Seeking to cash in on the rising demand for food delivery, crispy chicken restaurant chain 4Fingers will soon open its first delivery-dedicated outlet in the Clementi area. The Singapore brand also plans to handle some of its deliveries in-house to help mitigate the profit leakage from selling through food delivery companies, its Chief Executive Steen Puggaard said in an interview.
The new thrust is expected to result in shorter delivery times while reaching out to more customers. The new outlet will be about two-thirds of the size of its current shops, but will also have a small shopfront and some seats for eat-in customers. There are plans to open more of such outlets across Singapore in the next one or two years.
“We recognise that home delivery is only going to grow, so we need to make sure that we match our business model to the way that people are changing in spending their money,” Mr Puggaard said. “We see that as an important change in our strategy to accommodate the fact that people will be eating more and more food at home.”
The west side of the island was chosen because it was easier to get a good location and the area has seen strong demand in home deliveries, he said. Home deliveries have helped the business by “a lot” and have been growing “faster than anticipated,” he added.
4Fingers has seen its delivery segment grow to become a seven-digit business this year after the service was introduced early in 2016. The segment can take up to 30 per cent of a shop’s volume. The service is provided only in about half of the fried chicken chain’s stores, mainly those in the central and western areas of Singapore.
At present, most of 4Fingers’ home deliveries are carried out by Foodpanda. It has recently joined Deliveroo and is also in talks to sign up with Ubereats. Depending on traffic and weather conditions, orders via the food delivery apps usually to take about 30 to 45 minutes to reach the customer.
However, selling through these food delivery companies means low or even no profit margin for 4Fingers. “Food delivery comes with an additional cost – the commission for delivery companies. All of a sudden, the revenue we are generating with our food is weighed down by the additional cost,” said Mr Puggaard.
“Companies like Foodpanda, Deliveroo, Ubereats: they basically deal with the customer, then they will tell us what we need to supply, then they will take care of the rest and send us a cheque once a month. We now say that that model does not really work for us. So we are saying, while we are opening up our first delivery-skewed kitchen in the west of Singapore, we will also test our handling of orders from customers and the payment, then using a third party to deliver food to people’s homes.
“Right now, the cost structure linked with home deliveries actually doesn’t make us any money. It’s something we do for our customers because they want to eat 4Fingers. As long as we don’t lose money, we have to go along with it. But because it has now grown to seven digits this year, we say now is the time for us to begin to find a way where the cost structure makes more sense for us,” he said.
Mr Puggaard has more than 20 years’ experience in food and beverage, much of it in Singapore, where he is now a Permanent Resident. The Dane began his F&B career with McDonald’s in 1996 in Eastern Europe before coming to Singapore in 1999 to run the regional marketing for the brand. He then made subsequent moves to Burger King and Les Amis.
Mr Puggaard joined 4Fingers in February 2013 after the previous owners reached out to him to help expand the brand that made its debut in 2009. However, he left after only seven months because he felt the company was not structured for growth then. He rejoined the company in 2014 after a change in ownership and also took a 3 per cent stake in the venture.
Since then, 4Fingers has expanded to 12 outlets across Singapore, and several more in Malay-sia and Indonesia. Revenue has grown from about S$2 million to S$30 million from its owned outlets, excluding franchised outlets. A majority of the stores are owned by the company. Besides quality food, what makes the brand stand out for eat-in customers is the dining experience, said Mr Puggaard. 4Fingers focuses on details such as design, lighting and music as well as service to enhance the overall experience.
Even while the business grows in Singapore and the region, 4Fingers is looking to expand fur-ther afar: It will be launching in Australia in the next few weeks. It is also scouring locations in the US and expects to open one outlet there by the end of the year, said Mr Puggaard. There are also plans to open outlets in the United Kingdom and Germany in the first quarter next year.
