atans1

S’poreans fall for CNA’s flawed look at hawkers’ margins

In Accounting, Financial competency, Financial planning on 21/11/2018 at 10:46 am

CNA Insider, part of the constructive, nation-building media screamed

Profit margins for hawker fare? As low as 20 to 30 cents

Giving the example of

Mr Ng, who started The Fishball Story in 2013, disclosed that his net profit from selling a bowl of noodles at S$3 was 20 to 30 cents.

“That’s the margin … and it’s pathetic,” he lamented. “It’s very difficult for (hawkers) to continue selling cheap food any more.”

Read more at https://www.channelnewsasia.com/news/cnainsider/profit-margins-for-hawker-centre-fare-as-low-as-20-to-30-cents-10948414

This example and other similar examples in the CNA article had the usual cybernut suspects and even ordinary S’poreans KPKBing on new media about the plight of hawkers, and blaming the Pay And Pay people.

The ordinary S’poreans joining the cybernuts in baying for PAP blood are either not thinking straight or are financially incompetent.

Is that “margin” or “net profit” before or after the “salary” that hawker pays himself? When I see the word “net margin” or “net profit”, I assume that the amount is net of everything including “salary” payments made by ownself to ownself.

Same query for the other examples quoted in the CNA article because nowhere in the article does it state whether the “margin” or “net profit” takes into account the amount that the hawker pays himself for his efforts.

If it doesn’t then it’s really a tough life. If it does, then whether it’s that tough a life depends on the amount that ownself pay ownself before KPKBing about the “peanuts” net profit.


“Dollars and Sense” of a Hawker Stall

But does the “Estimated Monthly Cost” include the “wages” that the two entrepreneurs pay themselves? If they had employees, the employees’ wages would be included under this heading. But as they are both bosses and workers, it isn’t clear if “Cost” includes their “wages”.

Makes a big difference on the real bottom line.

Initial Cost Of Starting Hawker Stall (Inclusive Of Opportunity Cost)

(Excluding Apprenticeship Fee)

$40,000

Monthly Operating Cost$11,000 – $15,000

Estimated Daily Revenue $1,000 Based on assumption of 200 Customers, average spending of $5
Estimated Monthly Revenue $22,000 22 working days per month
Estimated Monthly Cost $13,000  
Estimated Monthly Gross Profit $9,000

——————————————————————-

Many moons ago when surgeon Susan Lim was trying to portray herself as more sinned against than sinning, I wrote

“Do the breakeven cost of $46,000 include any payments to you in the form of salary, director’s fees or advance payments?”. If they do, these numbers should have been disclosed by her when she bandied these numbers. These would have given an analyst a better understanding of what went into calculating the breakeven.

I’m not accusing Susan Lim or her accountants of anything shady or stupid. I’m juz trying to understand how the numbers she quoted prove that, This was a huge loss-making assignment.

 

 

 

Advertisements
  1. As I’ve alluded to before, for younger local hawkers, they need to see take home salary of at least $4k in order for them to continue, else might as well do other work or drive Grab. And many would be setting the bar at $5k or $6k.

    If govt intention is for $3 hawker meals as the norm, then they need to open it up to 3rd world foreigners, in addition to keeping a cap on rentals. Currently only citizens & PRs can have hawker license, just like for driving taxi. LOL!

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: