DROP IN DEMAND FOR DELIVERY
For Korean fried chicken chain Bonchon, this change in consumer behaviour led it to exit the cloud kitchen space.
While it has its own restaurant spaces, there was a strong draw from the start to use shared kitchens. It rented space in areas where it did not have a physical presence, in order to attract customers who use food delivery services.
But when the pandemic ended and people moved away from food delivery, Bonchon saw its profits drop.
“We could see there was a drop in delivery sales, which I think is attributed to people going back to dining out and meeting friends. We also realised that there were other forces at play which caused a lot more people to go overseas instead, such as inflation,” said Bonchon Singapore director Jefferson Tandamu.
He also cited high delivery commissions as a barrier in sustaining their cloud kitchen. For example, if the eatery sold fried chicken for S$10 (US$7.60), about 40 per cent – or S$4 – would go to the delivery company.
“We are always looking forward to expanding our footprint, our business in Singapore. But because of the downward pressures that I’ve shared, I think this year, we are looking to just focus back on what we do best – go back to strengthening our operations,” Mr Tandamu added.
As for Ms Ho, who remains one of the few female smoked meat specialists in Singapore, she now has her own dedicated space to do what she loves.
She said the higher rent and manpower costs are worth it for the bigger space and fewer concerns.
“I realised that privacy and safety is my number one when I’m in this F&B field,” she added.
