Top Stories

Will the cafe bubble burst?

EXPANDING: Cupplets, located at Ngee Ann Polytechnic, is scouting for a space for a second outlet.
Will the cafe bubble burst?

BOOMING BUSINESS: (From left) Chia Kai Chao, Mr Yeo and Oong Bing Hui are co-owners of Stateland Cafe in Bali Lane.


    Sep 24, 2014

    Will the cafe bubble burst?

    CAFES have been sprouting up like mushrooms, be it in schools, the heartland or the city centre. You may have also participated in the increasingly popular phenomenon of "cafe-hopping", patronising as many cafes as possible in one sitting.

    Say hello to the cafe culture which has infiltrated our lives over the last few years. Turn a corner and you are bound to find a coffee joint.

    Cafe owners estimate that there may be as many as a hundred indie cafes in Singapore now, with more expected to be set up to grab a slice of the action.

    These entrepreneurs are young, have a passion for pastries or coffee, want to succeed and desire to be their own boss.

    Many are enjoying booming business, like Yeo Chern Yu, the 23-year-old co-owner of Stateland Cafe in Bali Lane.

    Despite opening their cafe only in February, Mr Yeo and his business partners are already expanding, having bought over the shophouse unit next door.

    Ernest Tan, 25, co-owner of Cupplets, located at Ngee Ann Polytechnic, is scouting a location for a second outlet specifically for baking.

    The SIM University graduate forked out $20,000 to open the cafe in October, and even though his clientele is made up largely of students, he has already broke even.

    Business experts put the cafe trend down to Singaporeans' evolving tastes, with more seeking out speciality coffee.

    "In the past, Singaporeans were quite contented with the likes of Starbucks, The Coffee Bean & Tea Leaf and McCafe. But now, our taste buds for gourmet coffee are evolving, and we're ready to explore other culinary adventures," said Regina Yeo, adjunct senior lecturer of marketing at the National University of Singapore's Business School.

    Elison Lim, assistant professor at Nanyang Technological University's Nanyang Business School, said much of the momentum is fuelled by young people - both students and working adults - who have spending power and are comfortable paying between $5 and $8 for a cup of coffee.

    "For these people, checking out new coffee joints has become a hobby and something they can post about on social-networking sites," she said.

    But, while cafes like Stateland and Cupplets present a rosy picture of the cafe scene, business experts warn that there is limited room in the market for coffee joints.

    Amos Tan, a marketing and retail lecturer at Singapore Polytechnic, believes some cafes are already feeling the heat. He said new start-ups in remote locations in Singapore will be the first to go.

    "People tend to go to one stop with many cafes, so if they can't get into one, they can enter another," he explained. "Those isolated cafes don't have any spillover from their more established neighbours to leverage on."

    Dr Lim pointed out that many cafes are using nostalgic, old-school decor and themes, but warned that this is becoming over used.

    While this approach may appeal to a segment of consumers who are always looking for new things, the novelty factor tends to wear out quickly and customers will move on to the next new cafe.

    "As consumers mature and become more discerning, the market will sieve out cafes that are run-of-the-mill," she said.

    Will cafes then suffer the same fate as bubble tea, which was hot in 2001 but quickly became passe the following year.

    "It depends," said Ms Yeo. "If one looks at the bubble-tea industry now, it's the ones with strong branding and those which offer quality ingredients in the bubble-tea mix that command a loyal following."

    So just like how these bubble-tea joints survived despite the bubble bursting, some cafes will survive even when many others fizzle out, she noted.

    Dr Lim said the difference between bubble tea and coffee is that the former remains an infrequent treat, unlike the latter.

    Also, the cafe business and culture go far beyond selling a cup of coffee - it is a culture that includes a cafe's ambience and coffee preparation, she said.

    "There is still room to explore for cafe owners who have their eyes set on bringing the perfect cup of coffee and a unique coffee-drinking experience to consumers," she said.