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20-04-2013, 09:41 PM
Interesting math eh? The $3.50 hawker brings in about $100 in profit a day, while the $1.50 hawker brings in about $213 a day, just due to higher volumes! This is actually contribution margin analysis - the NPM is about the same for each hawker so it becomes a volume game!
The Straits Times
www.straitstimes.com
Published on Apr 20, 2013
$1.50 chicken rice brings in tidy profit
To earn $6k a month, stall buys supplies in bulk, stays open longer
By Jessica Lim Consumer Correspondent
A PLATE of roasted chicken rice at 820 Hainanese Chicken Rice in Tampines costs $1.50 - a rock-bottom price for the dish.
But despite this, owner Tam Mee Chan turns a profit of at least $6,000 a month.
This is despite raising the price of the meal from $1 in 1992, to $1.30 in 2008, then to $1.50 in 2011 due to rising costs.
Her secret - selling a large number of plates at lower prices, bulk-buying ingredients at discounted prices, cooking chickens from scratch and her roll-up-her-sleeves attitude.
The 45-year-old closes her stall only two days a month - every alternate Monday - and wakes up at 6am to cook from scratch.
'We sell a lot and our attraction is our low price,' she said, adding that buying pre-cooked chickens is more expensive. 'We need to hire only two part-timers. That saves us some money.'
A plate of chicken rice is typically priced at $2.50.
Madam Tam, who runs the stall with her husband, sells about $1,000 worth of food a day, equal to more than 650 plates of her chicken rice.
Retail analysts said that there is no magic bullet. A hawker stall selling $1.50 chicken rice, they said, could be more profitable than one selling the dish for double the price.
It is all about the business model and striking the right balance, said Ms Sarah Lim, a senior retail lecturer at Singapore Polytechnic. She said 820 Hainanese Chicken Rice is trumping not just other chicken rice stalls but also stalls that sell more expensive dishes.
'Selling at lower prices means thinner margins, but a stall may sell many plates. They earn by volume,' said Ms Lim. 'It's all about striking a good balance between pricing and demand.'
Many other factors could affect pricing, she said, such as the presence of competitors nearby and how much they charge, the affluence of the neighbourhood and overall costs.
Madam Tam's story is a glimmer of hope in a tough industry with hawkers caught between rising costs and the public's desire for hawker fare to remain cheap and good.
A check by The Straits Times with 35 hawkers at 17 non-air-conditioned eateries found 23 of them were wary of raising prices despite being squeezed by higher costs.
A recent survey by the Consumers Association of Singapore of 541 non-air-conditioned eateries supported this.
It found that more vendors were charging more, but that the most common prices found for chicken rice ($2.50), plain prata (80 cents) and chicken nasi briyani ($4.50) remained the same.
One hawker who is straining to hold the prices of his food is Mr E.K. Ong, 51, who owns an economical bee hoon stall called Lai Cheng Shu Shi at a hawker centre in Jurong. He earns a profit of about $3,000 a month now, down from about $4,000 two years ago.
The prices of several of his ingredients, he said, have doubled over the past two years. Luncheon meat costs him $44 a carton now, up from $24 a carton in 2011, he claims.
The price of a plate of his plain bee hoon, however, has stayed at 80 cents for the past six years. '
We absorb the increased prices. I cannot cut corners, or I won't have customers. I want to increase the price but I don't know how to,' he said, adding that there are a lot of competitors.
Over at a Bukit Merah hawker centre, Madam Puan Mui Tian, 54, who owns Nan Heng Hainanese Chicken Rice, said she has not increased the price of her $3 chicken rice with vegetables for the past 20 years.
The stall turns a profit of $1,000 a month, 20 per cent lower than in 2010 due to rising costs of ingredients.
Asked why she did not raise prices, she said: 'Human traffic is bad. Bukit Merah is also a mature estate and residents are not that rich.
'I chose to be a hawker even though life is hard. At least it's better than working as a cleaner. They get even less.'
Twelve of the 35 hawkers The Straits Times spoke to had raised their prices in the past year. But even then, some are struggling to turn a good profit.
At Fatman Satay at Old Airport Road Food Centre, Mr Hadi Tarmandi takes home slightly more than $1,000 a month after subtracting costs. His brother, who runs the business with him, takes home another $1,000.
The satay stall, one of several at the Government-owned hawker centre, charges 50 cents a stick - the only item it sells.
When The Straits Times visited them at dinner time on Thursday, only about five customers put in an order within the hour.
Mr Hadi, a father of two, said the cost of ingredients has gone up by 30 per cent since 2009. The 59-year-old increased prices to 50 cents from 40 cents in January after other stalls raised their prices.
'Look how few customers we have now. All the satay stalls here charge 50 cents a stick. If we increase the price, no one will buy ours,' he said.
The consumer price index (CPI) illustrates the tight spot that many cooked food sellers here are in.
The CPI, a measurement of inflation, shows that hawker food prices went up by 2 per cent last year from 2011. The CPI for all items went up by 4.6 per cent in the same period.
There are about 2,500 non-air-conditioned eateries around Singapore.
The Retail Price Watch Group, set up in early 2011 to keep a close watch on excessive price increase for daily necessities, told The Straits Times that while hawker prices have generally increased, there are still stalls offering value for money.
The group's secretariat called on the public 'to shop around and patronise food stalls that are able to offer food at lower prices'.
'This will encourage food stalls to provide their customers with the best value for money,' it said.
limjess@sph.com.sg
Additional reporting by Kash Cheong, Debbie Lee, Eugene Chua, Cheng Jingjie and Rachel Tan
The Straits Times
www.straitstimes.com
Published on Apr 20, 2013
$1.50 chicken rice brings in tidy profit
To earn $6k a month, stall buys supplies in bulk, stays open longer
By Jessica Lim Consumer Correspondent
A PLATE of roasted chicken rice at 820 Hainanese Chicken Rice in Tampines costs $1.50 - a rock-bottom price for the dish.
But despite this, owner Tam Mee Chan turns a profit of at least $6,000 a month.
This is despite raising the price of the meal from $1 in 1992, to $1.30 in 2008, then to $1.50 in 2011 due to rising costs.
Her secret - selling a large number of plates at lower prices, bulk-buying ingredients at discounted prices, cooking chickens from scratch and her roll-up-her-sleeves attitude.
The 45-year-old closes her stall only two days a month - every alternate Monday - and wakes up at 6am to cook from scratch.
'We sell a lot and our attraction is our low price,' she said, adding that buying pre-cooked chickens is more expensive. 'We need to hire only two part-timers. That saves us some money.'
A plate of chicken rice is typically priced at $2.50.
Madam Tam, who runs the stall with her husband, sells about $1,000 worth of food a day, equal to more than 650 plates of her chicken rice.
Retail analysts said that there is no magic bullet. A hawker stall selling $1.50 chicken rice, they said, could be more profitable than one selling the dish for double the price.
It is all about the business model and striking the right balance, said Ms Sarah Lim, a senior retail lecturer at Singapore Polytechnic. She said 820 Hainanese Chicken Rice is trumping not just other chicken rice stalls but also stalls that sell more expensive dishes.
'Selling at lower prices means thinner margins, but a stall may sell many plates. They earn by volume,' said Ms Lim. 'It's all about striking a good balance between pricing and demand.'
Many other factors could affect pricing, she said, such as the presence of competitors nearby and how much they charge, the affluence of the neighbourhood and overall costs.
Madam Tam's story is a glimmer of hope in a tough industry with hawkers caught between rising costs and the public's desire for hawker fare to remain cheap and good.
A check by The Straits Times with 35 hawkers at 17 non-air-conditioned eateries found 23 of them were wary of raising prices despite being squeezed by higher costs.
A recent survey by the Consumers Association of Singapore of 541 non-air-conditioned eateries supported this.
It found that more vendors were charging more, but that the most common prices found for chicken rice ($2.50), plain prata (80 cents) and chicken nasi briyani ($4.50) remained the same.
One hawker who is straining to hold the prices of his food is Mr E.K. Ong, 51, who owns an economical bee hoon stall called Lai Cheng Shu Shi at a hawker centre in Jurong. He earns a profit of about $3,000 a month now, down from about $4,000 two years ago.
The prices of several of his ingredients, he said, have doubled over the past two years. Luncheon meat costs him $44 a carton now, up from $24 a carton in 2011, he claims.
The price of a plate of his plain bee hoon, however, has stayed at 80 cents for the past six years. '
We absorb the increased prices. I cannot cut corners, or I won't have customers. I want to increase the price but I don't know how to,' he said, adding that there are a lot of competitors.
Over at a Bukit Merah hawker centre, Madam Puan Mui Tian, 54, who owns Nan Heng Hainanese Chicken Rice, said she has not increased the price of her $3 chicken rice with vegetables for the past 20 years.
The stall turns a profit of $1,000 a month, 20 per cent lower than in 2010 due to rising costs of ingredients.
Asked why she did not raise prices, she said: 'Human traffic is bad. Bukit Merah is also a mature estate and residents are not that rich.
'I chose to be a hawker even though life is hard. At least it's better than working as a cleaner. They get even less.'
Twelve of the 35 hawkers The Straits Times spoke to had raised their prices in the past year. But even then, some are struggling to turn a good profit.
At Fatman Satay at Old Airport Road Food Centre, Mr Hadi Tarmandi takes home slightly more than $1,000 a month after subtracting costs. His brother, who runs the business with him, takes home another $1,000.
The satay stall, one of several at the Government-owned hawker centre, charges 50 cents a stick - the only item it sells.
When The Straits Times visited them at dinner time on Thursday, only about five customers put in an order within the hour.
Mr Hadi, a father of two, said the cost of ingredients has gone up by 30 per cent since 2009. The 59-year-old increased prices to 50 cents from 40 cents in January after other stalls raised their prices.
'Look how few customers we have now. All the satay stalls here charge 50 cents a stick. If we increase the price, no one will buy ours,' he said.
The consumer price index (CPI) illustrates the tight spot that many cooked food sellers here are in.
The CPI, a measurement of inflation, shows that hawker food prices went up by 2 per cent last year from 2011. The CPI for all items went up by 4.6 per cent in the same period.
There are about 2,500 non-air-conditioned eateries around Singapore.
The Retail Price Watch Group, set up in early 2011 to keep a close watch on excessive price increase for daily necessities, told The Straits Times that while hawker prices have generally increased, there are still stalls offering value for money.
The group's secretariat called on the public 'to shop around and patronise food stalls that are able to offer food at lower prices'.
'This will encourage food stalls to provide their customers with the best value for money,' it said.
limjess@sph.com.sg
Additional reporting by Kash Cheong, Debbie Lee, Eugene Chua, Cheng Jingjie and Rachel Tan
My Value Investing Blog: http://sgmusicwhiz.blogspot.com/
To have earned so much money they must be incredibly dumb to allowed straits times the interview for the story there's much better ways to get publicity, now the tax man will know jialat.