Kitchen Language

[makapaaa]

<TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR>Mall landlord encroaching on our turf, claim tenants
</TR><!-- headline one : end --><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Irene Tham
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Some tenants at Far East Square, including Subway (left), are upset that Kitchen Language, a subsidiary of their landlord Far East organisation, has brought in Quiznos sandwich chain and Tully's coffee.
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->Should a mall landlord enter the same business as some of its tenants?
A mini-storm has been brewing since Kitchen Language, a subsidiary of Far East Organization, opened sandwich shop Quiznos in December last year and coffee joint Tully's in January.
Both shops, which are chains from the United States, are in Far East Square.
Kitchen Language also opened a Tully's outlet in another one of its malls, West Coast Plaza, in November last year.
Some tenants are unhappy at what they see as the landlord providing unnecessary competition.
They feel there could be a conflict of interest - such as the landlord taking up prime space for its own businesses - and that landlords should stick to leasing retail space.
But Far East said it introduced these chains because it wanted to vary its tenant mix, not to compete with existing retailers.
'We did so to create a business ecosystem where customers will want to come back because they have more choices, and this will benefit all tenants,' said Mr Anthony Yip, director of Far East's retail business group.
He added that Far East has always been on the lookout for new concepts to spice up the retail scene here, and it was unlikely any other company in Singapore would introduce Quiznos and Tully's.
Among the tenants who are unhappy is Subway, an American sandwich chain.
Four of Subway's 66 outlets are located in Far East's malls: Far East Square, Far East Plaza, Central at Clarke Quay and West Coast Plaza.
A spokesman for Subway Singapore Development, which looks after the chain's franchise business here, said he was not informed of Quiznos being set up at Far East Square, and sees it as a direct competitor.
'I'm surprised they have brought in a competing business. They did not give us any heads-up,' he said.
Since Quiznos opened, Subway in Far East Square has seen a 'double-digit' dip in turnover every month, said Mr William Pan, who owns the outlet in Far East Square.
'Quiznos is more prominently located,' Mr Pan added.
Quiznos is at the corner of Far East Square facing Telok Ayer Street and Capital Square. Subway, which moved to Far East Square from China Square in April last year, is located inside a building facing a small square. They are the only two sandwich chains at Far East Square.
But Mr Yip pointed out that unlike modern multi-storey malls, Far East Square comprises a cluster of 61 shophouse retailers that are spread over the ground floor and served by many entrances.
'There is human traffic that comes from every direction, so every outlet stands an equal chance of being seen,' he said.
Four other mall operators here - CapitaLand Retail, AsiaMalls, Lend Lease and Frasers Centrepoint - said that they do not own, and neither are they linked to, any retail shop that competes with the businesses of their tenants. This is because that is not their core expertise, they said.
Subway's unhappiness also stems from how the daily sales takings of two of its outlets are reported to Far East via a central point-of-sale system.
Under the leasing agreement that Far East has with its tenants at the newer Central and West Coast Plaza malls, all shops' daily takings are linked to a central cash register. The figures provide the landlord information for calculating the rent of each tenant.
Most mall managers here operate this central point-of-sale system to calculate rent, although some malls get monthly takings from tenants in an e-mail attachment and others charge a flat rate regardless of tenants' turnover. Tenants at Far East Square, for instance, pay a flat monthly rate.
Mr Yip said that the information which its tenants at Central and West Coast Plaza provide is not shared with Far East's subsidiaries.
'Kitchen Language is a separate and distinct business unit that operates independently of our retail management operations. It is not in our interest to undermine our tenants who contribute to the success of our malls,' he said.
In any case, consumers are not complaining about Quiznos and Tully's entry into the market.
Mr Jeremy Goh, 35, a freelance consultant for food and beverage companies, is happy about the greater shop mix.
'Instead of waiting for other companies to bring in new concepts, Far East has gone out to find brands to widen its tenant mix,' he said.
Teacher Joy Gan, 33, is also glad to have more choices. 'You see the same shops everywhere, it's getting a bit boring. It is refreshing to see something new.'
[email protected] Do you think mall landlords should enter the same business as their tenants? E-mail your views to [email protected]

 

[behlarnn]

This is clearly a conflict of interest. Which subsidiaries dun share information with the holding company and vice versa?

 

[Conan the Barbarian]

Since Quiznos opened, Subway in Far East Square has seen a 'double-digit' dip in turnover every month, said Mr William Pan, who owns the outlet in Far East Square.
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Of course its affected. There are some days I eat sandwiches at work. There are 3 to choose from if you work around that area and exclude Mos Burger.

Subway, Quiznos and O'briens. Obriens too expensive, so we use to eat Subway's until Quiznos appear. Now at least 30% of the time we eat from Quiznos instead of Subway.

On the consumer side, we gain as Subways now have pretty good offers. We also get variety.

But if I were the business owner, I will be very pissed as now my market of sandwich eaters is effectively halfed. More so when the landlord comes out to say that it does not matter. Its pretty obvious that the market is for people working around the area and can never attract anyone to go there.

"But Far East said it introduced these chains because it wanted to vary its tenant mix, not to compete with existing retailers.
'We did so to create a business ecosystem where customers will want to come back because they have more choices, and this will benefit all tenants,' said Mr Anthony Yip, director of Far East's retail business group.