SINGAPORE: With food prices rising, the pressing question in Singapore is: can people still afford to eat out? Will delivery services like Grab and Deliveroo become the new normal?
Digging deeper into the issue, a recent Yahoo Finance report lists six reasons why the middle class is finding it increasingly difficult to eat out, as even the American public grapples with these challenges.
Why the middle class can no longer afford to eat out
- Decrease in discretionary cash: Post-pandemic inflation has reduced discretionary funds, making eating out a target for budget cuts. Rising basic costs, such as housing and health care costs, are also reducing monthly spending flexibility.
- Excessive spending when eating out: The trend away from eating out could be reversed as inflation forces households to confront past waste. In 2015, restaurant sales exceeded grocery spending, blurring the lines between essential and discretionary spending.
- Inflation hits restaurateurs hard: Restaurants have low profit margins of 5%, making it difficult to absorb cost increases without raising prices. Inflation-related factors, such as rising food, labor, energy, and overhead costs, affect restaurant profitability.
- Menu prices are increasing: Full-service restaurants face major challenges, with 92% citing increased food costs and 90% citing increased labor costs. To address this, 89% of full-service restaurants have increased menu prices, with a reported 5.5% increase from November 2022 to November 2023.
- Additional charges as a solution: 17% of full-service restaurants add additional fees to offset price increases. The surcharges cover inflation, medical costs, utilities, credit card transaction fees, and can be permanent.
- Tipflation: The expectation of tipping on a variety of services has increased (“tipflation”), putting additional financial pressure on diners. Customers feel obligated to tip more, which affects the overall cost of eating out.
food price inflation in singapore
Inflation has become a global phenomenon, especially since the pandemic.
According to a United Nations report dated August 1, 2023:
“Globally, the average year-on-year domestic food inflation rate in June 2023 was 13.0%, down from the peak of 16.9% in December 2022, but there were large differences depending on region and country. Figure 2). The average domestic food price in June 2023 was 38.3% higher than in January 2019.”
In Singapore in particular, prices for food, transport and education have increased the most in the past 20 years.
Food prices have increased 58.9% since 2022, according to data from Dollars and Sense.
Considering this, it’s understandable why we get so many complaints from Singaporeans about high prices, even in hawker centres. Some people complain about the dining experience where the restaurant imposes his 10% service charge on orders via his QR code.
But you can’t blame everything on inflation. Due to lifestyle changes, Singaporeans may turn to delivery options instead of eating out.
Deliveroo’s Consumer Survey (September 2022) found that while food delivery statistics have increased during the pandemic, Singaporeans maintain a “heightened appetite for delivery services” even after the pandemic and the return of e-in restaurants. ing.
A survey of 1,000 Singaporean respondents found that “over 60% said they now use food delivery services more regularly than they did before the pandemic.” became.
Additionally, “70% expect to use food delivery services at least once a week.”
“Singaporeans spend an average of $108 per month on food delivery services, an increase of 62% from the average $67.54 per month in 2019,” the study noted.
So, while the price of a delivery service may be the same as that offered at a restaurant, its convenience may make it more worth the price than dining in.
Arguably, the issue of affordability for the lower middle class has become more complex, influenced by both economic factors and changes in consumer behavior. /TISG