Dear F&B owners, let’s sign this petition (bit.ly/fnbmalaysia-petition) to tell our government that we’re not Makcik Kiah! I will take on the responsibility to compile your feedback and send it to our gov.
Hi, I’m Meng Kuan, the cofounder of Avocadian. We’re a local F&B brand committed to delivering healthy avocado products to all Malaysians.
To be frank, the PRIHATIN Rakyat Economic Stimulus Package is a great disappointment to me as an F&B owner. We all know most businesses have been greatly affected by the Movement Control Order (MCO), but how does the F&B industry really suffer in particular?
Below is the list of challenges that I am facing now:
1) Employee Safety
– I’ve been feeling very guilty for exposing my employees at risk. Although face masks and sanitizer are provided, the risk of infection is still there. One week after the MCO, some Avocadian family members requested to take leaves, some went back to their hometown, another wanted to rest. As of now, I’m working alone in the SS15 outlet, employee safety is our priority, their job security is another priority too.
2) Drastic Drop in Sales
– Since Day One of the MCO, our daily sales have dropped 70%-80%. Currently, sales are mainly contributed from delivery platforms like Grabfood and Foodpanda, which charge us 30%-32% commission for every delivery order. In good times, deliveries add to our sales, even if margins are thinner. But with the MCO, regular diners are going digital. Meaning if our pre-delivery gross margin is 50%, the post-commission gross margin would be only 18%. For example, if my sales are RM300, my pre-delivery gross profit would be RM150 (RM300*50%), the delivery commission will be RM96 (RM300*32%), therefore my gross profit will be RM54 (RM150-RM96) excluding overhead expenses like rent and salaries. Let’s take the daily average RM54 * 30 days * 2 outlets = RM3240. This number will barely cover part of my RM30000-RM35000 monthly overhead expenses.
3) Employee Salary
– Employee Salary has been the highest cost of running this business. It is also one main driver of business growth as employees expect higher pay year after year. When my partner and I started Avocadian in 2017 ago, we did everything A-Z because there were just 2 of us working 16 hours a day (9am-1am), and I remember my first EPF saving was in 2019. Now Avocadian Family consists of 15 members. We, as cofounders, are fine with zero salaries, still, we understand others might need some monthly income to sustain their living. For the past 3 years, we’ve never fired anyone and that is the last thing we want to do.
4) Rental Fee
– Rental is our 2nd highest cost because our outlets are in Subang SS15 and Damansara Uptown high traffic area. Other than the food quality and service, F&B is also about location, location, and location.
5) Ingredient Supply & Spoilage
– We all know avocado is a highly valuable and perishable fruit and our stocks are full right before the drastic MCO sales drop. Furthermore, the future supply is very unstable and getting more expensive due to limited air space.
6) Capital Expenses
– Before this covid19 crisis, we had invested most of the company funds and personal savings to expand the business. As of today, the construction work of our new food manufacturing factory (also the warehouse) had come to a halt due to the MCO. Namely, the 6 figures’ cash flow is stuck.
On 27th March, our Prime Minister Tan Sri Muhyiddin Yassin announced the PRIHATIN Rakyat Economic Stimulus Package worth RM250 billion which is supposed to benefit “everyone”. I’m not sure if Makcik Kiah encounters similar challenges. Regardless of her employee’s salary and rental expenses, the sales must be negatively impacted by MCO too.
An online survey (15,627 SMEs) conducted by the SME Association of Malaysia has found that 33% of SMEs have just enough cash flow for them to pull through in March, while 37.8% can only sustain themselves until April 2020. A quarter of respondents (25.6%) said they have decided to retrench their employees or cut total employment if there’s no strong stimulus package from the government to the enterprises, since SMEs employ 70% of the 10-million-strong workforce in Malaysia, a job slash of 25% can potentially see up to 2.56 MILLION people being jobless.
In the United States, the weekly jobless claims for the week ending March 21 total 3,283,000, the Labor Department reported Thursday, exceeding the consensus analyst forecast of 1.5 million. That was up from 281,000 in the previous week, which already marked a two-year high. To date, the total Covid-19 number has reached 188,578 cases compared to 47,021 cases on 21st March.
Dear government, thank you for the Salary Subsidy Programme to assist employers to retain their workers. However, 1) don’t you think those employees earning above RM4000 are a bigger cost to employers? 2) “since 1st Jan 2020” is a bit unclear here, it sounds like only the tourism industry will really benefit from it. My suggestion here is all parties should do their part at this critical period. Out of the original salary, employers can pay 60%, government should subsidize 25%, and employees will need to sacrifice 15% for job security.
Dear government, I hope you can do more to prevent the upcoming employment crisis (e.g. help us with the rental fee). I hope you could spend more on healthcare and the private sector. You’re the boss of the million government servants, you want to save their jobs, so do we. The very big difference is that your income is largely contributed by the private sector (we) and can print unlimited money, but we don’t.
Dear government, as you can see, our employees are given a full monthly salary and you’re giving them extra allowance on top of it, especially the allowance for M40 (RM4000-RM8000) and those who are single, these are really too early at the moment. Don’t you know employees can save much more from their salary when they can’t spend on entertainment out there?
Dear government, as you can see, businesses are disappointed. Many have been bleeding since the MCO, especially those who just started their business or those who have been struggling earlier on. Don’t you know people will suffer even more when they lose their job? And this unemployment wave is going to be big, very big. Please take it as a warning instead of mere complaining.
Dear government, I’m not crying here begging for your help with my business. I believe even the crisis persists for years, I will be able to survive by retrenching or start it all over again. I think many employers in F&B don’t really need your help to save their businesses, instead, they want your help to save their employees’ jobs. I never want to say: “Dear XXX, you know what, you have really contributed a lot to Avocadian and we all appreciate it, but I have to let you go to save the other 14 members from being jobless.” You must understand that many businesses won’t start retrenching only when they run out of money or refinance their house to save everyone’s job, take it as a precaution.
Dear government, please refer to the US great depression whereby many men selling apples on the street. I really love pisang goreng, but I don’t wish to see unemployed people selling pisang goreng everywhere on the streets because those are not healthy food after all.
I decided to create a petition to collect F&B owners’ feedback to make sure our voices can be heard. I also hope that the government will do more to help with our cashflow so employees’ jobs can be retained, even just for another week.
Dear F&B owners, let’s sign this petition (bit.ly/fnbmalaysia-petition) to tell our government that we’re not Makcik Kiah.
Dear Malaysians, please share this message with your F&B boss/friends so we can continue enjoying the delicious local food when the crisis is over.