Non-Chinese restaurants are not above the fray in a practice that is more common than many imagine
By JAIME EE 19 September 2009
The general consensus in the food and beverage industry is that the culture of kickbacks is much more pervasive than people may think. ‘Everybody thinks that they’re making a big discovery for the first time, but this is very common. That’s how business is done and it’s not limited to Chinese restaurants. It happens industry-wide,’ says the general manager of a local food import company.
And Chinese restaurants are the easiest to cheat, she added matter-of-factly. ‘Ingredients like shark’s fin, abalone, and scallops come in different grades but who can really tell the difference besides the chef? If the chef is in your pocket, you can bill the restaurant for Grade A seafood and supply them with Grade B quality. Sure, a purchasing manager might want to check the weight, but if you order 30kg, you’re still getting 30kg.’
The issue of kickbacks hit the headlines recently when the Corrupt Practices Investigation Bureau hauled in several chefs, including well-known figures, for questioning in a crackdown on the practice.
Many Chinese restaurant chefs also have a gambling habit, which contributes to the kickback culture. The general manager said: ‘When they’re down on their luck - which is quite often - they ask you for a loan. You oblige, and next month, your ingredients are the ones picked for his restaurant.’
Kickbacks may be widespread, but it is a topic that makes industry players squeamish and unwilling to speak freely for fear of repercussions. The general upshot is that unless a hotel or restaurant group has very tight controls over suppliers and the purchasing process, there are many ways to skim the cream off the top.
Non-Chinese restaurants are not above the fray, either. One independent Italian restaurateur has seen it happen in his own restaurants. ‘Sometimes, they (suppliers) are quite subtle - they just invite their chefs to their house for dinner. But I also have known of suppliers who have offered kickbacks to some of my chefs. I know because they (chefs) tell me.
‘It’s mostly the local seafood distributors who do it because of their higher margins,’ he adds. ‘It’s less so with meat because we buy that from international companies. But the seafood suppliers all buy from the same source so the product is essentially the same. So what some do is try to talk to the chefs on the side and see how they can be friends. When you’re buying $600,000 worth of seafood a year from the same supplier, what’s a $5,000 gift to the chef? It’s nothing to them.’
Another fine dining restaurateur also suspected that one of his chefs was getting kickbacks from a major fine food supplier when bills from the company became unusually high. But as the chef was later sacked for another reason, he did not pursue the matter.
Even so, it isn’t always the supplier who makes the first approach. A partner in a restaurant group specialising in international cuisine says that kickbacks were a lot more rampant 20 years ago, when his parents had a business that supplied dimsum to hotels. ‘It wasn’t just the chef but also the purchasing department - they would just ask what was in it for them. So we would end up billing them for say, 100 kg of products but deliver only 50 kg, while they pocketed the difference from the hotel. Or sometimes, it wasn’t just cash. They would tell you that they need to go on a holiday, or send their children to school, and so on.’
Finally, the family made the decision to close down the wholesale business as they did not want to get implicated in case there was a legal crackdown. In his own business now, the restaurant partner makes sure he only deals with suppliers who go by the book.
To a certain extent, it makes doing business harder for suppliers on the straight and narrow. The general manager of the food import company, for one, could not understand why the hotels she approached would not buy her orange juice which was cheaper and of better quality than what they were using. She soon discovered an unwritten ‘5 per cent’ rule that required a percentage of sales to be paid as an incentive for the purchasing department to choose one brand over another. ‘Because we are not known in the market to give kickbacks, we weren’t asked, and we weren’t chosen. It’s an insider kind of thing. If they know from previous experience that you’re that way inclined, then they’ll ask you. For companies like ours, how do you compete in these circumstances?’
That’s why players like her and the Italian restaurateur are glad that the issue has finally made the spotlight. ‘It’s one of those things that everybody in the industry knows about but not the outside world,’ says the latter. ‘Now that people are talking about it, maybe the situation will get better and the suppliers, especially the seafood distributors, will be more professional. Sometimes you think Singapore is so far ahead in so many areas, but in many ways some things are being run the way they were 50 years ago.’
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Kickbacks an off-menu delicacy
Non-Chinese restaurants are not above the fray in a practice that is more common than many imagine
By JAIME EE
19 September 2009
The general consensus in the food and beverage industry is that the culture of kickbacks is much more pervasive than people may think. ‘Everybody thinks that they’re making a big discovery for the first time, but this is very common. That’s how business is done and it’s not limited to Chinese restaurants. It happens industry-wide,’ says the general manager of a local food import company.
And Chinese restaurants are the easiest to cheat, she added matter-of-factly. ‘Ingredients like shark’s fin, abalone, and scallops come in different grades but who can really tell the difference besides the chef? If the chef is in your pocket, you can bill the restaurant for Grade A seafood and supply them with Grade B quality. Sure, a purchasing manager might want to check the weight, but if you order 30kg, you’re still getting 30kg.’
The issue of kickbacks hit the headlines recently when the Corrupt Practices Investigation Bureau hauled in several chefs, including well-known figures, for questioning in a crackdown on the practice.
Many Chinese restaurant chefs also have a gambling habit, which contributes to the kickback culture. The general manager said: ‘When they’re down on their luck - which is quite often - they ask you for a loan. You oblige, and next month, your ingredients are the ones picked for his restaurant.’
Kickbacks may be widespread, but it is a topic that makes industry players squeamish and unwilling to speak freely for fear of repercussions. The general upshot is that unless a hotel or restaurant group has very tight controls over suppliers and the purchasing process, there are many ways to skim the cream off the top.
Non-Chinese restaurants are not above the fray, either. One independent Italian restaurateur has seen it happen in his own restaurants. ‘Sometimes, they (suppliers) are quite subtle - they just invite their chefs to their house for dinner. But I also have known of suppliers who have offered kickbacks to some of my chefs. I know because they (chefs) tell me.
‘It’s mostly the local seafood distributors who do it because of their higher margins,’ he adds. ‘It’s less so with meat because we buy that from international companies. But the seafood suppliers all buy from the same source so the product is essentially the same. So what some do is try to talk to the chefs on the side and see how they can be friends. When you’re buying $600,000 worth of seafood a year from the same supplier, what’s a $5,000 gift to the chef? It’s nothing to them.’
Another fine dining restaurateur also suspected that one of his chefs was getting kickbacks from a major fine food supplier when bills from the company became unusually high. But as the chef was later sacked for another reason, he did not pursue the matter.
Even so, it isn’t always the supplier who makes the first approach. A partner in a restaurant group specialising in international cuisine says that kickbacks were a lot more rampant 20 years ago, when his parents had a business that supplied dimsum to hotels. ‘It wasn’t just the chef but also the purchasing department - they would just ask what was in it for them. So we would end up billing them for say, 100 kg of products but deliver only 50 kg, while they pocketed the difference from the hotel. Or sometimes, it wasn’t just cash. They would tell you that they need to go on a holiday, or send their children to school, and so on.’
Finally, the family made the decision to close down the wholesale business as they did not want to get implicated in case there was a legal crackdown. In his own business now, the restaurant partner makes sure he only deals with suppliers who go by the book.
To a certain extent, it makes doing business harder for suppliers on the straight and narrow. The general manager of the food import company, for one, could not understand why the hotels she approached would not buy her orange juice which was cheaper and of better quality than what they were using. She soon discovered an unwritten ‘5 per cent’ rule that required a percentage of sales to be paid as an incentive for the purchasing department to choose one brand over another. ‘Because we are not known in the market to give kickbacks, we weren’t asked, and we weren’t chosen. It’s an insider kind of thing. If they know from previous experience that you’re that way inclined, then they’ll ask you. For companies like ours, how do you compete in these circumstances?’
That’s why players like her and the Italian restaurateur are glad that the issue has finally made the spotlight. ‘It’s one of those things that everybody in the industry knows about but not the outside world,’ says the latter. ‘Now that people are talking about it, maybe the situation will get better and the suppliers, especially the seafood distributors, will be more professional. Sometimes you think Singapore is so far ahead in so many areas, but in many ways some things are being run the way they were 50 years ago.’
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