It was an announcement by Singapore's Environment and Water Resources Minister Vivian Balakrishnan about removal of a particular clause under National Environment Agency (NEA) hawker licensing requirement on his Facebook page.
He was responding to a hawker-stall holder Daniel Goh's Facebook post on this clause.
Apparently, Daniel's neighbor stall has just renewed his license and spotted this odd clause. This clause states that "in the case of a cooked food stall, no restaurant type of dishes shall be sold unless the licensee has been authorized to do so in writing by the Director-General of Public Health."
Duh!
How do you classify a dish as a restaurant type dish?
Of course, it does not make any sense at all.
As usual, many people say this reflects a case of what the top does not know what his subordinates are doing. It's possible that he did not even read about the Facebook post. Probably an administrator of his Facebook page brought up this to his attention.
Did the clause mean to say hawker stalls are not allowed to charge restaurant type price? If this is the case, then the clause is way off it's intended meaning. The clause not only does not make sense, it creates more red tape for everyone.
Talking about pricing.....
Most businesses priced their products and services based on what their competitors are charging. They look around and see what other similar businesses are charging and priced themselves accordingly. This is a safe bet as you are offering a similar product or service at a price that is acceptable by existing customers who are already accustomed to the price.
Business owners are worried of pricing themselves too high to chase away the customers. They are afraid of pricing too low and become unprofitable. However, if you priced according to competitors, you are teaching customers to make buying decision based on price. When you compete based on price, you risk turning your product or service into a commodity.
So how do you price your product or service?
When it comes to pricing, it is different for everyone.
What you consider as expensive may be cheap to others. What you consider cheap is seen as expensive to others.
If you own a restaurant, does it mean that you can charge high prices like other restaurants? Generally this is the case as people already expect to pay the kind of price. It's easier for you to justify for the prices you charge. Customers are not just paying for the food. They are paying for the brand and its promise, the expensive cutlery, the expected quality of food, the ambience, the better seats, the nicely laid out table, the service, the aircon and other frills.
Conversely, if you own a hawker stall, does it mean that you have to charge low prices like the other hawkers? Anyway, there's no aircon, no service to talk about, no ambience, customers do not expect high quality of food, etc.
The answer is it depends.
It depends on who do you want to attract? Do you want to attract big bosses who like the feel of olden days? Do you want to attract working professionals? Or do you want to attract the elderly? Are you aiming for niches or mass market?
It also depends on what do your prospective customers want? Are they only concern about the taste? Are they particular about cleanliness and hygiene? Do they want affordable price for the quantity? Do they want high quality and price is not an issue?
On top of that, you need to justify the price you charge with the value you provide.
If you are a hawker stall and you want to charge $30 for a plate of fried rice, how are you going to justify to your target customers that it's worth the price? You definitely cannot bank on nice ambience, aircon, etc. Are you going to bet on taste, quantity, quality or service? Do you have a secret recipe? Or you're unique precisely because you've been around for forty years ? Do you have a brand to build on? A promise? Will customers overlook cleanliness and service for the taste?
While its easier to charge higher prices for a restaurant, it doesn't mean that you do not need to justify for it. With higher pricing, customers' expectations will also be higher.
Whenever I visit Bangkok, I stay at Sukhumvit Road. It's two stops away from the main shopping belts in Bangkok by the skytrain. There's a night market as well. And the whole stretch of Sukhumvit Road is filled with pubs, restaurants, cafes, shopping malls, 5-star hotels and high-class residential condominiums. It's one of the favorite hangout and accommodation area for expatriates and tourists.
And when there are tourists and expatriates, some things are a little more expensive.
I remember buying Tom Yung Goong from a street hawker for 200 Baht only to find out that a 24-hour air-conditioned restaurant on the same street is selling the same item for only 150 Baht. Both taste just as delicious.
Of course I prefer to eat at the restaurant than sitting by the side of the road inhaling the exhaust fumes from the vehicles passing by, especially in the heat. For those of you who want the experience of eating by the roadside, you'll probably choose the street stall over the restaurant.
On the other hand, I had eaten at non air-conditioned restaurants in Bangkok's Chinatown (Yaowarat Road) for a dish that costs the same as the higher class restaurants, because it was renowned to be one of the best and the outdoor atmosphere was just great.
Whether customers feel that your prices are expensive or not depends on the value they get. If they see no value in the price you charge, even $1 is considered expensive to them. If you charge $500 and they derive $5,000 value from it, it's not expensive to them.
No one is stopping you from selling a high price dish at a hawker setting. It does not mean also that a high class restaurant is entitled to charge high prices.
The important thing is to make sure your target customers get more value than the price they pay, so the price is no longer an issue.