and lowering revenue, affecting its bottom line.<\/p>\n\n\n\n
Read Also: <\/em><\/strong>Foreign Worker Quota In Singapore: What Is It And How To Calculate It For Your Business<\/em><\/strong><\/a><\/p>\n\n\n\nHow Do F&B Business Closures Affect Singapore\u2019s Economy?<\/strong><\/h3>\n\n\n\nSingapore is well known internationally as a gastronomical city due to the availability of a wide array of cuisines, which comes as no surprise for a cosmopolitan and multicultural city. Unlike other nations, our choices of tourist attractions may be limited compared to neighbouring countries, but we punch above our weight in offering a wide selection of food. From the affordable hawkerfare to Michelin-rated restaurants, it is an identity that has been nurtured over time. And it would be a shame to lose our “foodie” nation status if more F&B businesses start closing down due to these structural problems with high costs.<\/p>\n\n\n\n
Moreover, while fewer F&B businesses mean we, as consumers, have limited options, it also translates to fewer employment opportunities for local workers. Undoubtedly, the food services industry would shrink and may have a small contribution to our gross domestic product (GDP). This could have a butterfly effect, as food services are an essential sector for feeding our society.<\/p>\n\n\n\n
Another consequence of higher operational costs and manpower shortages could be shrinkflation, where we as consumers get less on our plate either for the same price or at a slightly higher price. While businesses are incentivised to experiment with higher productivity and technological innovation to overcome labour challenges and operational efficiency, not all businesses may succeed. Instead, these businesses may decide to sacrifice portion size, quality, or service. When that happens, all parties\u2014not just the consumers but also the food service businesses\u2014will be worse off. <\/p>\n\n\n\n
Read Also: 5 Digital Solutions That Every Company Should Adopt Using The Productivity Solutions Grant (PSG)<\/a><\/em><\/strong><\/p>\n\n\n\nWhat\u2019s Next For F&B Businesses?<\/strong><\/h3>\n\n\n\n
The prolonged war between Russia and Ukraine has disrupted supply chains around the world with an increase in the prices of commodities including fertilisers, food products, and oil & gas. This has led to food inflation rising to 6.8% year-on-year<\/a>. <\/p>\n\n\n\n Despite the higher costs, Just Dough generally maintained the selling price of their mantou buns at under $3, similar to their 2018 pricing. While we may assume a price increase is justified, for some businesses, it may not be straightforward. They may hesitate for fear that any price increase may alienate their long-term customers or push consumers to competitors.<\/p>\n\n\n\n This might have led to a lower profit margin, making the business less competitive and unsustainable amid the elevated cost pressure.<\/p>\n\n\n\n Another reason that Just Dough mentioned for its closure was the challenging manpower issues. The industry as a whole has a high job vacancy rate of 7%, based on the Q12023 Labour Report<\/a>. The manpower crunch was further exacerbated by the lowering of the foreign worker quota to 35% or less for the services sector in 2021. Furthermore, a minimum wage was also set for local employees under the progressive wage model (PWM) in May 2023, adding to the cost pressures faced by food service businesses.<\/p>\n\n\n\n For instance, Just Dough offered between $1,800 and $2,200 for a baker\/senior baker position as per their Facebook post below in September 2020. However, under the PWM, companies hiring local food services workers must offer at least $2,000 from 1 March 2023. This represents a wage increase of at least 10%.<\/p>\n\n\n\n As all companies begin paying at least the minimum wage, those with urgent manpower needs would need to pay higher to attract and retain local workers amid the tight labour market. This puts further cost pressure on businesses. For Just Dough, the shortage of manpower not only prompted it to cease its delivery services in May 2021 but also limited its mantou offerings due to a lack of bakers in June 2022. This may have had the double effect of increasing costs and lowering revenue, affecting its bottom line.<\/p>\n\n\n\n Read Also: <\/em><\/strong>Foreign Worker Quota In Singapore: What Is It And How To Calculate It For Your Business<\/em><\/strong><\/a><\/p>\n\n\n\n Singapore is well known internationally as a gastronomical city due to the availability of a wide array of cuisines, which comes as no surprise for a cosmopolitan and multicultural city. Unlike other nations, our choices of tourist attractions may be limited compared to neighbouring countries, but we punch above our weight in offering a wide selection of food. From the affordable hawkerfare to Michelin-rated restaurants, it is an identity that has been nurtured over time. And it would be a shame to lose our “foodie” nation status if more F&B businesses start closing down due to these structural problems with high costs.<\/p>\n\n\n\n Moreover, while fewer F&B businesses mean we, as consumers, have limited options, it also translates to fewer employment opportunities for local workers. Undoubtedly, the food services industry would shrink and may have a small contribution to our gross domestic product (GDP). This could have a butterfly effect, as food services are an essential sector for feeding our society.<\/p>\n\n\n\n Another consequence of higher operational costs and manpower shortages could be shrinkflation, where we as consumers get less on our plate either for the same price or at a slightly higher price. While businesses are incentivised to experiment with higher productivity and technological innovation to overcome labour challenges and operational efficiency, not all businesses may succeed. Instead, these businesses may decide to sacrifice portion size, quality, or service. When that happens, all parties\u2014not just the consumers but also the food service businesses\u2014will be worse off. <\/p>\n\n\n\n Read Also: 5 Digital Solutions That Every Company Should Adopt Using The Productivity Solutions Grant (PSG)<\/a><\/em><\/strong><\/p>\n\n\n\nTight Labour Markets Led To Cuts In Products And Services<\/strong><\/h3>\n\n\n\n
How Do F&B Business Closures Affect Singapore\u2019s Economy?<\/strong><\/h3>\n\n\n\n
What\u2019s Next For F&B Businesses?<\/strong><\/h3>\n\n\n\n