Singapore, 19 January 2026 – Singapore’s F&B industry is primarily afflicted by a combination of escalating operational costs, persistent manpower shortage, and intense market competition from both local and international brands. As of January 2026, the sector continues to grapple with a “perfect storm” of rising costs, labour shortages, and shifting consumer habits, threatening the long-term viability of F&B businesses, particularly SMEs, evidenced by the sector’s contraction in 2024 and record-high business closures.
Ahead of Budget 2026, the Restaurant Association of Singapore (RAS) has called for support from the government to consider targeted, structural interventions crucial to enhance cost predictability and stimulate domestic demand within the F&B sector. The interventions include stepped up Progressive Wage Credit Support (PWCS) to 75% (for another 3 years from 2026 to 2028); removal of the foreign worker levy (as PWM already helps to ensure fair wages for locals) and continued financial support for enterprise growth of businesses in the areas of innovation, productivity, internationalisation, upskilling, financing and more.
The call for support by the industry is driven by the pressing need to ensure the long-term health of the F&B industry and its ability to support broader economic and tourism goals such as the Singapore Tourism Board’s (STB) vision of $47 to $50 billion in tourist receipts by 2040.
“We are thankful to our government partners and agencies for their support over the years. There is no doubt that a vibrant and thriving F&B industry is key to making Singapore a great country to live in and visit, residents and tourists alike. The industry has uplifted standards significantly over the years, including food safety protocols, uplifting worker skills and paying low wage workers better through the progressive wage model,” said Benjamin Boh, President, RAS. He added, “looking forward, F&B owners and operators are committed to doing more in food safety, PWM and digitalisation, despite the increasingly challenging revenue and cost environment. We ask that the Ministry of Finance consider the highlighted areas of support as these will give owners and operators breathing room to improve their business structure while surviving the external market environment.”
Support Manpower Cost Restructure
Among the structural and financial measures recommended by RAS for Budget 2026 is its call for manpower cost mitigation and flexibility including the increase in Progressive Wage Credit Scheme (PWCS) subsidies (to 75%) for 2026 to 2028 to provide higher co-funding support for PWM-driven wage increases. More regular and timely payouts of PWCS versus the current practice of a yearly payout would also help with cashflow management as employers are facing delays in payment. SMEs and low-price operators struggle with the absorption of mandatory wage hikes while facing depressed revenue earnings.
As PWM has been implemented since July 2023, and sets a wage floor, the initial policy intent of using levies to prevent wage depression may now be redundant, allowing for a potential reduction in operating cost. Hence, RAS’ call for the removal of foreign worker levies.
While the industry is supportive of family-friendly policies, small businesses face significant costs finding and funding temporary replacements for when its employees are on parental leave. Additional Government funding and support to businesses is sought to offset the financial burden of increased paid maternity and paternity leave.
Rental and Cost Predictability
Rental continues to be a major fixed cost for the F&B industry. Measure to provide essential cost predictability will allow businesses to make informed, long-term financial projections and planning. RAS calls for the introduction of policy interventions (e.g., legislation) to control excessive rental renewal price hikes, potentially by capping increases or tagging them to macro-economic performance (like GDP); and for rental data transparency from landlords to be made available to tenants as an essential part of lease negotiations.
Support Local Brands
Local brands and concepts are integral to Singapore being a vibrant culinary and cultural hub for locals and tourists alike. Local owners might not have the same resources as foreign brands that are entering Singapore more aggressively today. We ask for stronger support measures for local F&B brands (for e.g., increased foreign worker quota, streamlined licensing fees) that would help them compete in a more level playing field vs. the bigger companies.
Financial Fragility of the F&B Industry
The F&B industry’s financial fragility, marked by contracting sales and escalating fixed and variable costs, requires immediate, high-level structural attention. The measures proposed by RAS ahead of Budget 2026, particularly regarding PWCS co-funding, levy removal, and rental stabilisation, are crucial financial levers that are vital for ensuring the sustainability of Singapore’s F&B ecosystem, which is an integral part of the economy and national identity.
About Restaurant Association of Singapore (RAS)
As the pioneer and largest F&B Association in Singapore, the Restaurant Association of Singapore (RAS) has more than 500 members, representing close to 800 brands that operate more than 5,000 outlets. Our members comprise a good mix of business models such as restaurants, caterers, fast foods and food courts, with various cuisine types, thus providing a wholesome view and opinion, with the common goal to propel the industry forward.
Since 1980, RAS has acted as a collective voice and the ‘voice of reason’ for the F&B industry and strives to advance the industry through various platforms such as bridging closer working relationships between businesses and government agencies, networking events for members, recognition and awards platforms and administering programmes to drive business success.
