SPEECH BY MR LEE YI SHYAN, MINISTER OF STATE FOR TRADE & INDUSTRY AND MANPOWER AT THE RESTAURANT ASSOCIATION OF SINGAPORE (RAS) INDUSTRY NIGHT 2010 AT QIAN XI LOU (SINGAPORE EXPO), ON 28 JANUARY 2010 (THURSDAY), 7.30PM

Mr Ang Kiam Meng,

President, Restaurant Association of Singapore,

Distinguished Guests,

Ladies and Gentlemen,

Good Evening,

I am delighted to join you for the RAS Industry Night 2010. I would like to commend RAS for organising this event as a platform to foster and build good relationships and rapport, as well as promote stronger cooperation among its members.

Introduction

Over the years, Singapore has built a vibrant dining scene with diverse food offerings. In fact, Future Brand ranked Singapore 3rd in its annual Country Survey for fine dining in 2008.

Our local restaurants have also garnered international awards. UK’s Restaurant magazine ranked Iggy’s and Les Amis to be among the top 100 restaurants in the world. The American Academy of Hospitality Sciences awarded My Humble House the International Star Diamond Award in 2008. In another notable magazine Bartender Magazine, the Tippling Club was named one of the top 15 bars in Asia Pacific.

All these are testimonies that despite our size and limited domestic market, we can produce award-winning restaurants. The opening of the two integrated resorts with their varied F&B offerings and line-up of celebrity chefs will raise the bar further, enhancing Singapore’s status as a gourmet destination. My heartiest congratulations to the industry! You have done well. These are all very good news.

The Shortcomings

The recently released Customer Satisfaction Index (CSISG) however, is less rosy. Customer satisfaction score for the Food & Beverage Sector fell from 67.7 in 2007 to 65.4 in 2008 to 65.0 in 2009. This score has been declining in past 3 years.

If we look at the restaurant sub-sector, the drop is even sharper, from 67.5 to 67.4 to 65.8. In this survey, the three drivers affecting Customer Satisfaction are: perceived product quality, perceived value and customer expectation. Perceived product quality in turn is dependent on Service Delivery. Customer satisfaction will increase only if there is improvement in all three drivers.

Why is customer satisfaction important? Because customer satisfaction improves customer loyalty and differentiates you from competition. It has a positive impact on your operations and bottom-lines. Let me share with you a few real examples:

One F&B chain was losing money. Half of its outlets were in the red. Two years after it embarked on a transformation exercise, its compliment-to-complaint ratio increased by 230%. Its revenue grew by 20%. In addition, 96% of its outlets became profitable, compared to 50% before it implemented its service improvement.

Another company in the retail industry developed service blueprints to ensure higher efficiency. It set up a centralized call center to make sure that all customer enquiries are attended to by trained customer service specialists in a professional and speedy manner. Its customer loyalty increased by 37% while its customer satisfaction rating almost doubled. Its revenue improved by close to 15%.

The third company developed a systemic process to gather customer and staff feedback. It also developed service manuals and standard operating procedures for its key touch-points. These initiatives led to an improvement of the company’s customer satisfaction level by 19% and its customer loyalty by 3%. The company’s revenue improved by about 14%.

Finally, a company in the healthcare sector improved its service processes by leveraging on technology. It streamlined admission processes through a queue management system, and developed Patient Bedside Terminals which include a video nurse-call system, on-line shopping options, educational contents, and online billing. These efforts helped the company cut its customers’ admission waiting time by 20% and billing time by 50%, improved perceived value (repeat patients) by 5% as well as overall customer satisfaction by 10%.

What do all these companies have in common? They all participated in the Customer-Centric Initiative (CCI). They understand that, to grow their businesses, they need efficient processes, standard operating procedures, adoption of technology and well-trained staff. They need to communicate a clear value proposition and to deliver the promise consistently. The latter is really customer expectation management.

Going forward, manpower supply will be tight. Foreign workers will still be available but they will come in smaller number and at higher costs. Our future growth will have to come from productivity gain rather than relying solely on more labor. It is in this context that I urge the F&B industry to consider ways to make quantum leap improvements in the way you operate your business.

There are many things RAS could do to improve productivity. For instance, RAS can take the lead in encouraging service process improvement, such as the 5S[1] methodology. It is heartening to note that pilot companies such as Jumbo, Palm Beach, Tung Lok and Bakerzin have successfully implemented the 5S system company-wide. With 5S, the companies are reaping benefits such as neater and safer workplace, improved efficiency, optimal space utilization and enhanced food safety. I am happy to note that 6 more companies have stepped forward to implement 5S in their operations.

RAS can also study international best practices and adoption of technology to boost productivity. In some instances, best practices can come from another industry. Example: Thomson Medical Centre, Wowbao.

Obviously, the other critical area of capability building is Manpower Development. One skilled worker supported by well-designed process can serve many more customers. RAS can take the lead to conduct benchmarking and best practice studies on HR practices and share it with the industry.

Conclusion

The F&B industry has a bright prospect. But it is also a very competitive industry. For the industry to continue its vibrancy and competitiveness, our companies must constantly innovate and improve its business capabilities.

The government agencies, namely SPRING, IE Singapore, WDA and STB, stand ready to assist our companies to raise productivity. We are looking for brave new ideas to move the industry forward, to make quantum leap improvement in productivity, and to restructure the industry in some fundamental ways. We need bright ideas from RAS and your members to make this happen.

Finally, I offer my heartiest congratulations to all winners and award recipients. I look forward to you achieving greater successes in time to come.

Thank you.

 
[1]5S is a housekeeping tool predominantly implemented in manufacturing companies. 5S refers to Structure, System, Sanitize, Standardize and Self-discipline and is a first step to Total Quality Management as a house-keeping foundation