F&B operators confront outlet closure risks

Weak governance delays response to warning signs.

F&B operators in Singapore are under mounting pressure as rising costs and weak governance practices delay action on underperforming outlets, contributing to high closure rates across the sector.

Around 60% of food businesses shut within five years, with multi-outlet operators facing compounded risks as they scale. Dr. Xu Le, Lecturer from the Department of Strategy and Policy at NUS Business School said high rental and labour shortages remain key pressures. She added that competition from foreign brands is intensifying, making it harder for smaller operators to sustain market share.

Michael Alexander Kruesi, Associate Professor from the Business, Communication and Design Cluster of Singapore Institute of Technology (SIT) said expansion often introduces complexity that can mask underlying issues. “The biggest risks generally arise from exponentially increasing complexity as chains start to expand… because fixed commitments stack up across rent, labour, utilities, and your suppliers.” He noted that even small declines in demand can quickly lead to cash flow problems, especially when weak outlet performance is not surfaced early.

Governance gaps are a critical issue. Kruesi said misalignment between owners and operators can delay escalation of problems. “That gap can affect how issues are reported and how they are escalated.” He stressed the need for structured oversight. “The portfolio should be managed on a rolling runway forecasting system… and you also need a small set of comparable KPIs with clear thresholds that trigger escalation.”

Operators are also urged to monitor individual outlet performance rather than relying on group-level results. Dr. Guy Llewellyn, Assistant Professor at EHL Hospitality Business School Singapore said, “It can't just be the group. It has to be the individual one,” highlighting the importance of tracking costs, feedback and performance per site.

Early warning signs are often financial and operational. Xu Le said, “The simplest signal is the monthly sales data,” whilst low seat turnover can indicate weak demand. Kruesi added that “persistent cash stress despite corrective action” is a key indicator, and if recovery is unlikely, “an orderly exit is often a better decision.”