The recently shuttered coffee chain, Flash Coffee, is grappling with significant financial woes, leaving a debt of S$14.9 million (US$11 million) owed to around 120 creditors. Among these creditors are the chain’s own employees, who are collectively owed more than S$300,000 in unpaid wages and contractual benefits.
Closure of Flash Coffee Outlets in Singapore
Last month, Flash Coffee, known for its vibrant yellow storefronts and rapid expansion, made the decision to close all 11 of its outlets in Singapore. This move to cease local operations and focus on markets elsewhere left a trail of financial obligations.
Employees’ Unpaid Wages
The unpaid wages to employees include a variety of components. This encompasses the remaining 75% of their salaries for September, compensation for work completed up until October 12, and the monetary equivalent of unutilized leave days. The Food, Drinks and Allied Workers’ Union highlighted these specifics on October 13, shedding light on the plight of the non-unionized company’s workers.
Liquidation and Asset Sale
Professional services firm BDO Singapore, tasked with handling the liquidation of Flash Coffee, is currently taking the company’s assets into custody for sale. These assets primarily consist of equipment which will be sold to recoup funds. BDO Singapore, however, has not provided a definitive timeline for when employees can expect to receive their pending salaries.
The Challenges Ahead
Gary Loh, Leow Quek Shiong, and Seah Roh Lin from BDO Singapore’s restructuring and forensic division are spearheading the liquidation process. Their immediate focus will be on asset custody and debt collection, crucial steps in addressing the outstanding financial obligations.
Flash Coffee’s Rapid Growth and Sudden Decline
Launched in 2020, Flash Coffee expanded rapidly across Asia, including markets like Indonesia, Thailand, and Hong Kong. In 2021, the company boasted almost 30 outlets in Singapore alone. However, the chain’s abrupt closure in Singapore was preceded by a TikTok video and Google Maps images revealing a ‘strike’ sign at one of its outlets. Flash Coffee refuted claims of a strike but acknowledged ceasing its Singapore operations.
The Bigger Picture
Last November, Flash Coffee reportedly laid off employees across various markets, including Singapore. In May 2022, the company announced a fundraising of US$50 million (S$68 million) led by White Star Capital, intended for reaching group-level profitability. However, the recent downsizing of operations and the current debt scenario pose significant challenges to the company’s future endeavors.
As Flash Coffee navigates through these turbulent financial waters, the situation underscores the volatility of rapid expansion in the competitive F&B sector and the critical importance of sustainable growth strategies.
Also learn about Flash Coffee Shuts Down All Singapore Outlets Amidst Barista Strikes.
