Are Hawker Stalls Profitable and Franchisable?

Are Hawker Stalls Profitable and Franchisable?

Hawkers: the backbone of our country’s food culture.

Hawker food is craved by Malaysians of all races and at any time of the day.
Source: The Culture Trip

The best food in Malaysia isn’t at a fine dining restaurant with sophisticated names and imported ingredients. The real gems of Malaysian food are found at humble stalls set up by the roadside, in coffee shops, and – if you want to get real “fancy”- in spacious hawker centres. The beauty of the good food found in Malaysia is that they are so cheaply priced, they can be patronised by rich and poor alike, making it accessible and enjoyable to all.

However, do you wonder how much can the Nasi Ayam makcik make from your plate of RM5 chicken and rice? To homecooks out there who regularly shop at the markets, you’ll know that groceries are not cheap, so the profit margin must be super slim for these hawker sellers, right? On the other end of the spectrum, you might hear people say that hawkers actually make a lot of money, because you see some of them owning Mercedes cars and sending their children to study abroad.

So, is the hawker business profitable or not?

Does this picture make you feel hungry?
Source: Matador Network.

If hawkering is lucrative, why don’t we see more of the younger generation aspiring to be hawker stall owners? If it isn’t, how could this subsector of the Food and Beverage industry thrive and grow throughout history in Malaysia? And finally, can this seemingly small trade be scaled up into an international business model?

Hawker Chan – A Franchise Success Story.

For those of you who are social media junkies, especially in food content, you must have heard of Hawker Chan.

Chan Hon Meng of the famed chicken rice chain.
Source: The Peak Magazine.

Hawker Chan is an award-winning, Michelin-starred hawker, originating in Singapore. Today, Chef Chan has a chain of franchises in 8 countries, from Thailand to Kazakhstan. There’s one in Kuala Lumpur too. Their most viral restaurant is in Melbourne, Australia.

Even though Hawker Chan is a franchise, there is no central kitchen for his food. Main meat items are all prepared in each of the outlets to ensure freshness. His franchise chain is so strong, that it survived even the most difficult times during the pandemic. Even with travel restrictions, he and his overseas franchisees communicate regularly through video conference calls on issues and ideas they have on running the outlets. Hawker Chan is even expanding to Dubai and South Korea soon.

Founded by 58-year old Chef Chan Hong Meng in Singapore’s famed hawker centres, he became the first hawker to win one Michelin star in both 2016 and 2017. His Signature Soya Sauce Chicken with rice or noodles is the most affordable Michelin-starred meal in the world.

Sounds like Chef Chan must’ve been trained in the most prestigious culinary schools of the world then. However, he was not! He started as just a regular hawker stall owner chopping up sauce-drenched chicken, from humble beginnings in a Singaporean hawker centre.

So, how did an unassuming hawker stall uncle grow his business internationally? Franchise is the keyword here. In 2018, Chan partnered with a homegrown food and beverage company, Hersing Culinary, to start a global restaurant franchise. Upon that, Hawker Chan is now a household name synonymous with top quality hawker-style food all over the world.

Profit Margins of Hawker Stalls in Malaysia.

Before we get in too deep, I would like to acknowledge the difficult times that hawker stall owners have been through during the strictest Movement Control Orders (MCO). In these tough months, the few tables and chairs set up are barely occupied. Many hawker stalls are also forced to shut. While businesses everywhere have taken a hit, hawkers are struggling to earn even RM50 a day.

Now, let’s get into more optimistic numbers

Hawker centres can even be considered tourist destinations in some parts of Malaysia.
Source: Silver Kris.

When we look at the F&B industry as a whole, the average restaurant profit margin is around 3-5%, but it can go up to 15%. To give perspective and something to compare to, pizza shops are a textbook example of a food business that can make somewhere near the 15% mark. Fast food restaurants have a profit margin that falls around 6-9%. An average catering business has an overall average profit margin of 7-8%, while a high-end or wedding caterer can pull in profits of 15% or more.

Hawkering is a very interesting business. There aren’t clear statistics available for this sector. What you sell and your location can make a world of a difference in profit. These businesses tend to be run by families as well, thus they may not always have the most comprehensive accounting records. Self-service shops like Nasi Kandar and economy rice stalls simply estimate how much a plate costs; there aren’t receipts or anything. That’s why nobody really knows how much hawkers actually make.

According to estimates on the internet, the profit margin of a plate of rice or noodles is about 30-50 cents, which doesn’t seem like a lot. And it isn’t. These businesses rely more on the quantity of food sold. The speed of their service matters a lot. The length of their opening hours, the city, the location, and how many days they operate contribute to the total monthly profit too.

Thus, like many things in the restaurant industry, there is no cookie-cutter answer to what a “typical” hawker stall profit margin should be. With that said, as a rough estimate, a hawker stall on the lower end of the spectrum makes about RM1,500 a month. If you have an established shop with proper seating and a reliable crowd, reports have shown that they can earn around RM5,000-RM8,000 a month. However, given the laborious nature of the job, one could say this is very fair earning.

Thinking of Starting Your Own Hawker Stall?

Do you want to be part of our nation’s force of affordable and convenient food providers?

Perhaps you know a special cooking method passed down in your family for generations?

Does your grandma have a dream of sharing her secret recipe with the world and creating a franchise empire?

Without these selfless aunties selling delicious meals at low prices,we would never get to enjoy them!
Source: CK Travels.

Although Malaysia has seen rapid modernisation and changes over the last decades, one thing remains the same for sure. Nobody messes with our food culture, and the hawker food industry is sure to remain and will grow in lengths and widths that is up to you to realise.

Hawker stall business can be exciting, but the business registration process can be completely opposite. To get help with your entrepreneurial journey and keeping this uniquely Asian business style alive, you can choose to engage with Intellect.