What if rent control makes the F&B problem worse?

In cities across Asia and the West, small food and beverage (F&B) businesses are sounding the alarm: rents are rising faster than they can keep up, and beloved eateries are vanishing from the urban landscape. In Singapore, neighborhood kopitiams are changing hands or closing entirely. In San Francisco and New York, independent cafés struggle to last beyond one lease cycle. Each time another local institution shuts down, the public conversation turns to rent control as a potential savior.

But while commercial rent control has emotional appeal—especially to consumers who want to preserve the places they love—it’s rarely a silver bullet. It often creates new problems without solving the real ones. If the goal is to sustain a vibrant, diverse F&B scene in high-cost cities, policy needs to move beyond rent caps and toward systemic support for small business viability.

It’s easy to point to rent as the primary cause of F&B struggles, but the economic picture is more nuanced. In most cities, rent accounts for 10–20% of an F&B outlet’s monthly expenses. While that’s significant, it’s not the only line item creating pressure.

Labor costs, particularly in tight job markets like Singapore and Hong Kong, are rising due to worker shortages and stricter hiring regulations. Ingredient inflation has pushed up food costs globally, especially post-pandemic. Add to that delivery platform commissions of 25–35% for takeout orders, and it becomes clear that rent is just one piece of a much larger puzzle.

Moreover, the F&B sector is notoriously low-margin. Even under stable conditions, many operators work with gross profit margins of under 10%. A slight dip in customer traffic, a hike in utilities, or a supply chain hiccup can tip a viable business into the red. It’s in this already-precarious context that rent spikes become intolerable—not because they are the sole issue, but because they are often the final straw.

Rent control feels like a direct and intuitive solution: cap the price, and small businesses can stay. But evidence from cities that have experimented with commercial rent control tells a different story.

In New York City, where commercial rent regulation proposals resurface every few years, analysts warn that price caps distort property markets. Landlords, faced with limits on rental income, often respond by converting spaces to non-retail uses or prioritizing chains and franchises that offer long-term stability, even if their rents are lower. The result? Less space available for independent F&B startups.

In San Francisco, some forms of soft commercial rent control exist, but critics argue that it creates tenant lock-in. Businesses lucky enough to secure a low-rent space rarely leave, even if they no longer attract customers, because they can’t afford market rates elsewhere. Meanwhile, new businesses—especially minority-owned or first-time entrepreneurs—find it harder to break in.

Rent control also disincentivizes upgrades and maintenance. If landlords cannot recoup investment costs through rent increases, they have little reason to invest in property improvements, leading to stagnation and decline in retail corridors.

In short, rent control may freeze prices—but it also freezes market dynamism, often in favor of legacy tenants at the expense of future innovation.

Rather than capping rents, cities need to ask a better question: What makes it possible for small F&B businesses to survive and thrive in high-cost urban areas?

1. Flexible leasing models and public-sector landlords:
Singapore’s HDB and JTC already play a major role in shaping the commercial retail ecosystem. These agencies can act as a stabilizing force by offering curated tenancy programs, short-term pop-up leases, or staggered rent schemes that align with a business’s early-stage ramp-up period. Such models provide breathing room without permanently distorting price signals.

2. Repurposing underused space:
Governments should identify underutilized buildings, rooftops, community centers, or public transit zones that can be reclassified for F&B use. Pilot programs in Seoul and Copenhagen have shown how temporary licenses for weekend markets or micro-kitchens can give entrepreneurs a low-cost way to test concepts before committing to full-scale operations.

3. Zoning reform and mixed-use design:
Overly rigid zoning laws often restrict commercial activity to designated streets or buildings, driving up rents through artificial scarcity. By encouraging mixed-use developments—residential blocks with first-floor F&B or informal vending spaces—cities can organically expand available options for small players.

4. Financial and digital tools for resilience:
Access to microloans, POS systems, and cloud kitchen partnerships can significantly reduce operational risk. Governments and banks could subsidize training in revenue management, social media marketing, and food cost control—areas where many small operators still lack expertise. A local coffee stall with smart ordering and delivery integration can outperform a higher-rent café with no digital reach.

5. Consumer-side support:
Public campaigns encouraging residents to dine local, use reusable containers, or join neighborhood food subscriptions can offer reliable income streams to small vendors. Direct support schemes—like Singapore’s CDC vouchers—help channel spending to local F&B outlets without interfering in the rental market.

Take the example of kopitiams—Singapore’s iconic neighborhood coffee shops. Once passed down through generations, many are now being sold to holding groups or converted into food courts. Younger Singaporeans are less likely to take over family-run stalls, and even those who do face hefty startup costs, bureaucratic hurdles, and intense competition from chain operators.

Rent is part of the challenge, but it’s not the whole story. New entrants also need cleaner facilities to meet health standards, digital tools for GrabFood or Deliveroo integration, and more flexible licensing to offer modern food options alongside traditional fare.

Rent control wouldn’t solve these problems—it might even entrench older stallholders and deter next-generation entrepreneurs from entering a regulated, rigid system. What’s needed is regulatory flexibility and targeted startup support, not blanket rent freezes.

Rent control may feel like a quick fix, but it’s a blunt tool that rarely delivers sustainable results. It can entrench inequality, discourage innovation, and reduce the total supply of viable retail space over time. Instead of focusing on price caps, cities should design ecosystems that support entrepreneurship: flexible leases, public-private partnerships, and zoning reforms that make space for small players. If we want local F&B culture to survive, we must shift the question from “how do we freeze rents?” to “how do we expand opportunity?” Emotion and nostalgia are not a substitute for sound urban policy. It’s time we responded to the F&B crisis with precision—not sentiment.