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Feedback for Macroeconomics prelim analysis

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Feedback for Macroeconomics prelim analysis

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Hello Team,

Thanks for sharing your prelim analysis with me. You’ll find below, feedback from me for your second stage work. Please note that the grow areas are specific to what I read on your padlet wall. It doesn’t mean these are all you need to do, to deepen your analysis for stage 3 presentation. I’m sure you’ll find more concepts or new info to deepen your analysis along the way. So feel free to expand your analysis. It also doesn’t mean that you have to address all that I’ve mentioned below.

As a team, discuss and come to a consensus.

Just to be clear, there is no need to amend your prelim analysis on padlet. My feedback are meant for you to consider when you work on deepening your analysis in stage 3 (Presentation and the slides)

Glows:
I like that the Team revealed understanding in covering the overall economic outlook before analysing the specific fast food/F&B industry to a large extent. Good work in making reference to relevant articles from recognised sources. Just a note on those reference that are at least 5 months old (there's one dated Aug 2021). Team might want to research for more recent article to see if the happenings mentioned are still ongoing.

Grow areas:
Room for growth in terms of applying more economic concepts to your analysis.
Another note on definition, please omit definition from presentation to give focus on application.

Specific comments:

GDP
Good point about tourist volume in affecting real GDP. Team might have to identify key sectors in the economy and relate their impact using the GDP expenditure approach.

Good find about the increase in delivered meals. Team just have to see how to reconcile this with the earlier point about the downturn in the F&B industry.

Labour Market
I note that the report Team made reference to provided ample stats. Suggest for Team to picked a few to focus on.

I like that there's examination of employment situation in a few sectors, the next steps would be to choose key sectors to focus and find out more about what caused the changes.

For the F&B, employment of foreign workers is mentioned. Why is this important?

What type of unemployment is most prevalent?

Good though in wanting to find more policies.

Inflation
Good work in identifying the causes for inflation in Singapore. Team showed understanding that one particular price increase for an item wouldn't cause an inflation given the definition of inflation. Next step would be to find out why these causes happened. For e.g. Why did raw food price increased?

Good work in attempting to find out the price change in key ingredients for FF. Team might want to find out more on where's the source of input?

Policies
Good industry specific policies were found.
For greater application of concepts, Team might want to try identifying the types of employment policies identified for some of them.

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https://www.channelnewsasia.com/singapore/singapore-gdp-q2-economy-growth-forecast-2104886

Singapore economy and Gross Domestic Product (GDP) growth

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Singapore economy grows 14.7% in Q2, full-year GDP growth forecast upgraded to 6-7%

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SINGAPORE: Singapore’s economy grew by 14.7 per cent year-on-year in the second quarter of 2021, faster than the 1.5 per cent growth in the previous quarter, the Ministry of Trade and Industry (MTI) said on Wednesday (Aug 11). The ministry also upgraded the GDP growth forecast for 2021 to 6 to 7 per

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Macroeconomics Prelim  Analysis [Based on 5 Key Info. Sources]

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Macroeconomics Prelim  Analysis [Based on 5 Key Info. Sources]

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1. Singapore Current Economics and the Impact on Fast Food Industry GDP  [Genevieve & Yunis]

The Economy and Impact of Covid-19

GDP measures the market value of all final goods and services produced in the economy during a calendar year.

The overall GDP of Singapore decreased from the years 2019 to 2020 by an estimated 41,642mil, along with the Food & Beverage's GDP decreasing by an estimated 1,386mil. This decrease can be due to Covid-19 outbreaks restrictions and the closing of borders.

Based on Key Source 1, in 2020, the real GDP value of Singapore's economy and the food and beverage industry decreased to -5.4% and -25.1% respectively.

The majority of the industries’ GDP value decreased due to the Covid-19 outbreak. Tourists are unable to visit Singapore and therefore, there is a dip in most industries such as the Food and Beverage businesses.

Also with the ever-changing Covid-19 situation, Singaporeans are unable to dine in restaurants due to the strict measures imposed by the government. Thus, there is a fall for the 3rd quarter of 2020 (3Q20) and the 4th quarter of 2020 (4Q20) of 24.1% and 19% respectively.

With the restrictions slowly easing, the sales volumes are slowly increasing as more Singaporeans choose to dine-in at restaurants, leading to a huge jump of 36.9% growth rate in Singapore’s economy.

The high increase in the percentage is calculated from a low base due to the fall in the growth rate last year.

In conclusion, the GDP of the fast-food industry changes seasonally due to covid-19 restrictions. There is an increase in its GDP when restrictions on dining locations are lifted and measures are looser. On the other hand, when there are more restrictions and no dine-in allowed, there is a slight drop in its overall GDP.

The increase in GDP level was highly dependant on the Covid-19 situation in Singapore. The stricter the Covid-19 restrictions on the F&B industry, the lower the GDP level.

The Effort of Food Delivery Services

73% increase in delivered meals during the circuit breaker period.

The high demand for food deliveries is due to its extreme convenience, a wide variety of options, and speedy deliveries.

Demand for food delivery increases the sales and thus, the GDP level for the fast-food industry increases too.

All in all, the growth rate for GDP is decreasing slowly from the 3rd quarter of 2020 (3Q20) to the 1st quarter of 2021 (1Q21) due to Covid-19 restrictions and but with the increasing demand for food delivery services, the GDP does not decrease drastically either.

To find out more for report writing:
1. Data statistics of the GDP changes

2. Labor Market and Unemployment in Fast-Food Industry [Celeste]

Overview of the Labour Market in Singapore

The labour market in Singapore performed better in 3Q 2021 than in 2Q 2021 when tighter COVID-19 restrictions temporarily affected demand for some sectors

Total employment declined at a significantly slower pace, as resident employment increased strongly. The change was from -16,300 in the 2nd quarter to -2,400 in the third quarter

This is supported by how resident employment grew more strongly in 3Q 2021, although total employment declined due to the fall in non-resident employment as COVID-19 was still impacting Migrant Domestic Workers in Singapore

The unemployment rate also has a steady decline where the overall unemployment rate declined from (2.7%) in August 2021 and it was at a constant in September and October at (2.6%)

There was a decline in the number of retrenchments and incidence in the 3Q 2021 (from 2,340 or 1.3 retrenched for every 1,000 employees to 1,900 or 1.1). Retrenchments declined throughout all industries, but primarily in Manufacturing and Services

Change in Employment and Unemployment in Different Industries

The total employment level in the third quarter of 2021 was led by outward-oriented sectors such as Information & Communications, Professional Services, and Financial Services, and growth has picked up pace from a quarter ago. Domestically Oriented sectors also fared better, with increases in Administrative & Support Services and Health & Social Services.

In comparison, consumer and tourism-related sectors lagged behind, with muted resident declines in Food & Beverage Services and Arts, Entertainment & Recreation, while employment held steady in Accommodation and Retail Trade. With seasonal hiring for festivities and the easing of travel and dining restrictions, employment in these sectors is expected to rise in the coming months

While resident employment contributed to the rise of the employment rate, the ongoing border restrictions contributed to the continued contraction of non-resident employment access in most industries.

The resident unemployment rate by age shows that the different age groups have a declining trend from September 2020 to September 2021 (Third Quarter). However, there was a sudden rise in the unemployment rate for the age group below 30 where it shifted from 5.1 in June 2021 to 6.1 in September 2021.

This is also supported by how Non-Tertiary students have a huge spike in the unemployment rate from 3.5 in June 2021 to 5.0 in September 2021. This suggests that there is an active job search going on for fresh graduates or students in both the age and education group, where they move from one job to another job to find what is suitable for them, exploring the different options available. This shows that it is most likely that this falls under frictional unemployment as frictional unemployment is caused by the normal search time required by workers with marketable skills who are changing jobs, initially entering the labor force, or reentering the labor force

To find out more for report writing:
1. Is there any government measures to support the unemployment rate in Singapore?
2. Unemployment statistics for the fast-food industry

3. Overall inflation situation in Singapore & Fast Food Industry [Areef & Celeste]

Inflation is defined as a sustained and continuous increase in the general (average) level of prices of goods and services in the economy.

Singapore's overall inflation rose to a more than eight-year high in October, which was mainly caused by higher car prices and housing rents. The core inflation is at its highest after three years.

Overall inflation jumped to 3.2% on a year-on-year basis, up from 2.5% in September.

The uptick reflected stronger private transport and rental costs, in addition to the higher core inflation, said the Monetary Authority of Singapore (MAS) and the Ministry of Trade and Industry (MTI) on Tuesday (Nov 23).

Core inflation climbed to 1.5% in October from 1.2% in September. The increase was due to rising services and food prices, and a smaller decline in the cost of retail and other goods.

Food inflation edged up to 1.7%, compared to 1.6% in September, as raw food prices rose at a faster pace while the inflation of prepared meals remained broadly unchanged.

Overall prices have generally risen in Singapore. From November 2020 to November 2021, the food industry consumer price index has increased by 1.4% using 2019 as the base year.

Prices continued to rise for all components where fast food increased from 2.3% in October to 2.5% in November 2021.

There has been a 49.6% increase in food prices since 2000 (or over the last 20 years). Thus, the cost of food and food-related services that were $1.00 in 2000, will be closer to $1.50 now.

Breaking down on how different the prices have changed from individual food item:

1. Meat - increased 69.5% since 2000
2. Oils & Fat -  increased 55.5% since 2000
3. Vegetables - increased 54.3% since 2000

Thus, this will eventually lead to fast food restaurants buying their ingredients at a much on expensive price to produce their goods. This leads to fast food increasing by 35.7% since 2000

To find out for more report writing:
1. the price change over the years for menu item

4. Government Measures to Support the Food & Beverage Industry
[Genevieve & Celeste & Zaw]

Jobs Support Scheme (JSS)

The Government will increase support for F&B businesses under the Jobs Support Scheme (JSS) to 50%.

Co-chair of the COVID-19 multi-ministry task force Lawrence Wong said: “We realize that this will have significant inconvenience to many people, I think the businesses that will be hardest hit will be the F&B sector because of the restriction for dining-in.”

The Ministry of Health (MOH) said that the Government will increase the JSS support rate to 50% of the first S$4,600 of gross monthly wages paid to local employees for this period.

The JSS was first introduced in the Budget in February 2020, and it subsidized between 25% and 75% of wages for firms.

During his Budget speech earlier this year, Deputy Prime Minister Heng Swee Keat announced a fourth extension of the scheme, costing the Government another S$700 million.

Community Development Council (CDC) Vouchers Scheme

Government to give out $100 digital vouchers to about a 1.3million Singapore households, which was launched on 13 December 2021.

This scheme helps to defray some daily expenses such as food and groceries.

This scheme helps to boost Singapore's economy as more Singaporeans will purchase from local hawkers and heartland merchants.

Overall, this will have a positive impact on Singapore's economy, especially in regards to the Food and Beverages Industry.

NightLife Establishments that have switched to F&B operations

Due to the covid-19 pandemic, nightlife establishments such as nightclubs, pubs have been put to a halt to prevent gatherings and the spreading of viruses.

The government decided to replace these nightlife establishments with F&B operations.

This gave more opportunities and made way for more F&B operations to bloom despite the Covid-19 pandemic setback.

Rental Relief for Commercial Properties

Under the Rental Support Scheme, the Government will give an additional 4-week rental waiver for qualified renters on Government-owned commercial buildings, as well as an additional 2-week rental relief cash payout for qualifying tenants and owners of privately-owned commercial properties (RSS)

The government will also encourage landlords of commercial premises to provide rental assistance to affected enterprises.

If the landlord is a government agency, the restaurant's rental can be waivered for up to 2 months

To find out more for report writing:
1. To what extent did these government measures help the industry and how effective was it.

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https://www.channelnewsasia.com/singapore/dining-in-suspended-job-support-scheme-for-restaurants-1365361

Singapore Government effort to help the Food & Beverage businesses to get more support from Jobs Support Scheme

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SINGAPORE: The Government will increase support for F&B businesses under the Jobs Support Scheme (JSS) to 50 per cent, following the announcement that dining-in will be suspended from Sunday (May 16).

This is an increase from the 10 per cent support of wages paid up to June 2021.

Speaking at media conference on Friday, co-chair of the COVID-19 multi-ministry task force Lawrence Wong said: "We realise that this will have significant inconvenience to many people, I think the businesses that will be hardest hit will be the F&B sector because of the restriction for dining-in."

This increase in support will apply during the period where dining-in is prohibited, he added.

The current size of group gatherings allowed will be reduced from five people to two people, following a spike in COVID-19 community cases, Mr Wong announced on Friday.

Dining-in at F&B establishments will not be allowed. This includes hawker centres and food courts, both indoors and outdoors.

The measures will be in place for a month between May 16 and Jun 13, and the Government will do a review two weeks after they have been implemented to "look at the prevailing public health situation" and "see if there's a need to adjust the measures further", said Mr Wong.

In a separate press release, the Ministry of Health (MOH) said that the Government will increase the JSS support rate to 50 per cent of the first S$4,600 of gross monthly wages paid to local employees for this period.

"This is an increase from the 10 per cent support for wages paid up to June 2021," the press release stated.

The Government will also provide one month of rental waivers for hawker stalls and coffee shop tenants of government agencies, said Mr Wong.

"We also strongly encourage commercial landlords to support their F&B tenants," he added.

Responding to whether the Government expects the fallout for F&B businesses to be comparable or worse than during the "circuit breaker" period last year, Mr Wong said it would be "hard to predict".

"Certainly the F&B sector will be impacted. The takeout business is not the same as dining-in. And therefore, while they can shift to take out, there will be an impact on the revenues and bottom lines.

"We will continue to monitor this closely but we believe with the support measures we can do something to help the affected businesses."

The JSS was first introduced in the Budget in February 2020, and it subsidised between 25 and 75 per cent of wages for firms.

During his Budget speech earlier this year, Deputy Prime Minister Heng Swee Keat announced a fourth extension of the scheme, costing the Government another S$700 million.

Download our app or subscribe to our Telegram channel for the latest updates on the coronavirus outbreak: https://cna.asia/telegram

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F&B businesses to get more support from Jobs Support Scheme following tighter COVID-19 measures

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SINGAPORE: The Government will increase support for F&B businesses under the Jobs Support Scheme (JSS) to 50 per cent, following the announcement that dining-in will be suspended from Sunday (May 16). This is an increase from the 10 per cent support of wages paid up to June 2021.

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https://www.straitstimes.com/business/economy/singapore-overall-inflation-rises-to-32-in-october-highest-in-more-than-8-years

Inflation on Singapore

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Singapore overall inflation rises to 3.2% in October, highest in more than 8 years

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Core inflation, which better captures the underlying trend in consumer prices, rose to 1.5% last month, highest in nearly three years. . Read more at straitstimes.com.

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https://stats.mom.gov.sg/iMAS_PdfLibrary/mrsd-Labour-Market-Report-3Q-2021.pdf

The Labour Market and Unemployment in Singapore during the Third Quarter 2021

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MACROECONOMICS PRELIMINARY ANALYSIS

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https://www.singstat.gov.sg/-/media/files/news/gdp3q2021.pdf

Gross Domestic Product(GDP) data for the year 2021.

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Additional Resources for research (MACRO)

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Additional Resources for research (MACRO)

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GDP
1) https://tablebuilder.singstat.gov.sg/table/TS/M015241#!
2) https://www.channelnewsasia.com/commentary/food-delivery-apps-grabfood-foodpanda-deliveroo-restaurants-1367326

Inflation
1) https://dollarsandsense.sg/heres-much-prices-everyday-goods-services-changed-past-20-years/

Government Measures
1) https://www.straitstimes.com/singapore/100-worth-of-cdc-vouchers-for-each-sporean-household-available-for-collection-online
2) https://www.mof.gov.sg/news-publications/press-releases/support-package-to-help-workers-and-businesses-during-phase-two-(heightened-alert)
3) https://www.gobusiness.gov.sg/covid-19-faqs/for-sector-specific-queries/nightlife-establishments

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Singapore economy grows 14.7% in Q2, full-year GDP growth forecast upgraded to 6-7%

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SINGAPORE: Singapore’s economy grew by 14.7 per cent year-on-year in the second quarter of 2021, faster than the 1.5 per cent growth in the previous quarter, the Ministry of Trade and Industry (MTI) said on Wednesday (Aug 11). The ministry also upgraded the GDP growth forecast for 2021 to 6 to 7 per

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Happy to hear that the Team is working well and appreciate each other's effort in meeting up for discussion despite the different and various commitments each might have. Coming to a consensus is never easy and it requires understanding and an open mind. Kudos to such good spirit!

Happy to hear the constructive suggestions of making meetings even more efficient and to value add portions done by other team members and to give constructive feedback. *clap clap That's truly what a dream Team should be.

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Feedback for Microeconomics Prelim Analysis

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Feedback for Microeconomics Prelim Analysis

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Hello Team,
Thanks for sharing your prelim analysis with me.

You’ll find below, feedback from me for your first stage work. Please note that the grow areas are specific to what I read on your padlet wall. It doesn’t mean these are all you need to do, to deepen your analysis for stage 3 presentation. I’m sure you’ll find more concepts or new info to deepen your analysis along the way. So feel free to expand your analysis. It also doesn’t mean that you have to address all that I’ve mentioned below.

As a team, discuss and come to a consensus.

Just to be clear, there is no need to amend your prelim analysis on padlet. My feedback are meant for you to consider when you work on deepening your analysis in stage 3 (Presentation and the slides)

Glow areas:
1. Key sources are well recognised though the e-book reference could be a bit generic for application. Small issue though, I get it that it’s more for background info.

2. Key sources contained good information for team’s analysis. For the article on potato prices, I get that this is a key ingredient for production but Team would need to supplement this with further findings that’s more specific to SG context. E.g. Do we import potatoes from the countries mentioned? Evidence of rising cost reported in SG associated to this?

3. Appreciate your good effort in reading up topics in advance and applying concepts to your best ability.

Grow areas:
1. Market Structure: Thinking further about your point “dominating fast-food restaurants….”, would you think this is a market with many players with more or less equal market presence or would it be one with a few larger players and many smaller ones? Answering this would help you confirm the market structure for this industry.

Product Uniformity: Applause for your good effort in applying types of product differentiation to a large extent  Number of sellers: Just wanted to caution that there is a difference between outlets and brands. Most outlets could come from a single brand.

Information in the market: Yeap, factually right

To find out more for report writing: Just wanted to emphasize this - please find out if it’s really true that it is easy to enter this industry.

2. Support could be found in your key sources for Team’s second question on “why there’s increase in demand for fast food”. Suggest to revisit the selected articles

3. While source article is dated 2016, the trend in technology is still happening. Perhaps Team could explore how this has progressed in more recent years with further research. Team could also look at how your prelim analysis could be explained more specifically using demand and or supply determinants (where applicable).

4. These are factual and to bring it to the next level, Team got to identify the supply determinant you are actually describing and how this might impact the supply. And yes, Tech (point 3) could be considered collectively in examining the overall impact on supply.

5. Please refer to S/n 2 comments under “Glow”

6. For fast food to be deemed as a necessity, stronger justification/evidence would be needed given that we are not talking about a specific group of people who has the habit of consuming fast food (ur second point) but the population as a whole.

For the second determinant, please revisit the concept of price elasticity of demand and check your conclusion.

For third determinant, just wanted to highlight the difference between chains and brand. Many chains could come under one brand.

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Additional Resources for research (MICRO)

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Additional Resources for research (MICRO)

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1. https://ijbnpa.biomedcentral.com/articles/10.1186/s12966-017-0515-x

2. https://sgpgrid.com/filter?industry=56121&pageSize=25&page=1&isOptimal=false

3. https://www.investopedia.com/terms/m/monopolisticmarket.asp

4. https://ijbnpa.biomedcentral.com/articles/10.1186/s12966-017-0515-x

5. https://sgpgrid.com/filterindustry=56121&pageSize=25&page=1&isOptimal=false

6. file:///C:/Users/Celes/Downloads/study_id88671_food-service-industry-in-singapore%20(1).pdf

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My team is extremely helpful, everyone helps each other out even though we have our own parts to do and I really appreciate it, we communicate pretty well and manage to get things done on time for our first submission.

For the area of improvement I personally don’t feel there is much, maybe we can schedule our calls better so we won't have to rush if we have plans?

One interesting thing I learnt is how the fast food industry outdid other F&B outlets in sales. I knew the fast food industry was doing well but I didn't think it would have beaten other F&B outlets.

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This team is very organised and professional. It feels like an actual official real-life project of a company. I love how everyone in this team is very hardworking and easy to communicate with as well. Very friendly and helpful groupmates!

One area of improvement is that maybe we could have gone through the whole project in detail so that there would not be any misunderstandings? Really hard to find a fault in this group.

One interesting fact I took from this analysis is how the fast-food chain has such a large number of customers however its market power is considered quite low still.

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My team is a very organized group and I appreciate it as without organization, we might have fallen behind on our deadlines. We are also understanding of each other's needs and match our schedules accordingly.

One area of improvement could be we research about each other's parts as well as to provide our teammates with constructive feedback.

One interesting fact is I learnt how to view the market from a supplier perspective. Instead of researching demand determinants, I chose supply determinants and it has helped broaden my knowledge about how a demand supply graph can move.

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Hello friends! One thing that I like about our team is that we helped each other along the way! We communicate well with one another so as to not leave anyone behind. I also appreciate how our work allocation is well diversed and evenly spread out!

I think one area of improvement can be to research more resources before we select the best one so that we can save time and be an effective and efficient group. Other than that, I enjoy working with my group!

One interesting news I learnt was that A&W was around since 1966, which was even earlier than KFC and Mcdonald in Singapore. Though it was loved by so many fans, they were suffering losses and had to leave Singapore in 2003. I was shocked by this news as I wondered why it would close down even though it is loved by so many people and the fast food industry is growing. However, A & W surfaced back in April 2019 after 16 years and gained its popularity with 4 outlets in Singapore.

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The workload is evenly distributed and members put in efforts to do their parts. Great teamwork and communication go smoothly in this team. First part of this project is completed efficiently and I hope that stays the same for the remaining assignment!

No major issues with this group. The only thing that I can think of is that members should try to complete their parts as soon as possible.

One interesting fact is that I learnt to distinguish between monopolistic competition and oligopoly more clearly now. Their differences were slightly confusing to me as there were overlapping characteristics and the fast-food industry seemed to fit into both categories. However, after doing more research analysis, I can conclude that the fast-food industry is indeed the market structure of monopolistic competition.

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Microeconomics Prelim  Analysis [Based on 5 Key Info. Sources]

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Microeconomics Prelim  Analysis [Based on 5 Key Info. Sources]

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1. Market Structure for Fast Food Industry: Monopolistic Competition [Genevieve and Celeste]
Support from the key resources:

The market structure of the fast-food industry is ‘Monopolistic Competition’ where there are many sellers in the market, in which the products sold are similar but differentiated. The fast-food industry has a relatively low barrier of entry and exit and information in the market is relatively widespread.

The fast-food industry assumes a large number of firms, where there are many sellers in the market.

For example, the dominating fast-food restaurants are Starbucks, Mcdonalds, KFC, Burger King, and many other fast-food chains.

It also assumes easy or low entry and exit to this market industry.

Products and services are differentiated, thus higher market power than perfect competition.

Product Uniformity
The product uniformity of the fast-food industry is similar but differentiated as fast-food restaurants sell food products that are similar in appearance but can come in different flavors and different consumer experiences. Since many products out there are wide in variety, sellers will try different methods to differentiate themselves from their competitors. In the short run, fast food restaurants can yield positive economic profits.

Firstly, fast food restaurants can be differentiated by their location.

Many of the fast-food restaurants can be found almost everywhere in Singapore, especially in shopping malls where it gathers most consumers. Fast food restaurants such as McDonald's and KFC can be seen at almost every corner of Singapore as they are one of the major players in the industry, which is also very convenient for consumers. This easily attracts consumers as it is evenly scattered across Singapore and can result in long queues almost every day. However, there are also fast-food restaurants that are located in neighboring districts that are away from their competitors. An example of this would be Subway. Subway has outlets that are located at markets, shophouses, and even train stations. Take Lakeside MRT and Bukit Batok MRT for example, Subway is there for consumers who may be rushing or getting home late. This appeals to consumers because it is very convenient and close to where they are staying.

Secondly, fast food restaurants can also be differentiated by their services.

The majority of fast-food restaurants serve their consumers with convenience and comfort, but some firms differentiate themselves by providing more than just that. Looking at Mcdonald's, Mcdonald’s is differentiated from their competitors in terms of services as more than 36% of their outlets operate 24/7 or 57 outlets that are operating 24/7. This unique selling point cannot be found in the majority of the fast-food chains. This gives consumers an option to purchase from Mcdonald which makes them the choice that consumers pick.

Also, fast food restaurants can be differentiated by their physical differences, which appeal to different customer groups.

A good example of this could be Burger King where their burger buns come in an exotic color like black. The bun is very unique and different from the typical brown bun, so consumers will be attracted to it. They differentiate themselves from other fast-food restaurants by promoting their burgers with black buns to capture the attention of an adventurous group of customers.

Fast food restaurants can also gain market power through the use of product images to make their product different.

A&W stands out from its competitors by branding their draft root beer, root beer floats unlike most of the fast-food chains which normally sell standardized drinks like soft drinks, coffee, and tea. Additionally, the A&W brand itself is a hip nostalgia brand that is different from how other fast-food restaurants brand themselves which is very modern. Product image can also be perceived through their advertisements where advertising can improve the product image of the fast-food company and stand out from their competitors. This includes being creative and understanding how the customer's mind works.

Another example would be Mcdonald’s collaborating with BTS and coming out with BTS meals. With the help of this BTS meal, consumers are paying 9 times more just for the packaging. This skyrocketed Mcdonald’s sales and thus, stands out from their competitors.

Number of sellers
In the fast-food industry, there are many buyers and sellers. According to data from Statista, there are around 491 fast food outlets in Singapore.

Information in the Market
Lastly, there is a relatively good amount of information in the market. Consumers can compare the prices of the different products that fast food restaurants are offering and compare them to see which is worth their money. Consumers can view menus that are in-store or through partnerships with delivery companies like Grab and Foodpanda, to compare the prices of different products. This way, consumers can fully utilize their money by comparing which is more worth it and getting a good deal out of it.

To find out more for report writing:

What is the number of players in this monopolistic competition of the fast-food industry?

What is the evidence to support the easy entry and exit in this industry?

To find out more sources of evidence to prove the differentiation between the fast-food companies which allows more price inelastic.

2. Customer’s demand for fast food has increased over the past decades [Areef and Celeste]

Support from key sources:

In addition to long lines at new outlets, fast food chains frequently introduce new flavors and sell out in a matter of weeks, like McDonald's Nasi Lemak Burger.

In 2016, fast food outlets in Singapore generated a total of approximately S$1.1 billion in operating receipts, according to the latest statistics from the Department of Statistics (SingStat).

Despite bucking the overall trend in the food and beverage (F&B) industry, Singaporeans' apparently insatiable appetite for fast food has helped support this sector.

In the entire F&B industry, sales have decreased by 10 percent from 2000 to 2018. The fast-food chains, on the other hand, have seen a 29 percent increase in sales.

Why fast-food chains have an edge over restaurants:

Convenience and quick service

Affordable prices

Accessible locations

Assembly line model which helps to keep costs low

Successful and targeted marketing. “(McDonald’s) Happy Meal is one example. The culture already ingrained is that McDonald’s is a part of your life… It’s nostalgic to a lot of Singaporeans growing up,” said F&B consultant and branding specialist Derrick Chew.

To find out more for report writing:

How much has it increased in terms of revenue?

Why there has been/what has caused an increase in the number of people buying fast food

3. Technology has helped fast-food restaurants to better meet customers’ needs and the efficiency of the fast-food industry.  [Celeste]

Support from key resources:

Fast-food companies are doing better due to lower prices and marketing campaigns. Food trends are also more easily adapted by the industry.

Sales are up due to a combination of new products and higher productivity, which decreases costs and improves efficiency, in addition to the introduction of new products.

Many brands, including McDonald's and Popeyes, as well as BurgerUp, have invested in technology to streamline services and reduce dependence on staff, including self-ordering food kiosks.

BurgerUp offers burger customization, so having an ordering kiosk is essential so diners can customize their meals without hogging the counter. As a result, 20 percent of the manpower has been saved.

According to a Burger King spokesman, a similar system will be introduced. Texas Chicken is also considering the possibility. These technologies have been linked with increased sales. Mr. Dickson Low, chief operating officer of Revenue Valley Group, which operates the Popeyes restaurant chain in Singapore, noted that customers are ordering side dishes and receiving larger portions.

Possibly, this is because they can view images of all the items on the menu on the self-ordering kiosks. There is a 15 percent increase in add-on and top-up orders at restaurants with self-ordering kiosks than at restaurants without them."

To find out more for report writing:

How has technology changed the industry?

Will it be good in the long run if technology keeps evolving in the fast-food industry?

4. Factoring in the higher paying wages still led to a struggle to hire workers [Yunis]

Support from the key resources:

Despite the 5% increase in salary price, the quantity of workers is not increasing much, as proven within the source, as many more restaurants are understaffed by 20% to 30%. (high demand, low supply, inelastic)

Led to restaurants turning to operate on a smaller scale & using technology to gain revenue.

To find out more for report writing:

Is the lack of manpower limited to F&B chains only?

How much financial impact does lack of manpower have on the F&B industry?

5. Change in price of potatoes due to the high demand [Yunis]

Support from the key resources:

40% increase in prices due to shortage in supply while demand has increased

Lower production rates with the increase of 24-25RS per kg and 30-35 per kg at retail. Prices are unlikely to drop till November due to high demand & alternatives to vegetables

To find out more for report writing:

Any other alternative to potatoes for fries?

6. Price Elasticity of Demand for fast food chains [Zaw]
Support from the key resources:

According to the research shown above under market structure, we came to a conclusion that the fast-food market is “ Monopolistic Competition”. This shows us that the degree of market power is at the second-lowest compared to the four market structures.

Market power shows the ability of an industry to increase and maintain its prices high while retaining market share.

This suggests that since the degree of market power is low, the market of the fast-food industry is elastic as they do not have the power to charge and maintain a high price while making it profitable at the same time.

To find out more for report writing:

Has any fast-food chain in Singapore been affected by the elasticity of the market?

Price Elasticity of Demand for fast food chains using N.P.H.A.T [Yunis, Celeste and Zaw ]

To find out the price elasticity of fast-food chains, we are going to use the factors affecting price elasticity of demand which are the determinants (N.P.H.A.T) that will influence whether fast-food chains are price elastic or inelastic.

The first determinant is Necessity vs. Luxury (N), where it can be both a necessity and luxury in different contexts. In developing countries, fast food can be seen as a luxury as consumers are spending more to eat at fast-food restaurants rather than a normal food stall. However, in the Singapore context, fast food can be seen as a necessity as consumers opt for fast food options as it is affordable and convenient. As it is seen as a necessity, we can say that demand for necessities is price inelastic.

The second determinant is Habits (H). Singaporeans have a high eating-out frequency of 77.3% where they usually eat either dinner, lunch, or breakfast at eateries such as fast-food restaurants. This results in people having a habitual eating pattern at fast-food chains because many people chose to eat there as it offers cheap and fast alternatives compared to restaurants. Thus if the prices were to be raised, the demand for products will drop and they would lose customers as they defeated one of the main purposes of the fast-food industry, which is offering cheap and affordable food, people would not want to spend more and will instead shift to alternatives, making the demand price elastic.

The third determinant is the availability of substitutes(A). Within Singapore there are around 600 fast-food chains, indicating that there is an abundant amount of alternatives if some of the fast-food chains were to close down. For example, Even if Mcdonald's were to close down completely, there would still be alternatives such as Burger King, A&W, and many more. This would mean that the demand is price elastic.

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MICROECONOMICS PRELIMINARY ANALYSIS

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Fast Food Industry in Singapore
[Market Structure]

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11.1 Monopolistic Competition: Competition Among Many

Learning Objectives

1. Explain the main characteristics of a monopolistically competitive industry, describing both its similarities and differences from the models of perfect competition and monopoly.

2. Explain and illustrate both short-run equilibrium and long-run equilibrium for a monopolistically competitive firm.

3. Explain what it means to say that a firm operating under monopolistic competition has excess capacity in the long run and discuss the implications of this conclusion.

The first model of an imperfectly competitive industry that we shall investigate has conditions quite similar to those of perfect competition. The model of monopolistic competition assumes a large number of firms. It also assumes easy entry and exit. This model differs from the model of perfect competition in one key respect: it assumes that the goods and services produced by firms are differentiated. This differentiation may occur by virtue of advertising, convenience of location, product quality, reputation of the seller, or other factors. Product differentiation gives firms producing a particular product some degree of price-setting or monopoly power. However, because of the availability of close substitutes, the price-setting power of monopolistically competitive firms is quite limited. Monopolistic competition A model characterized by many firms producing similar but differentiated products in a market with easy entry and exit. is a model characterized by many firms producing similar but differentiated products in a market with easy entry and exit.

Restaurants are a monopolistically competitive sector; in most areas there are many firms, each is different, and entry and exit are very easy. Each restaurant has many close substitutes-these may include other restaurants, fast-food outlets, and the deli and frozen-food sections at local supermarkets. Other industries that engage in monopolistic competition include retail stores, barber and beauty shops, auto-repair shops, service stations, banks, and law and accounting firms.

Profit Maximization

Suppose a restaurant raises its prices slightly above those of similar restaurants with which it competes. Will it have any customers? Probably. Because the restaurant is different from other restaurants, some people will continue to patronize it. Within limits, then, the restaurant can set its own prices; it does not take the market prices as given. In fact, differentiated markets imply that the notion of a single "market price" is meaningless.

Because products in a monopolistically competitive industry are differentiated, firms face downward-sloping demand curves. Whenever a firm faces a downward-sloping demand curve, the graphical framework for monopoly can be used. In the short run, the model of monopolistic competition looks exactly like the model of monopoly. An important distinction between monopoly and monopolistic competition, however, emerges from the assumption of easy entry and exit. In monopolistic competition, entry will eliminate any economic profits in the long run. We begin with an analysis of the short run.

The Short Run

Because a monopolistically competitive firm faces a downward-sloping demand curve, its marginal revenue curve is a downward-sloping line that lies below the demand curve, as in the monopoly model. We can thus use the model of monopoly that we have already developed to analyze the choices of a monopsony in the short run.

Figure 11.1 "Short-Run Equilibrium in Monopolistic Competition" shows the demand, marginal revenue, marginal cost, and average total cost curves facing a monopolistically competitive firm, Mama's Pizza. Mama's competes with several other similar firms in a market in which entry and exit are relatively easy. Mama's demand curve D ₁ is downward-sloping; even if Mama's raises its prices above those of its competitors, it will still have some customers. Given the downward-sloping demand curve, Mama's marginal revenue curve MR ₁ lies below demand. To sell more pizzas, Mama's must lower its price, and that means its marginal revenue from additional pizzas will be less than price.

Figure 11.1 Short-Run Equilibrium in Monopolistic Competition

Looking at the intersection of the marginal revenue curve MR ₁ and the marginal cost curve MC, we see that the profit-maximizing quantity is 2,150 units per week. Reading up to the average total cost curve ATC, we see that the cost per unit equals $9.20. Price, given on the demand curve D ₁, is $10.40, so the profit per unit is $1.20. Total profit per week equals $1.20 times 2,150, or $2,580; it is shown by the shaded rectangle.

Given the marginal revenue curve MR and marginal cost curve MC, Mama's will maximize profits by selling 2,150 pizzas per week. Mama's demand curve tells us that it can sell that quantity at a price of $10.40. Looking at the average total cost curve ATC, we see that the firm's cost per unit is $9.20. Its economic profit per unit is thus $1.20. Total economic profit, shown by the shaded rectangle, is $2,580 per week.

The Long Run

We see in Figure 11.1 "Short-Run Equilibrium in Monopolistic Competition" that Mama's Pizza is earning an economic profit. If Mama's experience is typical, then other firms in the market are also earning returns that exceed what their owners could be earning in some related activity. Positive economic profits will encourage new firms to enter Mama's market.

As new firms enter, the availability of substitutes for Mama's pizzas will increase, which will reduce the demand facing Mama's Pizza and make the demand curve for Mama's Pizza more elastic. Its demand curve will shift to the left. Any shift in a demand curve shifts the marginal revenue curve as well. New firms will continue to enter, shifting the demand curves for existing firms to the left, until pizza firms such as Mama's no longer make an economic profit. The zero-profit solution occurs where Mama's demand curve is tangent to its average total cost curve-at point A in Figure 11.2 "Monopolistic Competition in the Long Run". Mama's price will fall to $10 per pizza and its output will fall to 2,000 pizzas per week. Mama's will just cover its opportunity costs, and thus earn zero economic profit. At any other price, the firm's cost per unit would be greater than the price at which a pizza could be sold, and the firm would sustain an economic loss. Thus, the firm and the industry are in long-run equilibrium. There is no incentive for firms to either enter or leave the industry.

Figure 11.2 Monopolistic Competition in the Long Run

The existence of economic profits in a monopolistically competitive industry will induce entry in the long run. As new firms enter, the demand curve D ₁ and marginal revenue curve MR ₁ facing a typical firm will shift to the left, to D ₂ and MR ₂. Eventually, this shift produces a profit-maximizing solution at zero economic profit, where D ₂ is tangent to the average total cost curve ATC (point A). The long-run equilibrium solution here is an output of 2,000 units per week at a price of $10 per unit.

Had Mama's Pizza and other similar restaurants been incurring economic losses, the process of moving to long-run equilibrium would work in reverse. Some firms would exit. With fewer substitutes available, the demand curve faced by each remaining firm would shift to the right. Price and output at each restaurant would rise. Exit would continue until the industry was in long-run equilibrium, with the typical firm earning zero economic profit.

Such comings and goings are typical of monopolistic competition. Because entry and exit are easy, favorable economic conditions in the industry encourage start-ups. New firms hope that they can differentiate their products enough to make a go of it. Some will; others will not. Competitors to Mama's may try to improve the ambience, play different music, offer pizzas of different sizes and types. It might take a while for other restaurants to come up with just the right product to pull customers and profits away from Mama's. But as long as Mama's continues to earn economic profits, there will be incentives for other firms to try.

Heads Up!

The term "monopolistic competition" is easy to confuse with the term "monopoly." Remember, however, that the two models are characterized by quite different market conditions. A monopoly is a single firm with high barriers to entry. Monopolistic competition implies an industry with many firms, differentiated products, and easy entry and exit.

Why is the term monopolistic competition used to describe this type of market structure? The reason is that it bears some similarities to both perfect competition and to monopoly. Monopolistic competition is similar to perfect competition in that in both of these market structures many firms make up the industry and entry and exit are fairly easy. Monopolistic competition is similar to monopoly in that, like monopoly firms, monopolistically competitive firms have at least some discretion when it comes to setting prices. However, because monopolistically competitive firms produce goods that are close substitutes for those of rival firms, the degree of monopoly power that monopolistically competitive firms possess is very low.

Excess Capacity: The Price of Variety

The long-run equilibrium solution in monopolistic competition always produces zero economic profit at a point to the left of the minimum of the average total cost curve. That is because the zero profit solution occurs at the point where the downward-sloping demand curve is tangent to the average total cost curve, and thus the average total cost curve is itself downward-sloping. By expanding output, the firm could lower average total cost. The firm thus produces less than the output at which it would minimize average total cost. A firm that operates to the left of the lowest point on its average total cost curve has excess capacity Situation in which a firm operates to the left of the lowest point on its average total cost curve. .

Because monopolistically competitive firms charge prices that exceed marginal cost, monopolistic competition is inefficient. The marginal benefit consumers receive from an additional unit of the good is given by its price. Since the benefit of an additional unit of output is greater than the marginal cost, consumers would be better off if output were expanded. Furthermore, an expansion of output would reduce average total cost. But monopolistically competitive firms will not voluntarily increase output, since for them, the marginal revenue would be less than the marginal cost.

One can thus criticize a monopolistically competitive industry for falling short of the efficiency standards of perfect competition. But monopolistic competition is inefficient because of product differentiation. Think about a monopolistically competitive activity in your area. Would consumers be better off if all the firms in this industry produced identical products so that they could match the assumptions of perfect competition? If identical products were impossible, would consumers be better off if some of the firms were ordered to shut down on grounds the model predicts there will be "too many" firms? The inefficiency of monopolistic competition may be a small price to pay for a wide range of product choices. Furthermore, remember that perfect competition is merely a model. It is not a goal toward which an economy might strive as an alternative to monopolistic competition.

Key Takeaways

A monopolistically competitive industry features some of the same characteristics as perfect competition: a large number of firms and easy entry and exit.

The characteristic that distinguishes monopolistic competition from perfect competition is differentiated products; each firm is a price setter and thus faces a downward-sloping demand curve.

Short-run equilibrium for a monopolistically competitive firm is identical to that of a monopoly firm. The firm produces an output at which marginal revenue equals marginal cost and sets its price according to its demand curve.

In the long run in monopolistic competition any economic profits or losses will be eliminated by entry or by exit, leaving firms with zero economic profit.

A monopolistically competitive industry will have some excess capacity; this may be viewed as the cost of the product diversity that this market structure produces.

Case in Point: Craft Brewers: The Rebirth of a Monopolistically Competitive Industry

In the early 1900s, there were about 2,000 local beer breweries across America. Prohibition in the 1920s squashed the industry; after the repeal of Prohibition, economies of scale eliminated smaller breweries. By the early 1980s only about 40 remained in existence.

But the American desire for more variety has led to the rebirth of the nearly defunct industry. To be sure, large, national beer companies dominated the overall ale market in 1980 and they still do today, with 43 large national and regional breweries sharing about 85% of the U.S. market for beer. But their emphasis on similarly tasting, light lagers (at least, until they felt threatened enough by the new craft brewers to come up with their own specialty brands) left many niches to be filled. One niche was filled by imports, accounting for about 12% of the U.S. market. That leaves 3 to 4% of the national market for the domestic specialty or "craft" brewers.

The new craft brewers, which include contract brewers, regional specialty brewers, microbreweries, and brewpubs, offer choice. As Neal Leathers at Big Sky Brewing Company in Missoula, Montana, put it, "We sort of convert people. If you haven't had very many choices, and all of a sudden you get choices-especially if those choices involve a lot of flavor and quality-it's hard to go back."

Aided by the recent legalization in most states of brewpubs, establishments where beers are manufactured and retailed on the same premises, the number of microbreweries grew substantially over the last 25 years. A recent telephone book in Colorado Springs, a city with a population of about a half million and the home of the authors of your textbook, listed nine microbreweries and brewpubs; more exist but prefer to be listed as restaurants.

To what extent does this industry conform to the model of monopolistic competition? Clearly, the microbreweries sell differentiated products, giving them some degree of price-setting power. A sample of four brewpubs in the downtown area of Colorado Springs revealed that the price of a house beer ranged from 13 to 22 cents per ounce.

Entry into the industry seems fairly easy, judging from the phenomenal growth of the industry. After more than a decade of explosive growth and then a period of leveling off, the number of craft breweries, as they are referred to by the Brewers Association, stood at 1,716 in 2010. The start-up cost ranges from $100,000 to $400,000, according to Kevin Head, the owner of the Rhino Bar, also in Missoula.

The monopolistically competitive model also predicts that while firms can earn positive economic profits in the short run, entry of new firms will shift the demand curve facing each firm to the left and economic profits will fall toward zero. Some firms will exit as competitors win customers away from them. In the combined microbrewery and brewpub subsectors of the craft beer industry in 2010, for example, there were 152 openings and 43 closings.

Answer to Try It! Problem

As shown in Panel (a), higher wages would cause both MC and ATC to increase. The upward shift in MC from MC ₁ to MC ₂ would cause the profit-maximizing level of output (number of meals served per week, in this case) to fall from q ₁ to q ₂ and price to increase from P ₁ to P ₂. The increase in ATC from ATC ₁ to ATC ₂ would mean that some restaurants would be earning negative economic profits, as shown by the shaded area.

As shown in Panel (b), in the long run, as some restaurants close down, the demand curve faced by the typical remaining restaurant would shift to the right from D ₁ to D ₂. The demand curve shift leads to a corresponding shift in marginal revenue from MR ₁ to MR ₂. Price would increase further from P ₂ to P ₃, and output would increase to q ₃, above q ₂. In the new long-run equilibrium, restaurants would again be earning zero economic profit.

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Monopolistic Competition: Competition Among Many

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Explain the main characteristics of a monopolistically competitive industry, describing both its similarities and differences from the models of perfect competition and monopoly. Explain and illustrate both short-run equilibrium and long-run equilibrium for a monopolistically competitive firm.

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Customer’s demand for fast food has increased over the past decades
[Demand Determinant, Taste and Preferences]

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Each week, TODAY's long-running Big Read series delves into the trends and issues that matter. This week, we take a look at Singaporeans' enduring love affair with fast food, which first arrived in Singapore more than five decades ago. This is a shortened version of the feature, which can be found here.
SINGAPORE - When American burger joint Shake Shack opened its doors at Jewel Changi Airport in April, part time service staff Watt Zhong Qing, 29, was one of the first in line.

The fast food fan - who eats fast food about four times a week - is no stranger to queues, as he waited 3.5 hours for a taste of Filipino fast-food chain Jollibee when it first arrived in Singapore back in 2013.

Apart from crazy queues at new outlets, new flavours introduced by fast food chains also tend to generate much buzz, with offerings sometimes sold out in just weeks such as McDonald's Nasi Lemak Burger.

Based on latest figures from the Department of Statistics (SingStat), fast food outlets in Singapore generated a total of about S$1.1 billion in operating receipts in 2016.

Singaporeans' seemingly insatiable appetite for fast-food has helped the sector buck the overall trend in the food and beverage (F&B) industry.

From 2000 to 2018, data from the showed:

10 per cent decline in sales of overall F&B industry

However, sales increased by 29 per cent for fast-food chains

In contrast, restaurant sales dropped 20 per cent while those at other eating places - such as cafes - fell 13 per cent.

The strong showing by fast food chains in Singapore is in contrast with what is happening in the United States. There, many chains are suffering from an oversaturated market and rising labour costs. Greater health consciousness are also causing more American customers to shun these chains.
NUMBERS AT A GLANCE
Singapore's love for fast food began in 1968, when the first A&W restaurant opened its doors. Over the years, other chains also entered Singapore, including KFC (1976), McDonald's (1979), Burger King (1982) and Long John Silver's (1983).

More recent entrants are Popeyes (2001), Carl's Junior (2005) and Texas Chicken (2010).

Total number of outlets which some of these chains have currently:

Market share of fast food outlets in Singapore in 2018, based on data by market research firm Euromonitor International:
RECIPE FOR SUCCESS
Experts say that fast-food chains do particularly well in Singapore because:

The healthy eating movement here is not as prevalent as compared to other countries such as the United States which is tackling high obesity rates

Fast food is not much more expensive than local hawker fare

An English-speaking population exposed to international culture

Singapore's dining out culture: 55 per cent of Singaporeans eat out on a weekly basis, based on a Nielsen survey in 2018.

Singapore is also an "excellent" test bed for fast-food outlets looking to expand or test out new products, said Adjunct Associate Professor Lynda Wee of Nanyang Business School.

Long John Silver's spokesperson described Singapore as a "food capital with a diverse range of cuisines". The chain studies the evolving preferences and needs of consumers here to prepare for its expansion overseas, the spokesperson said.

Why fast-food chains have an edge over restaurants:

Convenience and quick service

Assembly line model which helps to keep costs low

Successful and targeted marketing. "(McDonald's) Happy Meal is one example. The culture already ingrained is that McDonald's is a part of your life... It's nostalgic to a lot of Singaporeans growing up," said F&B consultant and branding specialist Derrick Chew.

STAYING NIMBLE
Despite the sector's success, stiff competition has led to the failure of many global brands trying to establish themselves in Singapore.

It was the main reason that led A&W, despite having a first-mover advantage here, to exit in 2003, experts noted.

With competitors marketing their offerings much better than A&W, the chain faded into obscurity, said Mr Lucas Tok, marketing lecturer at Singapore Polytechnic.

Other barriers to entry:

For Texas Chicken, getting on to food delivery apps has helped it reach more customers, said Mr Eugene Lim, marketing director of Select Group that runs the chain in Singapore.

While technological innovation helps, experts say that it is the service and menu offerings that matter ultimately.

Despite facing high operating costs, manpower shortage and customers' fast-changing tastebuds, fast food chains here have generally been adaptive and responsive to change - especially those that have thrived.

What fast-food chains do to stay on top of the game:
HEALTH CONCERNS
The unhealthy effects of fast food is well-documented.

The release of a documentary "Super Size Me" in 2004 triggered a backlash against the fast food sector in the US.

Over the years, authorities around the world, including Singapore, have taken steps to curtail its marketing to young children.

But the fast food industry here has been spared from any consumer backlash stemming from health concerns - even after the "Super Size Me" documentary gained international prominence.

Experts attribute it to the absence of social media then, and the fact that fast food is not a staple in Singapore, unlike the US.

Fast food fans TODAY spoke to also played down health concerns, adding that it would not be an issue if they ate it in moderation.

Nutritionists say it is unclear whether the availability of healthier options are effective in steering consumers away from junk food.

Healthier options, such as salads, may not necessarily be healthy too, if its dressing is high in fat and sodium, for example.
FOOD FOR THOUGHT
While the industry would continue growing, the rising demand for healthier food may pave the way for the rise of fast casual restaurants here, which could provide competition to fast food chains, said Mr Karthik Bakthavathsalem, an F&B lecturer at Nanyang Polytechnic.

An intermediate concept between fast food and casual dining, fast casual eatery chains have taken off in the US, including the likes of Shake Shack and Chipotle.

These chains market themselves as offering the same quick and convenient service which consumers can get at fast food chains, but with better ingredients at slightly higher prices.

In the meantime, some are concerned that the enduring popularity of fast food among Singaporeans could come at the expense of homegrown hawkers and food culture.

Food blogger Leslie Tay believes that people of his generation would stay true to hawker food but he was not so sure about the younger generation.

Food critic and consultant K F Seetoh, who founded the Makansutra website, noted that the younger generation grew up inundated by the marketing efforts of fast-food giants.

"Fast-food outlets are winning, but they have not taken over (local food) - not yet," he said.

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The Big Read in short: S'poreans' love for fast food

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Each week, TODAY's long-running Big Read series delves into the trends and issues that matter. This week, we take a look at Singaporeans' enduring love affair with fast food, which first arrived in Singapore more than five decades ago. This is a shortened version of the feature, which can be found here.

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Technology improving how fast-food chains are doing and better meet customers' need
[Supply Determinant, Technology]
[Demand Determinant, Tate and Preferences]

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The food and beverage industry is in a pickle with the slowing economy, but the fast-food industry appears to be staying ahead.

The latest official figures show that sales at fast-food outlets were better than those at restaurants this year until September, except for June.

Fast-food sales in September are estimated to have risen 2.6 per cent over the same period last year.

But sales at restaurants rose more modestly at 0.9 per cent.

Still, sales in both the restaurant and fast-food categories have slowed down compared with five years ago. The fast-food industry grew just 1 per cent last year, a significant drop from the 10 per cent growth in 2011.

High rental rates and a manpower crunch have contributed to the sector's misery, as has a slowing economy.

The fast-food industry is doing better because of lower prices and promotions. The industry is also a lot more nimble in responding to food trends, said observers.

"It has speed and convenience, and even the ambience is getting better at the outlets. They keep having new products, which people get on to social media and talk about," said Singapore Polytechnic senior retail lecturer Sarah Lim.

Fast food is also more attractive when times are bad, said Associate Professor Prem Shamdasani, from the National University of Singapore Business School.

Texas Chicken, which opened two new outlets in Singapore in the second half of this year, said it has seen a 6 per cent growth in same- store sales in the first nine months this year, compared with the same period last year.

Popeyes, also a fried-chicken chain, reported the same amount of growth in sales.

Besides the introduction of new products, the chains said sales are up because of higher productivity, which leads to lower costs, and more efficiency.

International chains like McDonald's and Popeyes as well as local chain BurgerUp have invested in technology such as self-ordering food kiosks that help streamline services and reduce the dependence on staff.

"We offer burger customisation, so it is essential to have the ordering kiosk for diners to do it without hogging the order counter," said Mr Charlie Tan, BurgerUp's director of strategic planning and marketing.

He said this has led to 20 per cent savings in manpower.

Burger King is expected to adopt a similar system next year, said a spokesman. Texas Chicken is exploring the option.

The use of such technology has translated into better sales.

Mr Dickson Low, chief operating officer of Revenue Valley Group, which runs the Popeyes chain in Singapore, said staff have noticed more customers ordering side dishes and getting bigger portions of food.

He said this may be because the self-ordering kiosks allow them to view the images of all items on the menu. "For restaurants that use self-ordering kiosks, the orders for add-on and top-up items are higher by 15 per cent (than at restaurants) without kiosks."

The firm has invested $150,000 to $200,000 on these kiosks for each of its five outlets.

Prof Shamdasani said fast-food outlets find it more cost-efficient to invest because of the number of outlets they operate.

On the other hand, restaurants outside the industry may operate fewer branches and struggle to afford the technology.

Besides technology, the fast-food industry has also turned to the local palate to attract customers.

McDonald's, for example, introduced salted egg burgers in June this year.Texas Chicken introduced flavours such as sambal chicken, as well as herb and garlic chicken.

"Singapore is the hotbed of innovation and creativity when it comes to flavour profiles. It is a trend leader," said Mr Amarpal S. Sandhu, Texas Chicken's general manager for the Asia-Pacific region.

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The food and beverage industry is in a pickle with the slowing economy, but the fast-food industry appears to be staying ahead. The latest official figures show that sales at fast-food outlets were better than those at restaurants this year until September, except for June.

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F&B lack of manpower
[Supply determinant, Factor/Resource Price]

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Singapore F&B outlets struggle to hire despite offering higher pay

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Tightened border controls have limited the number of foreigners entering Singapore, exacerbating the situation. Read more at straitstimes.com.

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Increase in price of potatoes due to supply shortage
[Supply Determinant,Price of related goods]

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Agencies
The surge in potato prices is largely due to lower production, which was also the case with onions last year. In some cities, onion prices last year breached the Rs 200 per kg mark due to a major supply crunch.

KOLKATA: Potato is following the onion price movement of last year, with a 40% surge in prices in the past one month to about Rs 35 per kg owing to a shortage in supply while the demand has increased for the staple.

In the major metros of Mumbai, Delhi, Kolkata and Chennai potato is selling for Rs 30-45 per kg, depending on the variety and quality. In Mumbai, a kg of potato is commanding a price of Rs 35-45 while in Delhi and Kolkata prices are hovering between Rs 30-40 per kg.

Potato traders from Uttar Pradesh, the largest producer of the tuber, said prices are unlikely to come down till November, when the new crop starts coming in.

The surge in potato prices is largely due to lower production, which was also the case with onions last year. In some cities, onion prices last year breached the Rs 200 per kg mark due to a major supply crunch.

Arvind Agarwal, president of Cold Storage Association of Uttar Pradesh, told ET: "At the wholesale level, price is around Rs 24-25 per kg and at the retail level it is around Rs 30-35 per kg. Potato farmers faced bad times in last three consecutive years. This time they are at least being able to earn something on their produce. Prices are unlikely to fall till November as the demand is on the higher side. Also, vegetable prices have gone up. So people are depending on potatoes now."

Uttar Pradesh produces 15.5- 15.8 million tonnes of potatoes annually. But untimely rains in the beginning of this year impacted the potato crop, leading to a crop loss.

In West Bengal, the second largest potato producer, prices have shot up as there has been a production shortage of nearly 1.4 million tonnes. The state has produced 8.6 million tonnes of potatoes this year.

Patitpaban De, a veteran trader, said "At the wholesale, potato price is Rs 24-24.50 per kg. Therefore, the retail price has gone up."

West Bengal chief minister Mamata Banerjee has asked traders to bring down prices. She will hold a meeting by the end of this week with traders to review the price situation, said officials.

"After her intervention, prices have come down by a rupee per kg," said De.

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Supply shortage, rise in demand push potato prices up by 40% in major cities

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In the major metros of Mumbai, Delhi, Kolkata and Chennai potato is selling for Rs 30-45 per kg, depending on the variety and quality. In Mumbai, a kg of potato is commanding a price of Rs 35-45 while in Delhi and Kolkata prices are hovering between Rs 30-40 per kg.