Softsrve director Tommy Thong
Softsrve's MCO products
To operate or not to operate, that is the question, mused Softsrve director Tommy Thong when the Movement Control Order (MCO) was announced. As a food and beverage (F&B) company, Sotfsrve is allowed to operate but its specialty is soft serve ice cream, which melts quickly.
Thinking that the MCO would only last two weeks, the company decided to shut down for the duration. Having never done takeaway or delivery services, Thong and his business partner were unprepared to face the challenges ahead. Its revenues have already fallen 99% during this MCO period.
Thong says the company has tried to apply for a bank loan which was announced as part of the government’s stimulus package to aid SMEs. He applied through the IMSME portal, but ran into another problem: although Softsrve has been operating since 2014, it was taken over by Thong and his partner in late 2018.
“We ran the company through sole proprietorship in the first year of takeover, which was 2019, and then just registered as a Sdn Bhd in January 2020. Hence, we do not have a financial track record [to apply] for the loan and financial assistance. We spoke to several banks and mentioned the issue and even the banks are not sure. We’ve been waiting over a week for them to get back to us,” he explains.
“We’re still trying to explore other methods to access this fund. The information being relayed to small players, needs to be more accurate so we can take the necessary steps [to get assistance],” he says.
By week two of the MCO, the pair realised that it could carry on for a very long time. Thinking on their feet, they started ordering ice cream from similar companies to see how these were carrying out their deliveries and imitate them.
“We cannot survive with zero sales so using whatever we have, we procured packaging and came up with a deliverable menu. Some extra cost [was incurred] for packaging, because we needed to find one that suited our ice cream, to keep it frozen.”
It took a week to prepare their systems for delivery. Softsrve re-opened for business on April 11, and most of its sales were from close friends and regulars, which was not a sustainable solution.
The ice cream parlour decided to change its ice cream production methods to produce frozen hard ice-cream, which it branded "Hard Hard by Softsrve". Fortunately, the company’s ingredients suppliers are still operating but even if they were not, Softsrve has enough ingredients to see them through as they are only producing 5% of what they did in January and February.
“With shrunken production, we do not see a problem with supply. Some of the ingredients, especially the dry ones, we still have in stock.”
The company was contacted by Beep Delivery, which was set up by its point of sales (POS) system provider, Storehub, to help businesses during the MCO. “Right now, our product can be delivered within a 10km radius. Further than that, the fare would be too high,” says Thong, adding that customers can access the delivery site via their Facebook page.
Post-MCO, Thong expects at least a 50% drop in revenue compared to January 2020. This, in fact, will lead to many lay-offs and companies like Softsrve closing down as they will no longer be able to pay rent and electricity, he adds.
“It’s really a domino effect we’re seeing here and the rent at Plaza Arkadia is high. Now, we don’t even dare turn on our air conditioner and lights. It’s survival mode here and we’re trying to cut costs where we can.”
As for payroll, Thong says they consider themselves lucky because all their staff are all part-timers and are paid on an hourly basis. The downside is that Thong and his business partner will have to forego their salaries for the next few months to sustain the business. They were also unsuccessful in getting a discount on their rent from their landlord.
The first two months of the year were relatively good for Softsrve as it managed to make a slight profit, especially during the Chinese New Year season. Thong estimates that it will take at least six months for the company, which operates in Plaza Arkadia, Desa Parkcity, to reach that level of profitability again.
“The community here [at Desa Parkcity] is home to a lot of expats and the fear of coming out of their homes to spend might still be there [after the MCO is over]. A lot of our customers are also from the international school nearby and I’m sure the students’ parents wouldn’t want them loitering around after the MCO is lifted,” says Thong.
He admits that as a parent, he would do the same. “I’m not sure how many shops will still be around after six months.”