PETALING JAYA: It’s a fight to keep the coffee brewing in our local kopitiam or warung – the number of coffee shops nationwide is down by half since the Covid-19 pandemic.
From over 6,600 coffee shops in 2015, the number shrank to 3,279 in 2022, based on data from the Department of Statistics Malaysia.
Today, customers are pouring back into coffee shops, much to the delight of operators.
But it’s still tough for operators to open new outlets to regain the numbers from pre-pandemic levels.
It would take at least two to five years before food and beverage businesses can make a full recovery, say industry players.
Malaysia Singapore Coffee Shop Proprietors General Association president Wong Teu Hoon said business was returning to normal, with tourists also making a beeline back to shops.
“But it is more difficult for people to set up new coffee shops today.
“Our profit margin is already small and the operation hours are long,” he said when contacted.
Malaysian Federation of Hawkers and Petty Traders Association president Datuk Seri Rosli Sulaiman
Wong said coffee shops had no choice but to raise the prices of drinks too, seeing that the cost of ingredients like coffee had also gone up.
Malaysian Federation of Hawkers and Traders Association president Datuk Seri Rosli Sulaiman said businesses were scaling down because many operators cannot cope with the rising operation costs.
“If owners once ran restaurants, they are now operating stalls. Stall owners, on the other hand, are now running food trucks.
“By doing this, they save on paying rental fees in buildings,” Rosli said.
Malaysian Muslim Restaurant Owners Association president Datuk Jawahar Ali
Consumers too, were feeling the pinch of higher prices, with many cooking and eating at home more often, he added.
F&B shrinks in Malaysia
The smaller number of coffee shops is part of the overall declining trend in food and beverage (F&B) services in Malaysia since the pandemic.
From a total of 167,490 food and beverage establishments in 2015, the number fell to 136,453 in 2022.
This is based on data in the Statistics Department’s Economic Census 2023 – Food and Beverage Services report, released on Aug 5.
Here’s what happened to the overall food and beverage industry from 2001 to 2022.
Click on the arrow buttons to see the next image:
When it comes to beverage services, all types of drink businesses shrank in numbers.
But coffee shops were the hardest hit, recording the largest drop in establishments, followed by drinks stalls or hawkers.
For food services, the biggest blow was suffered by food stalls, including food and drink preparation in market stalls.
From 2015 to 2022, some 19,020 food stalls went out of business.
Malaysian Muslim Restaurant Owners Association president Datuk Jawahar Ali said some had to cut their number of branches to survive with a reduced income.
“But for newcomers and small outlets with one or two branches, they tended to either wind up or disappear from the market as they were unable to survive through the pandemic,” he said.
Another factor affecting the industry, said Jawahar, was the mushrooming of online food delivery platforms, which added competition to existing businesses.
“Some operators on such platforms don’t necessarily need a physical shop to operate and can easily run their business from home with mouthwatering advertisements,” he said.
However, he said things were improving, especially in the first quarter of this year.
“As the government is promoting tourism aggressively, I believe that by the end of 2024, business will be back to normal as Malaysia is known as a food heaven among international tourists,” Jawahar added.
Interestingly, there were some food services that have increased in numbers after the pandemic, namely cafeterias and fast-food restaurants.
Going against the overall trend, the number of cafeterias spiked from 5,444 in 2015 to 5,731 in 2022.
Fast-food outlets also grew from 2,597 in 2015 to 4,166 establishments in 2022.
On the increase in cafeterias and fast-food outlets, Restaurant and Bistro Owners Association vice-president Jeremy Lim said several new brands had entered the market and Malaysians were quick to try out such new establishments.
“When new chains come in, Malaysians are generally keen to try them because they want to experience something different,” he said.
The challenges ahead
Although the coronavirus is no longer a big threat, the industry still faces challenges, namely the higher cost of goods, the foreign worker freeze, and weaker consumer demand.
“Yes, the pandemic may be over, but eateries are still feeling the effects of it.
“Some operators are still finding their footing,” said Lim.
He added that in 2020, the Restaurant and Bistro Owners Association had over 700 members, which fell to about 500 in 2022.
“This year, the current number has dropped to around 200,” Lim said.
As such, he said the outlook for restaurant operators appeared to be “soft” and volatile.
Based on the data, every state saw a decrease in the number of food and beverage establishments, except for Sabah:
Lim said there were times when business owners had to cut their losses by shuttering their shops.
“It isn’t going to be an easy ride for the next two years at least.
“But if you believe in your product and your people, you should keep fighting,” he advised other food operators.
Malaysian Indian Restaurant Owners Association vice-president C. Krishnan said the dining-out culture has been somewhat affected post-pandemic.
“Now, we see fewer groups of people going out to eat and hanging out late at night.
“For example, in the past, if there were 10 spots filled with customers at night, now there would only be four spots,” he said.
It doesn’t help that there has been a freeze on permits for foreign workers since March 2023.
“Our existing workers want to go home or go for a holiday but there is no way we can replace them with others because of the freeze.
“We urge the government to come up with a more sustainable policy for foreign workers so that we can operate our business smoothly and peacefully,” he said.
Despite the higher cost of ingredients, Krishnan said increasing prices on the menu was the “last thing” that operators want to do.
“Normally, we wait and see before raising prices.
“Only if push comes to shove will we consider increasing our prices by 10% to 20%,” he added.
There was also pressure for eateries to look good and stand out from other outlets.
“There’s a certain benchmark to be met these days to attract customers,” he said.
