Why Singapore wants its food courts to be run by machines

Ageing population, immigration curbs limiting growth potential

Singapore’s latest quest to boost productivity is playing out at a busy food court in the second terminal of Changi Airport. There, hungry passengers can select their chicken rice or bowl of noodles from a machine, pay with a credit card and collect their food — all with minimal human interaction and in stark contrast with the abundant manpower commonly used in food courts elsewhere on the island.

It’s this kind of automated initiative that’s popping up more frequently across Singapore — from self-driving taxis to face-reading payment systems for rail commuters — as the city state grapples with a rapidly ageing population, falling fertility rates and a slump in economic growth. With authorities restricting the inflow of foreign workers after a backlash against immigration, Singapore is increasingly turning to machines to replace low-end manpower.

“Productivity is a vital component of growth especially for when labour contribution to growth is declining, especially in advanced economies such as Singapore,” said David Mann, chief economist for Asia at Standard Chartered Plc. “Singapore has been trying to be on the cutting edge of applying more automation.” Select Group, the Singapore-based operator of the Changi food court, is so satisfied with the cost reductions achieved so far, it’s implementing the same system at a site at a new airport terminal due to open next year.

Singapore’s government is just as satisfied. SPRING Singapore, a state agency responsible for promoting local enterprises and products, is conducting trial tenders for two food centres under a new system that seeks to reward productivity gains: while the winning bidder was selected on price under the old system, now the agency will put a 50 per cent weighting on productivity considerations and the rest on price.

SPRING may use the productivity-weighted system on all future tenders for new coffee shops, a local term used to describe open-air food courts adjacent to public housing. The agency sees it as a key component of plans to increase productivity in Singapore’s food industry by an annual two per cent over the next five years.

“Other countries are not under the workforce pressures that Singapore is under,” Jonathan Galligan, an economist with CLSA Ltd., a brokerage and investment company, said by phone from Singapore. “Other countries have population trends more in their favour, so they have less pressure to drive productivity. That’s why Singapore is doing what it’s doing.”

The food industry has been targeted because it’s among the least productive in the city-state. It accounts for 0.8 per cent of gross domestic product, but employs 160,000 workers, or 4.5 per cent of the local workforce, according to SPRING. From 2010 to 2014, manpower in the industry grew on average six per cent a year, higher than in the economy as a whole. SPRING is working with the Restaurant Association of Singapore to encourage more companies to venture into the ready meals market, providing grants for firms and employees. It’s also pushing to boost the number of food vending machines, replacing stalls.

As a result of these efforts, catering company JR Group launched in August the first Vendcafe establishment in the country, a cluster of vending machines in a residential area where locals can buy ready meals. SPRING says this format requires 70-90 per cent less manpower than the typical food stall, and takes only a few weeks to be built. The agency is looking to set up 10 similar establishments over the next 12 months. Bloomberg