Read this before leasing a food court / coffee shop stall in Singapore
In terms of physical appearance and comfort, a food-court stall is definitely more appealing than an open concept coffee-shop stall in our hot hot Singapore. But, is it financially wise or contractual wise to select whichever based on a hopeful dining crowd in location wise? Let’s explore a little.
Air-conditioned or non-Air-con? Is that an important consideration?
Air-conditioned or non-air conditioned, the many food-court operators namely KopiTiam, Foodfare, Koufu, Food Republic, Food Junction, Kim San leng, K2. Including other privately managed food court or coffee shop operators offers both air-conditioned and non air-conditioned.
One of the MAKE OR BREAK in consideration is the contractual agreement you are going to sign. There are many companies with mandatory clauses to ring fence food business tenants and subjects to certain business conditions.
Some Contractual T&C by food court operators
- GTO (Gross Turn Over) or min rental whichever is higher. GTO is a sharing of profits between you and the foodcourt operator if your monthly sales exceed a certain amount. For example if your sales exceed $Xk a month then they will share X% of your sales.
- GTO on External Food Delivery Clause – As your stall is in their food court, every online order via Grab, Food panda is consider as sales and subject to overall sales for GTO calculation. So example you sold $30 worth of food, this $30 is considered as sales to be calculated at the end of the day subject to GTO.. example if GRAB take 35% for commission and GTO 20% on the balance. All in all your $30 sales is left with $15.60.
- Mandatory Renovation Clause – if your rental contract is on-going and food court operator has to do a renovation, you are required to pay partial of the renovation cost as their stall holder.
- Business absent penalties – if your stall is not open for a number of days, you can be subjected to financial penalties.
- Daily sales cash – Most major food court operators with their own POS system will collect all your sales & cash daily. Balance will be returned 2-3 weeks after deduction of rental and other fees. If you did not break even, you get nothing or ends up owing them.
- Mandatory discount – stall holders in certain locations are mandated to provide 10-20% discount to certain group of people.
So read carefully and compare terms in rental contract to your acceptance level before you inked your name on it.