How to Open a Coffee Shop in Singapore - 2024 Update

 

No matter where you are in the world, one food and beverage business will always be a staple: a coffee shop. 

A coffee shop opens as early as 5:00 AM to accommodate the early birds and could last up until the late hours of the night. The foot traffic is always going to be good too. 

If you plan on opening a coffee shop in Singapore, know that it's going to be a challenge, but we're going to help you set it up. This article will show you all the necessary paperwork that needs to be completed before, during, and after you open a coffee shop in Singapore. 

How to open a coffee shop in Singapore

What Is a Coffee Business?

Ask any coffee enthusiast in Singapore, and they'll tell you that no coffee shop is built the same way because there is an existing classification for these shops, all thanks to coffee connoisseurs. 

In a nutshell, a coffee shop is a business where coffee products are the main beverage or product. This does not mean you're restricted to just serving coffee drinks alone. Depending on the permits and licenses you acquire, you can go as far as serving prepped meals, baked goods and pastries, and even have bands play within your shop. 

From what we gathered from connoisseurs, these are the types of coffee shops: 

  1. Gourmet - A coffee shop that uses Arabica beans and other gourmet beans instead of using Robusta beans. These are usually the small cafe type and may have products such as cold brew or roasted beans.

  2. Kopitiam - From the Malaysian Kopi (coffee) and Hainanese Team (shop). This is the most common type of coffee shop in Singapore. These shops are known for serving toast and coconut jam (instead of using commercial brands of sandwich spreads/dressings). 

  3. Speciality - These shops are considered high-end and specialize in high-grade coffee beans such as Kopi Luwak, Hawaii Kona, Jamaica Blue Mountain, and so on. Usually, they'll also make use of coffee shop equipment to ensure the quality of their products.

  4. Roasters and Retailers - These shops are known for growing, roasting, and retailing their brands of coffee beans. Some stores will also have their coffee roaster so they can make beans on the spot. 

  5. Coffee Bar - These are shops commonly found within malls and hawker centres. They have limited seating and are known for providing quick brew coffee. 

  6. Third Wave - is a new kind of coffee shop business that involves itself within the industry's goal of a sustainable, ethical, and artisanal coffee experience.

What Are the Steps to Opening a Coffee Shop in Singapore? 

Incorporate Your Company

The first step to opening a coffee shop or a new cafe in Singapore is to incorporate your business. Suppose you're a local (Singapore citizen or Singapore permanent resident). In that case, you can use your SingPass to access Accounting and Corporate Regulatory Authority (ACRA) 's Bizfile+ to get all the documents and do all the incorporation processes. 

Foreign entrepreneurs can always work with corporate service providers to get them started with the incorporation process. 

The costs for incorporating are as follows: 

  • S$15 for the company name application, which needs to be approved by ACRA first. 

  • S$300 for the company incorporation process

ACRA provides a flat rate for incorporation for all business structures, and it just boils down to the additional paperwork they may require from you. On the other hand, corporate service providers may charge you for the incorporation services plus their margins, so it can be more expensive to work with them. However, if you're a foreigner, you don't have a choice in the matter. 

Incorporation takes about 24 to 48 hours to process, and you'll receive the necessary documents if ACRA has approved the application. If the application gets denied, you won't be refunded the application fee. 

You can read more about the incorporation process on our resource page. 

For establishing F&B businesses, there are two common structures: 

  • Sole Proprietorship

  • Private Limited Company (Pte Ltd)

Sole Proprietorship is easily accessible to Singapore citizens, permanent residents, and EntrePass holders. This is the most common structure that a lot of small businesses go for. A foreign entrepreneur can go for this business structure, but they'd need to find a local to represent them. This representative will be liable for the cafe business without limited liability protection.

This is why foreigners would opt to register as Pte Ltd. This structure is known for its access to various tax incentives and grants and protection from liability. 

You can read more about the different business structures on our resource page. 


If you have any questions with regards to incorporating a company in Singapore, feel free to fill up the form below to get in touch with one of our dedicated account managers.


Build Your Coffee Space

Once you have your business permits, it's time to start to set up your coffee space. 

This is the second step because your location is required for the application for the Food Shop License, which we'll talk about later. You'll rent the space you need to occupy for your cafe business most of the time. The rental costs will vary depending on which part of Singapore you're operating in, so be sure to consider rent expenses for computing your profit margins. 

You will need to secure the following documents and requirements during the time you build your space: 

  1. Tenancy Agreement - The document that you and your landlord have signed together. This document will permit you to occupy the space and to do construction/renovation work when needed. 

  2. Planning Permission from Urban Redevelopment Authority 

  3. Comply with the Code of Practice of Environmental Health (COPEH) from the National Environment Agency (NEA)

Acquire Different Licenses

You need to acquire several licenses if you want to open an F&B shop in Singapore. Thankfully, this is not as challenging as you might think. You can make all of the applications in the LicenceOne App, and payments for the fees can be made on the app.

Food Shop License

A Food Shop License is required for all food establishments in Singapore. This is the next set of paperwork that you will need to take care of once you already have your tenancy agreement and the physical layout of your shop or cafe ready. Some licenses will require physical inspections of the location, which is why you need to get your place ready. 

Under the Environmental Public Health Act, all companies who want to operate a retail food outlet in the country will need to acquire the Food Shop License from the Singapore Food Agency. This is a license that guarantees the government of your shop's ability to maintain cleanliness and proper hygiene, follow proper food preparation and handling procedures, and ensure that the community is safe from food-borne diseases. 

The license applies to the following types of food shops: 

  • Restaurants

  • Cake shops and bakeries

  • Eating houses

  • Coffee shop/tea houses

  • Food court

  • Snacks and drinks counters 

  • Private markets

  • Food catering businesses

  • Food shops that allow pets on the premises

  • Mobile food wagons

The cost of the Food Shop License is S$195 and is valid for one year. 

Eligibility for Application

  • Singaporeans or Permanent Residents can apply for the Food Shop License as individual applicants.

    • Self-employed individuals will need to ensure that their Medisave contributions are up to date before license application. 

    • You also need to comply with the list of hygiene requirements from the SFA's Food Service Department. 

  • Company registration with ACRA or

  • Association/Society registered with Registrar of Societies

Documents Required for Application

  • Approval from the Housing Development Board (HDB) and Urban Redevelopment Authority (URA) to use your proposed shop location as your business premises

  • Tenancy agreement between you and your landlord

  • For the license applicant, a copy of both sides NRIC (National Identity Card for Singapore Citizens or Permanent Residence Holders)

  • For companies applying for a license, one of the following: 

    • Certificate of Incorporation from ACRA or

    • Certificate of Registration from Registrar of Societies

    • Letter of Authorization if a representative applies for a license on behalf of the licensee or director of the company

  • Certificates for: 

    • Basic Food Hygiene or Refresher Food Hygiene Certificate for food handlers, if applicable. 

    • Food Hygiene Officer Certificate for restaurants, food caterers, food courts, and canteens only 

  • Cleaning Program

  • The layout of the premises in scaled metric units

  • Copy of a pest-control contract that covers the control of pests such as cockroaches and rodents during the year-long licensing period

  • Other supplementary documents such as company name, store operating hours, type of food or drinks sold, and so on. 

  • Food Safety Management Plan or Proof of Registration for the "WSQ Apply FSMS for Food Service Establishments" course (for food caterers)

  • Photos of the interiors and exteriors of the catering vehicle, if applicable.

  • If applicable, a log card or tenancy agreement of rental cars/vehicles to prove ownership of the catering vehicle.

  • Cleaning program for the vehicle, if needed

Halal Certification

If you want to cater to the Muslim community in Singapore, you'll need a Halal Certification. This is an optional certificate in the greater scheme of establishing your coffee shop in Singapore. 

The Halal Certification ensures your Muslim customers that the food production process and food preparation adhere to Islamic Law. 

Before applying for the MUIS Halal Certification License, your shop needs to meet the following requirements: 

  1. Staffing requirements - Your shop needs to employ a minimum of two or three Muslim individuals in each premise that you want to apply a Halal Certification for. Food catering services will need a minimum of three Muslim staff in the catering and central kitchen services. 

  2. Halal requirements - Supporting documents that prove that raw materials are Halal.

  3. System requirements - The applicant needs to comply with the 10 Principles of the Singapore Muis Halal Quality Management System (HalMQ)

For Halal Certification, there are seven schemes available and intended for different food and food-related businesses in the industry: 

  1. Product: Certification for manufacturing or processing products locally

  2. Eating Establishment: Eateries include fast-food restaurants, hawkers, snack bars, food kiosks, canteens, hotel restaurants, and temporary food stalls.

  3. Food Preparation Area: For central kitchens operating in hospitals, food catering businesses, airports, canteens, and pre-school kitchens

  4. Endorsement: For importers, exporters, and manufacturers who want to import, export, or re-export Halal-certified products by MUIS or other foreign Halal-certifying agencies. 

  5. Poultry Abattoir: For freshly slaughtered poultry

  6. Storage Facility: For stationary and mobile storage areas such as cold rooms and warehouses

  7. Whole Plant: For manufacturing facilities or products manufactured for the food business or restaurant industry

Basic Food Hygiene Course

This is a mandatory license that all food handlers need to have when they work in a coffee shop, or any retail food business, in Singapore. 

Your barista, waiting staff, and the people handling your kitchen equipment and food items will need to go through this course. You may also end up taking this course if you plan on being behind the bar yourself.

Central Provident Fund (CPF) Registration

The Central Provident Fund (CPF) is a mandatory social security savings plan that all employers must register for their employees. 

Applying for a CPF Submission Number should be done as soon as you hire your first employee. You'll need your SingPass and company's Unique Entity Number (UEN) to get started, and the UEN is provided to you along with your incorporation documents. 

You'll receive an email notification if your application has been approved. You'll receive a hardcopy of the welcome letter, which will contain your CPF Submission Number )CSN) and Direct Debit Authorisation Form. 

CPF contributions are on the last day of the calendar month. Actions are taken against employers who fail to pay for contributions by the 14th of the following month. These actions include late payment interest fees charged at 1.5% per month starting from the first day after the due date. Once the payment has been processed, you'll receive an email notification to view the Record of Payment (ROP) on their website. Check all the ROPs sent to you for discrepancies and report them as soon as possible. 

New employers can refer to these resources: 

Goods and Services Tax (GST) Registration

Goods and Services Tax (GST) is a tax levy imposed by the Singapore government on money spent on goods and services. Companies with annual revenue of S$1,000,000 and above will need to sign up for GST. 

You can register for GST once the business is operational and whenever you hit the revenue mark of S1,000,000. Keep in mind that registration should be done within 30 days (at least) of becoming liable. 

Once you register for the GST, you'll get to charge this to your clients, which is at 7% right now. 

Liquor License

Suppose your coffee shop plans on serving or selling liquor products. In that case, you'll need to acquire a Liquor License, which is issued by the Singapore Police Force (SPF) through the Liquor Control (Supply and Consumption) (Liquor Licensing) Regulations 2015. 

The license cost is between S$110 and S$880, depending on what category you apply for. 

You can check out our thorough discussion on setting up retail outlets in Singapore if you want to know more about the liquor license.

Petroleum/Flammable Material Storage License

Another optional license, the Petroleum and Flammable Materials Storage License, allows you to store more than 200kg of LPG at an establishment. But if your shop stores less than that, you don't need to apply for this license. 

What Documents Do You Need?

To apply for the license, you will need the following documents: 

  • Approved Plans for LPG Installation;

  • Fire Safety Certificate;

  • Professional Engineer's Certification documents for the Piped LPG system;

  • Letter of Undertaking on Safe Handling of LPG installation;

  • LPG Check List;

  • Acknowledgement letter for Emergency Response Plan;

  • Approval Letter from URA and Land Transport Authority ("LTA") for the proposed storage area of the LPG manifold system;

  • Letter of Undertaking from LPG Supplier / Dealer; and

  • Letter of authorization from Owner/Operator (for Filer).

Food Service, Innovation, and Safety Incentives

Singapore's food and beverage industry provides entrepreneurs with a fair amount of incentives, all thanks to the government. The incentives are the government's way of promoting the industry to grow and meet the market's demands. Some of the incentives made available for cafe owners are: 

  • F&B Sector Innovation Incentives - These are incentives from SPRING Singapore through the Capability Development Programme (CDP) to help grow innovative projects. 

  • F&B Sector Service Incentives - These incentives were created by the Go The Extra Mile for Services (GEMS), a government movement responsible for improving service levels within the industry. 

  • Food Safety Incentives: This incentive funds up to 50% of the cost to ensure that safety standards are met within the workplace as enforced by the National Environment Agency (NEA). 

Now, availing these incentives is not a requirement for opening a coffee shop. These are merely options for different financial assistance. You can apply for them before or after you’ve opened your coffee shop.

Hiring Baristas and Other Staff

If you plan on just hiring Singaporean employees (citizens or permanent residents), then you should have no issue with staffing. 

On the other hand, hiring foreign workers requires you to follow the Ministry of Manpower (MOM). 

The bare minimum requirement for your working staff is that they should have work visas. MOM considers a company to be under the services sector (at least for the F&B industry) if the principal activity is:

  • Hotel restaurants

  • Restaurants, coffee shops, and other food establishments (hawker stalls are excluded)

You can hire foreign workers as long as they meet certain conditions for source countries, age, and a maximum period of employment. The following are considered source countries by MOM:

  • Malaysia

  • People's Republic of China (PRC)

  • North Asian sources including Hong Kong (HKSAR passport), Macau, South Korea, Taiwan

Your coffee shop should already have the Food Shop License before you can employ foreign workers. 

You can read our explanation on the different Singapore Visas available for employers and employees if you want to know more about what visas you and your employees can qualify for. 

Closing

There you have it — a complete and thorough guide on what you need to set up a coffee business here in Singapore. People will always need their morning, afternoon, and evening caffeine fix. Hence, it comes as no surprise that coffee shops in Singapore are plentiful and provide unique services for everyone, ranging from your usual quick brews to your speciality coffee products.

If you need assistance with company incorporation for your coffee shop, we at Piloto Asia would be more than happy to help you. 

 

Frequently Asked Questions

  • Finding affordable yet proficient accounting services is crucial for managing the finances of your coffee shop effectively.

    At Piloto Asia, we offer cheap accounting services in Singapore tailored to meet the unique needs of coffee shops and other F&B establishments.

    Our experienced team is well-versed with the specific accounting and tax regulations that apply to this industry, ensuring accurate and compliant financial management.

    By partnering with us, you not only get cost-effective accounting solutions but also the assurance of quality and expertise.

    Reach out to us to learn how we can support your coffee shop in achieving financial clarity and compliance.

  • The most important things to keep in mind when planning to open a coffee shop in Singapore include identifying your target market, finding an ideal location, balancing between providing variety and maintaining quality, procuring the necessary permits and licenses, and understanding the local food and culture.

    Additionally, setting up an investment holding company in Singapore could provide you with unique financial benefits such as asset protection and potential tax savings. This arrangement involves forming a company that holds the assets or investments—in this case, the coffee shop—on your behalf. This can prove beneficial in terms of liability management and resource allocation.

    Remember, every business, including coffee shops, have their own share of challenges and it"s always important to research, plan, and assess your capabilities before plunging in.

  • The corporate tax rate for coffee shops in Singapore is 17%. This applies to both local and foreign coffee shops. There are a few exceptions to this rule, such as coffee shops that are newly established or that are operating in certain industries.

  • The tax filing deadline in Singapore for businesses is April 18 of the following year after the tax year to which it relates. For example, the tax filing deadline for 2023 is April 18, 2024.

  • When opening a coffee shop in Singapore, the strategic considerations vary for different business entities, including individual investors and investment holding company Singapore entities. Key aspects to consider are:

    1. Diversification of Portfolio: Entering the F&B sector, such as opening a coffee shop, offers a diversification opportunity for all types of investors, including investment holding companies.

    2. Financial Structuring: Investment holding companies in Singapore may find benefits in setting up a coffee shop as a subsidiary for tax and asset management, a strategy that can also be advantageous for other business entities.

    3. Brand Synergy and Marketing: Utilizing existing brand networks or market presence is crucial for promoting the coffee shop, regardless of the business entity type.

    4. Risk Management: Understanding and managing industry-specific risks, such as market fluctuations and regulatory compliance, is essential for all investors.

    5. Local Market Insights: Gaining a deep understanding of the local coffee shop market is vital for tailoring offerings and competing effectively.

    6. Regulatory Compliance: Ensuring adherence to Singapore's stringent food business regulations is a must for all business entities.

    7. Operational Efficiency: Efficient operational practices are key, whether leveraging the resources of an investment holding company or an individual investor's management skills.

    8. Long-term Sustainability: Focusing on sustainable practices and community engagement can help build a loyal customer base and enhance the coffee shop's reputation.

    These considerations are crucial for all business entities, including investment holding companies and individual investors, to successfully establish and operate a coffee shop in Singapore's dynamic market.