A recipe for success: conquering the halal food market

Muslims worldwide spend trillions of dollars annually on food and drinks. In Singapore, the F&B sector sees strong competition and a high churn rate. Given these circumstances, how viable is it to start a halal food business locally?

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By: Anmol Khan Rai

Food is king when it comes to the Muslim market. Muslims worldwide spent an estimated US$1.3 trillion on food alone in 2017, based on figures by the Dubai Islamic Economy Development Centre.

Singapore has gained importance as a globally recognised halal hub according to a report by the United States Department of Agriculture, taking into consideration the city state’s location, attractiveness in the tourism sector, food safety laws and halal standard.

Given the promising track record, many food-related businesses have since been established in Singapore. Executive Director of the Singapore Malay Chamber of Commerce and Industry, Azrulnizam Shah Sohaimi, said this caused the food and beverage (F&B) sector to be oversaturated, or what he dubbed as a “red ocean”.

Based on the best-selling book Blue Ocean Strategy, the red ocean refers to a business strategy where companies attempt to outperform rivals to gain a greater share of an existing market. When the marketspace gets crowded (red), prospects and growth are reduced. A blue ocean, by contrast, is a calmer market segment with less competition and greater growth potential.

The (red ocean) F&B sector is highly competitive in Singapore as reflected by its high churn rate. While many new restaurants launch every day, there is also a high turnover — more than a quarter of F&B outlets are replaced yearly, according to Enterprise Singapore in 2016.

So, how can a halal F&B business be lucrative in Singapore? Ideally, the key is to have substantial capital and to be quick in making a mark.

Rewarding as it can be, the halal food sector is more suited for experienced entrepreneurs. Amid fierce market competition, strategic businesses are more likely to survive.

“Businesses probably pick up traction much faster in F&B as compared to logistics and other sectors. But they also have to be prepared to establish themselves quickly before they get cannibalised by the bigger boys,” says Azrulnizam.

But once established, the prospects are promising for halal F&B businesses.

Singaporean Muslims are identified by the USDA as having one of the highest purchasing power. Furthermore, experts observed that consumers in Singapore are increasingly going out for meals. About 25% of those surveyed by Nielsen last year said that they eat out daily. The number spiked to 55% for those who dine out weekly.

Together, these factors translate into higher demands for halal food.

With Singapore being the most Muslim-friendly destination among non-Organisation of Islamic Cooperation countries, based on the Mastercard-CrescentRating Global Muslim Travel Index 2018, tourist dollars in the halal F&B sector are up for grabs. According to the Singapore Tourism Board, over US$1.4 billion was spent on food last year.

Besides, the market is not limited to Muslims alone as non-Muslims can also enjoy halal food.

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All’s not lost

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Despite stiff competition, Singapore’s halal F&B scene still has room for smaller businesses. Local restaurant Peppercorn shook things up by zeroing in on a niche market.

Its founders, Jaron Chan and James Tan, became fans of Sichuan cuisine after spending years in China. Upon returning to Singapore, they wanted to offer an authentic rendition of Sichuan food, specifically mala.

But places serving mala dishes — flavoured with Chinese sauces, Sichuan peppercorn, chilli pepper and various spices simmered in oil — are dime a dozen in Singapore.

Turn left after taking exit C at Chinatown MRT station and you will find a stir-fried mala hawker stall in People’s Park Complex. Turn right onto Upper Cross Street and you can find three more restaurants – one specialising in mala hot pot, another in mala grilled fish and the other offering various Sichuan dishes.

So, they decided to serve mala soup, and they made it unique by exclusively serving a halal version. This allowed them to corner the Muslim market, which had limited options for halal mala. 

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Other businesses like The Black Hole Group opted to corner Malay/Muslim-centric locations and then expand nearby.

In less than a decade, the brand has opened eight cafes in Bugis and surrounding areas, with each establishment specialising in a different type of cuisine. For example, Tipo serves handmade pastas and Stack, gourmet sandwiches. These locations see a high foot traffic of Muslims as they are close to the Sultan Mosque and Arab Street.

Brand Manager Hayley Ridgwell said the company believes that establishing a deeper relationship with customers and forming a community within these Malay/Muslim-centric locations can promote brand loyalty.

The Black Hole Group’s approach of capturing the Muslim market can be adopted by new players. There are still locations in Singapore with high traffic but limited halal food options, such as the North-East region.

For instance, popular food haunt Chomp Chomp Food Center in Serangoon Gardens is now seeing its first few halal stalls, despite being open since 1972. Terry Ma, who has been in the F&B industry for over 14 years, is one of the hawkers targeting the Muslim demographic.

His first halal venture, Char-Grill Spice, serves Western food and is one of the three Muslim-friendly stores in the food center. He says: “I chose Chomp Chomp because I wanted to introduce more Muslim-friendly options to this historic makan place.”

For Ma, the main challenge is getting the word out about his newly opened stall. Although it was only opened last October, he is already optimistic about the growth of his business.

“I am on the right track. I just launched our store’s Facebook and Instagram account and with our loyalty card programme, I believe it will help us breakeven,” he says.

Others, like Yusuf Alwi, owner of All Bout Chicken which is also located in Chomp Chomp, rely on the community spirit among tenants.

“Initially, it wasn’t easy to get people to try new things. But the tenants are the ones who really help me get more customers by directing them to my stall. That’s the good part about this hawker thing, we help each other.”

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Callous whispers

Word of mouth can boost businesses but it can also thwart growth. In Australia, halal businesses face resistance from splinter groups. In fact, petitions and online calls to boycott halal establishments are increasingly common.

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A Facebook group, “Boycott Halal in Australia”, has garnered over 108,000 supporters. The anonymous creators urge followers to boycott halal products, saying that these products drive up prices and profits are channelled to fund terrorism.

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A similar Facebook group was created for Singaporeans, called “Boycott Halal in Singapore”. Set up in 2012, the group claims that halal products are a form of discrimination against non-Muslims.

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When Subway was certified halal last August, the group warned its followers against contributing towards “the halal agenda”. Facebook user Carl Linderson commented: “This is a big mistake, Subway. A BLT or a Melt without bacon? Guess you’re hoping to find new customers, but you’re certainly losing this one.”

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When contacted, Subway declined to comment on its sales after going halal.

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On the flip side, the company’s move was applauded by some. Users like Andrew Chock said that Singapore needs more halal establishments as the options for Muslims are limited.

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Ultimately, the halal food market is open to both new and experienced businesses. Given the right strategy, returns can be lucrative.

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The Black Hole Group is a prime example.

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What started as a humble burger bar, the Working Title, has now grown into a full-fledged lifestyle brand with eight establishments, achieved solely by compounding profits since its inception. And, further expansion is in the works, said Ridgwell.