Teo Heng KTV can finally resume karaoke biz – are “heavily in debt” due to 2 years of closure

Back in March 2020, the Singapore government released an advisory, stating that karaoke outlets and other entertainment venues such as nightclubs and bars have to be closed as part of Covid-19 safety management measures.

In a past interview with Vulcan Post in October that year, Jean Teo — the director of Teo Heng KTV, who is also the sister of founder Jackson Teo — spoke about their challenges on staying afloat with zero income, costly rentals and draining reserves.

At that point in time, it had only been seven months of closure for the company. Fast forward to today, it has been slightly over two years of karaoke business closure, which spelt even more struggles for them.

“It [has been] very, very difficult [to cope],” Jean told Vulcan Post during a phone interview. She added that it felt like an endless waiting game for them, with no clear indication of when they can resume business as usual.

In fact, it was not only until recently that the local authorities announced that all nightlife businesses in Singapore, including karaoke outlets, can finally resume business from April 19.

They are “heavily in debt” mainly because of rental fees

When the news of closure broke out, two main concerns weighed over their shoulders: rental, and workers.

“At first, we didn’t dare to give up our units because we thought that we could probably open for business [soon]. It’s not an easy [situation] to handle, especially when we have 14 outlets [to oversee].”

“[We had] many nights where we couldn’t sleep [thinking about these problems],” lamented Jean.

Although the government rolled out Covid-19 support measures for businesses such as rental relief and Jobs Support Scheme (JSS), Jean felt like it wasn’t enough to put out the fire. In fact, she felt like they were sinking deeper as the months went by, with landlords sending them letters of demand and pressing them for payment.

Jean would then personally meet with the landlords to explain their situation — a handful of them were understanding, but most refused to budge. Eventually, Teo Heng KTV sought help from the Ministry of Trade and Industry, Ministry of Home Affairs and Enterprise Singapore to negotiate with the landlords.

Those that were willing to see us hang on helped to reduce the rent, but we still had to pay. For the rental relief [scheme], no doubt they [waived] four months of rental [fees], but that relief is [purely] on rental.

Commercial lease is divided into two portions — part of it is the base rent, and the other part is the service charges [such as] maintenance and A&P (advertising and promotion). The ratio [of these] can be [split into] 60-40, or 40-60. The government gave us grant for the base rent only (40 per cent), so we still had to pay the [remaining] 60 per cent to the landlord.

– Jean Teo, director of Teo Heng KTV

With zero income and many bills to pay, their financial burden eventually snowballed, causing them to be “heavily in debt”.

To put things in perspective, the average rental fee for each outlet is S$20,000 to S$30,000. With a total of 14 outlets at the time, the costs totalled up to at least S$280,000. This huge sum is spent on rental alone, asserted Jean.

Retaining all workers also became impossible

When it came to their workers, Jean sees them as “family”, regardless of their employment duration.

She recounted a time when their new employee from Malaysia — who has yet to even pass his probation — suffered a stroke and eventually passed away.

While his hospitalisation fees were covered by insurance, Teo Heng KTV decided to foot the bill for an ambulance to send him back to his hometown as well as bear the costs of his funeral, out of sheer goodwill.

For the first six months of business closure, Teo Heng KTV did not let go of a single employee and sent them for training workshops. From October 2020 onwards however, the company had to make the tough call to cut their salaries by half to sustain the business.

After seeking further help from the relevant local authorities, they proposed for the company to pivot so they can continue to open for business. The caveat however, is that once they pivot, they “cannot return to the original business”.

Furthermore, the government’s pilot programme aimed at helping the nightlife industry reopen safely, was limited to only one outlet and under very strict safe management measures.

In due course, they got the green light from the government, but at a very bad timing when Covid-19 cases started to spike. Later on, Covid-19 variants like Delta and Omicron started to emerge, which further stalled their plans.

“It was always not the right time,” said Jean, adding that they had to make another painful decision then to let go of their younger workers and retain the more senior ones, who would face greater difficulty in finding new jobs.

What tugged Jean’s heartstrings is that when some of their staff voluntarily resigned, they promised to return to work for the company once they are allowed to reopen.

From an initial pool of 120 employees, they are now down to only 32 employees.

Closing down its outlets and pivoting to stay “alive”

Initially, the authorities proposed for Teo Heng KTV to pivot to a F&B concept, but its existing structure and layout made it difficult to make the necessary conversion and accommodate necessary fittings and fixtures such as a kitchen.

We don’t even have water supply because we don’t sell food. We allow our customers to bring in food instead. Converting our outlet into a F&B concept is not easy, and we would also need to apply for licenses. It will cost us a huge sum of money.

– Jean Teo, director of Teo Heng KTV

Eventually, Teo Heng KTV decided to convert its existing outlets into a “work, chill and dine” concept, referencing co-working space WeWork. No major changes were made to the room, so if and when they are allowed to reopen for business, they can easily do so.

Rooms were available for rent from only S$4 per hour, which is much cheaper than a dedicated co-working space.

When asked if they had any thoughts to increase the rental rates of the rooms, Jean immediately shot down the idea, saying that they have always operated like a “social enterprise”.

Jean acknowledges that it’s a “very, very low rate” and even with many bookings, it did not make a sizeable impact in recouping their losses, much loss cover their rental fees, but at least they were earning some form of revenue from it.

“We just didn’t want to close [down the business], and I simply cannot bear the thought of losing the entire company overnight,” said Jean, with clear distress in her voice.

She shared that the management had even toyed with the idea of liquidating the company at the six-month mark of closure. After lengthy discussions, they eventually came to the conclusion of shutting down a few outlets instead to keep their business “alive”.

However, the business outlook for Teo Heng KTV continued to be bleak and its founder recently shared that they were considering temporarily shutting down the entire business to tide over the pandemic.

At its peak, Teo Heng KTV had 14 outlets. It closed down half of its outlets in July 2020, and another four outlets over the years. Its latest closure was its Star Vista outlet last month.

Now, it’s down to only three outlets, which are located at Causeway Point, JCube, and Suntec City.

Ultimately, Teo Heng KTV’s core business is still the import and export of karaoke sound systems, which has been very badly affected by Covid-19 too as they mainly rely on B2B (business-to-business) sales, although they do sell for home use as well.

“At this point in time, our items are seen as a luxury [purchase]. People are not looking to pay high-end prices, and they cannot go out for karaoke,” said Jean.

This is why they came up with their own product line to accommodate those who are looking for affordable home karaoke systems. Sales have slowly picked up since then — a testament that they have finally “hit the right market”.

Following the identification of this trend, Teo Heng KTV also made the move to open a KTV systems experience centre at its Causeway Point outlet earlier in February. Jean clarified that it is not a standalone centre, but rather, they merely converted an existing extra-large karaoke room into an ‘experience room’ of sorts, allowing customers to test the system on-site.

“At least it can help us [generate] some revenue so we can [last] longer,” mused Jean.

What’s next for Teo Heng KTV?

Drawing back to the news that they can finally reopen for business, Jean said that they were “overjoyed” when they first read about it on social media.

“It has been such a rollercoaster — I feel like we are now back at the top after being at the bottom for so long. It’s an [indescribable] feeling, and I could finally have a good sleep that night,” she said with a laugh.

Ahead of its reopening today, Teo Heng KTV made sure that all its microphones and sound systems are properly working after two years of not in use. They also updated their systems with the latest songs, as well as sanitised the necessary equipments and relevant spaces.

According to Jean, they are not overly-concerned about the Covid-19 safety management measures because it’s something that they have been strictly following since their pivot.

Beyond the logistic side of things, Teo Heng KTV also made a “slight adjustment” to its pricing. It increased its rental rates by a dollar — a small room now starts at S$12 per hour during ‘happy hour’.

Despite the price increase, Teo Heng KTV has received “non-stop calls” for bookings since the announcement. All three outlets are fully booked on the reopening day, and they are also almost fully booked for the whole month of April.

Although it’s unclear if the demand will fade over time, Jean still expressed her gratitude towards the overwhelming and unwavering support of customers who have not given up hope on them for the past two years.

We are very glad that we received this kind of [massive] response, and I do hope that customers will continue to show their support. We also do not want to be [too consumed] by the current situation and want to stay prepared for the [worst-case scenario], like if we have to close again because another variant comes up.

– Jean Teo, director of Teo Heng KTV

She also expressed her hope for the Covid-19 situation to stabilise further so Singaporeans can safely head into the new norm. When that happens and their business steadily picks up, there’s a strong possibility that Teo Heng KTV will set up new outlets in “more residential areas”.

Since it lost most of its outlets in the East side of Singapore, they are hoping to reestablish their presence in this area and gradually open more outlets in the central and West sides as well.

Teo Heng KTV has been established since 1989 and they hope to stick around in many years to come, upholding their reputation as an affordable, family-friendly, and much beloved, homegrown KTV studio.

Featured Image Credit: Teo Heng KTV