Why RM5 Menu Rahmah is brilliant

- Advertisement - [resads_adspot id="2"]

The most brilliant part of the programme is the indirect effect of lowering the cost of living due to competition.

Finance Twitter

Since Anwar Ibrahim-led unity government took over on Nov 24, 2022, there have been visible improvements to Malaysia’s economy. At least, it has stopped deteriorating at the speed seen during previous backdoor regimes of Muhyiddin Yassin and Ismail Sabri. PM Anwar’s first two months saw local currency Ringgit appreciating from RM4.75 to RM4.28 to the US dollar – 10% improvement.

The supply and price of chicken eggs appear to have stabilized when the new government started importing up to 10 million eggs – temporarily – from India since Dec 16. The measure taken by Agriculture and Food Security Minister, Mohamad Sabu, was necessary to solve the shortage of eggs in the market, a problem which previous administrations had failed to solve in months.

Finance Twitter

Last week, Domestic Trade and Cost of Living Minister Salahuddin Ayub announced something spectacular – “Menu Rahmah” – a programme that would allow 127,000 hardcore poor Malaysians to enjoy RM5 meals. Available at nearly 15,000 restaurants or eateries nationwide, the government initiative, which is voluntary, has taken the country by storm especially in the cities.

Participants included Malaysian Indian Restaurant Owners Association, Malaysian Muslim Restaurant Owners Association, Malaysian Tomyam Operators Association, Malaysian Retail Chain Association, Malaysian Retailers Association, Bumiputera Retailers Organization, and Malaysian Singapore Coffee Shop Proprietors General Association.

Essentially, the meals are available in some 12,000 mamak restaurants, 800 Indian restaurants, 500 Kuala Lumpur-based tom-yam shops, as well as all Mydin shopping outlets. While the programme seems to cater for poor Malays, other restaurant owners of non-halal food have expressed desire and interest to try the Menu Rahmah – suggesting that the model could boost business.

In fact, Sarawak has demanded that Menu Rahmah be made available in the Borneo state too, indicating the popularity of such unbelievable value meals. Higher Education Ministry quickly jumped on the bandwagon, saying it will implement the programme in universities or higher learning institutions soon to provide cheap and tasty meals for students from low-income group.

Finance Twitter

At RM4.90, a meal offered by Mydin could comprise white rice, fried turmeric chicken, fried spinach and a bottle of mineral water. On another day, the menu could be fried fish, fried bean sprouts and mineral water. The menu would change every day and the possible combinations are up to each restaurant’s imagination and creativity.

In Terengganu, a state ruled by opposition Perikatan Nasional, 52-year-old housewife Noraini Ibrahim said she would have to splash between RM15 and RM28 daily just to buy fish or chicken for her family – excluding vegetables and other raw ingredients for cooking. With Menu Rahmah, she pays only RM24.90 for five lunch meals – saving between RM7 and RM15 per day.

Fadil Manaf, a 65-year-old government retiree, revealed he could save between RM5 and RM7 daily on his lunch and dinner thanks to the programme. He would normally pay between RM7 and RM9 for each of his meals of rice with fish and vegetables – excluding any drink. The Menu Rahmah also allows him to enjoy breakfast, which comes with mineral water, at RM2.50.

Crucially, the huge demands for Menu Rahmah means the new unity government has done a great job in stabilizing food prices, otherwise no restaurant in their right mind would pro-actively and voluntarily join the programme. The best part is that the Anwar government actually provides zero subsidy, unlike similar programmes which had failed in the past.

Finance Twitter

Menu Rahmah could succeed in the long term primarily because it is being driven by the pioneer batch of 15,000 restaurants. The government just started the ball rolling. This is a vital factor that would determine whether the programme will work or fail. The role of the government, however, is to ensure the cost of raw material and produce like chicken, eggs, vegetable, and cooking oil remains low.

But does the programme make sense in the first place, or is even sustainable? The simple fact that 15,000 eateries willingly offer the RM5 meal without government subsidies is the clearest proof that they are not making any losses. They are just making less profits. For example, the profit margin could be 100% when they charged RM9 previously but will be slashed to 10% at RM5.

Yes, it’s all about how much profit a restaurant wanted to make. Take for example, economy rice or mixed rice. Depending on locations, rental, salaries, and other operating costs and expenses, a two-dish-economy rice could cost RM10 in most part of big cities. However, even in Kuala Lumpur, you still can find the same economy rice at RM4 (depending on size of portion).

A plate of economy rice – with one type of meat and vegetable – along with free soup and free water is available for RM4 because the restaurant’s main target is nearby college students and the owner is not overly obsessed with huge profit, but with a mindset to help those students as well as low-income families. It’s eat-and-do-charity kind of business mentality.

Surprisingly, the Malaysian economy rice, known as “chap fan” in Chinese or “nasi campur” in Malay because it serves the regular people at an affordable price, has gained popularity in Hong Kong as a result of Covid-19 lockdowns. The two-dish-rice in Hong Kong became popular as struggling people were looking for quantity and price, not qualities such as taste or presentation.

Regardless of the countries, the concept is still the same – make profits based on volume. And this is precisely how the 15,000 restaurants participating in the Menu Rahmah make money – selling more at reduced profit and at the same time create loyalty among the customer base. Shopping chains like Mydin has the advantage because it buys raw materials based on bulk purchase price.

Other restaurants can keep the cost low by buying discounted chicken, fish, vegetables and other perishable raw materials, which would otherwise get thrown away or to be sold at mark-down prices, at strategic hours when lots of food remain unsold at the end of the day. It’s up to how the restaurants manage their stocks and inventories to minimize wastage while retaining freshness.

It’s better for a mamak restaurant to sell 1,000 meals at RM5 than selling 250 meals at RM7 or RM9, leaving leftover to be thrown away or re-cooked for the next day. Besides, not 100% customers who visit a restaurant will order purely Menu Rahmah. Some might order other normal-priced food and beverages – profits which the restaurant would not be able to make in normal circumstances.

Finance Twitter

Some food operators have gotten creative with different Menu Rahmah sets using the names of popular ministers. For example, there are sets Prime Minister Anwar Ibrahim (Monday), Mohamad Sabu (Tuesday), Anthony Loke (Wednesday), Salahuddin Ayub (Thursday), Rafizi Ramli (Friday) and Azalina Othman (Saturday). The set of PM Anwar consists of white rice, curry chicken, vegetable and sambal.

It’s a win-win solution for everyone – the restaurant can boost its business with eye-popping meal sets while ministers are being promoted for free. The sudden increase in sales would also allow restaurant owners to buy chicken and vegetables from the wholesale market, which usually sells the bulk items at lower prices, and in turn increase the profit margin for the restaurants.

Finance Twitter

The spill over effects of the programme saw others like Chatime offering its own Menu Rahmah – Pearl Milk Tea or Grass Jelly Milk Tea at a promotional price of RM5 between 3pm and 6pm from 3 Feb – 28 Feb. In the case of Mydin, clearly its priority isn’t the RM4.90 meals alone. Patrons could, at the same time, shop at the hypermarket after having their lunch or dinner.

The most brilliant part of the programme is the indirect effect of lowering the cost of living due to competition. Eateries that do not offer Menu Rahmah would be threatened by nearby competitors, and eventually will be forced to also lower the prices of its food to maintain its market share or to stay afloat. The government does not need to do anything to force food operators to bring down food prices.

Sure, there are some small operators who disagreed with the programme, arguing that their profits are affected by Menu Rahmah. However, food operators are encouraged – not forced – to join the initiative to help the B40 (bottom 40%) households and the hardcore poor. The market forces will determine the fair prices of goods and services based on supply and demand in the economy. – Finance Twitter