Coffee shop prices bear close watching

Quite apart from food inflation, which is a global problem biting into many Singaporean pockets, many residents and stallholders here are worried about food price hikes as the recent sale of coffee shops witnessed record prices. A food and beverage giant forked out $40 million in June for a coffee shop in Yishun, representing a price per sq ft that surpasses that of some ground-level retail units in the prime Orchard Road shopping belt. The transaction followed two other recent high-price sales: one in Tampines changed hands for a record $41.68 million, while another there went for $16.8 million. At one level, such sales reflect investor confidence in the prospects of Singapore's gastronomic economy as it bounces back from the disruption the coronavirus pandemic caused.

There is also a case to be made for the argument that the introduction of private competition can raise standards and expand the diversity of offerings in coffee shops. However, this does not mean that the authorities should not interfere in the commercial workings that drive price movements. Rising prices in the HDB heartland go beyond simple demand-supply equations that apply to the private sector. Along with hawker centres, neighbourhood coffee shops in HDB estates serve the important social purpose of giving residents access to affordable meals. The danger is that those residents could be held hostage by high prices charged by coffee shop stalls to recoup their high rents. Indeed, the practice of one coffee shop charging high prices could embolden neighbouring coffee shops to raise prices too.