The young Singaporeans cooking up char siew at Roast Paradise reveal the financial and opportunity cost of running a hawker stall in Singapore.
This article was first published at Dollars and Sense.
Nestled right smack at the famous Old Airport Road hawker centre, young Singaporeans Randall and Kai are not whom you would expect to see as hawkers serving up delicious plates of roast meat and char siew to the hungry lunchtime crowd.
Despite being in their 20s, and likely to have a combined age lesser than many of their counterparts at the hawker centre, the pair decided to take the plunge to enter the local food scene by setting up Roast Paradise – a stall dedicated to selling delicious roast meat and char siew.
Before coming together to set up Roast Paradise, the two have known each other since their days working at a PR and event company. When thinking of a business to start, they identified the food and beverage (F&B) sector as one that offers promising opportunities in Singapore.
However, the first challenge they faced was that the pair did not have any prior experience in this trade, nor did they have hawker parents whom they could learn from.
The Opportunity Cost Of Learning To Be A Hawker
With no background in this trade, the pair decided to search for a mentor to teach them how to cook the food of their choice – roast meat and char siew.
That led to them going on a 6-month apprenticeship programme in KL. During that time, the pair learnt from a mentor (whom they managed to convince to teach them) what it took to prepare, cook and run a roast meat and char siew shop.
Choosing To Be A Hawker
Upon returning to Singapore, the pair decided to start running a hawker stall, rather than to open a shop on their own. The reasons were sensible; lower rental cost and lesser manpower requirements.
Initial Cost Of Setting Up Roast Paradise
For the initial metalwork and equipment needed to set up Roast Paradise at Old Airport Road, the owners spent about $10,000. This excludes the 2-month rental deposit required.
Aside from that, we must remember that both Randall and Kai incurred an opportunity cost when they spent 6 months on their apprenticeship programme in KL. Even if we assume a low opportunity cost of $2,000 per month (remember, they could have been working during that time), this still adds up to $24,000 for both of them.
When we sum up the initial investment and opportunity cost, we are looking at about $40,000.
Monthly Cost Of Running Roast Paradise
Our initial thought was that running a hawker store should be quite affordable compared to operating in a coffee shop, food court or an individual shop.
We were wrong.
Based on our conversation with the owners, we estimated the monthly operating cost for Roast Paradise to be about $11,000 to $15,000. These include raw ingredient cost (i.e. meat, noodle, rice, oil, sauce, etc.), rental, utility, replacement of parts and maintenance.
|Initial Cost Of Starting Hawker Stall (Inclusive Of Opportunity Cost)(Excluding Apprenticeship Fee)||$40,000|
|Monthly Operating Cost||$11,000 – $15,000|
How Much Do They Make Each Month?
The question we all want to know at this point is how much hawkers are making.
The owners were upfront about their initial challenges. On the very first day of operations, they took home $80. For the first 3 months, they were losing money.
Thankfully, business did picked up as time passed. They started to gain more loyal customers, who in turn helped them to bring in more customers.
Business has now stabilised for Roast Paradise. On an average day, the stall can get about 200 customers. If we assume an average spending of $5 per customer, that would mean a daily revenue of about $1,000.
The stall operates full day on Tuesday, Thursday, Friday and Saturday and half day on Wednesday and Sunday. That equates to 5 full days each week, or about 22 days each month.
|Estimated Daily Revenue||$1,000||Based on assumption of 200 Customers, average spending of $5|
|Estimated Monthly Revenue||$22,000||22 working days per month|
|Estimated Monthly Cost||$13,000|
|Estimated Monthly Gross Profit||$9,000|
Based on our calculation, the stall might be making about $9,000 a month. If you split it between both partners, we are looking at about $4,500 each.
Various Job Scope, Long Working Hours
On full days, Roast Paradise operates from 11am to 230pm, before resuming sales at about 430pm till 6pm, or whenever the meat has sold out. On the surface, customers may think they only work for a few hours each day.
That however is not true. On most days, the partners start at 7am and work till about 6pm. They start early because the process of roasting meat takes about 3 hours. There is also the tedious routine of clearing and cleaning the stall at the end of each day.
And because they are hawker-entrepreneurs themselves, there are also other matters to tend to. Being savvy social media individuals, they have their own Roast Paradise Facebook page to manage. Accounts would also have to be done at the end of each day. These take about an additional 2 hours each day.
In total, we are looking at about 13 hours of work for each full day.
The Non-Financial Incentive Of Doing Well
We won’t deny it. Being a hawker in Singapore can be financially rewarding, if you are good in whipping up a good dish or two. With our strong local food culture, you should find no shortage of Singaporeans willing to pay and queue for good local food.
That being said, one must be willing to endure the hard (and hot) work demanded each day as well as the initial investment required to learn the trade, and to set up the stall.
On its own, it’s hard to imagine the financial incentive being the only reason why any young Singaporean would join the industry. One can even argue that if making money is the only reason for starting a hawker stall such as Roast Paradise, then there are better and easier ways of doing so.
For Randall and Kai, what keeps them (and other hawkers) motivated is when their customers tell them how much they are enjoying their food, and when people show appreciation for the work and dedication they have committed to their job.
When you think about it, aren’t we all the same? What keeps us happily working in our job (aside from the money) is knowing that there is someone out there who appreciates the work we have done. It could be our manager, our CEO, our clients, our customers or even our colleagues.
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By Timothy Ho of Dollars and Sense
DollarsAndSense.sg is a website that aims to provide interesting, bite-sized financial articles which are relevant to the average Singaporean. Subscribe to our free e-newsletter to receive exclusive content not available on our website. Follow us as well on Instagram @DNSsingapore to get your daily dose of finance knowledge through photos.
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