Singapore restaurant chain Ministry of Food (MOF) just shuttered five of its outlets over the weekend.
Two outlets, Ju Hao at Bukit Panjang Plaza and MOF My Izakaya at Lot One, were repossessed by landlord CapitaLand on Friday (28 Feb) for failure to pay rent.
These sudden closures bring MOF, which had 80 restaurants in Singapore at its peak, down to 26 outlets remaining.
Today (2 Mar), its 11-stall food court concept Platform M at SingPost Centre may also be seized if rent cannot be paid.
MOF Owner’s Assets Frozen After Business Deal Gone Wrong
MOF is owned by founder Lena Sim, who opened the first outlet at Marina Square in 2006.
Over the years, the chain grew to encompass nine brands including MOF, MOF My Izakaya, Lenas, DaeSsikSin Korean BBQ Buffet, Ju Hao, and Danro Collagen Hotpot Buffet.
The Sunday Times reported that Sim has been facing difficulties paying not only rental, but also suppliers and employees.
Her financial troubles today trace back to a failed business deal in 2017, in which she had intended to purchase a chain of Korean restaurants and resell them to a Thai conglomerate who was in talks to acquire MOF.
Sim reportedly agreed to buy the Korean restaurant chain for $5.5 million, but later only paid $700,000 after her deal with the Thai conglomerate fell through.
As a result, four shareholders of the Korean chain, Lee Je-young, Soh Sow Hoon, Huh Suk Kyung and Lee Pil Young, sued Sim for the outstanding $4.8 million.
In Feb 2020, they obtained a Mareva injunction against Sim (a court order that freezes the defendant’s assets to prevent them from dissipating the assets).
This freezes her assets up to a value of $4.8 million, the outstanding amount stated in the order.
Closure of 40 Outlets In 2019
Sim also revealed to The Sunday Times that she executed a “major revamp” of MOF after the acquisition had fallen through.
Under pressure of the “manpower crunch”, she closed all table-service concepts that were thought to be “no longer viable in Singapore’s food and beverage landscape”, cutting down about 40 outlets in 2019 alone.
According to Sim, these downsizing measures helped the company turn operationally profitable by Q4 2019.
However, the recent Covid-19 outbreak made a dent in the F&B industry, and MOF saw a 35 per cent drop in performance across the group.
While some outlets could still get by, eight of them in particular suffered steep falls in sales, by 80 to 90 per cent.
Unable To Make Payments
On top of the coronavirus’ impacts, banks have allegedly been freezing Sim’s accounts, including her personal accounts, after the Mareva injunction in February.
Sim said this has prevented her from paying landlords and suppliers, and some suppliers have already cut off their ingredients to MOF’s kitchens.
She was also questioned by the Ministry of Manpower (MOM) and had her passport impounded as she failed to pay employees’ wages.
Sim added that each outlet closed will cause 15 to 20 people to lose their jobs, out of about 400 staff across the group.
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Featured Image Credit: Ministry of Food