Is 2026 a bad year to open an F&B shop? What the retail data says

2026 is a hard year for F&B, but not a year to stay away. Retail Group Malaysia reported café and restaurant sales down 4.6% year on year in 1Q2026, and fuel costs rose sharply. At the same time, some segments are still growing and chains are giving up weak leases, which frees up shops. The risk is opening with an untested concept at a rent your sales cannot carry.

Retail Group Malaysia's figures, reported by Malay Mail on 12 June 2026, were the worst for F&B in some time:

The 1Q2026 fall came even though Chinese New Year, Hari Raya and school holidays all fell in the quarter, which normally lifts sales. Operators blamed higher raw material, rental, utilities, fuel, labour and packaging costs. In 2Q2026 some independents closed, and chains declined to renew underperforming mall leases.

No. Three points cut the other way:

• Overall retail is still growing. The full-year 2026 projection stays at 3.8% (The Star, 10 Sep 2026), even after a weak second quarter.
• Non-F&B retail held up. MR DIY reported positive like-for-like sales in 1Q2026, helped by CNY and Hari Raya demand (Business Today, 20 May 2026).
• Some F&B segments still grow. Momentum Works found Malaysia's modern coffee market grew 34% from 2023 to 2025 (The Malaysian Reserve, 6 Jul 2026).

So the data says F&B as a whole is under pressure, not that every format is.

When operators close and chains drop leases, landlords face vacancy. That gives a well-prepared tenant more choice and more room to negotiate. In past downturns, prime shops still let, just at softer terms. EdgeProp reported in 2021 that asking rents in SS2 fell 5% to 10% and landlords offered 2 to 3 months rent-free. Our post on which areas' shops hold value in a downturn explains where that pattern holds.

Things to ask for in a soft market:

• A longer rent-free period for fit-out; see how long a rent-free period you can negotiate.
• A fixed rent for the first term, with a capped increase at renewal.
• A lower deposit, or deposit in stages.
• A landlord contribution to exhaust, grease trap or power upgrades.

A takeover can save months of fit-out, and weak years produce more "restaurant for sale" and "café for sale" adverts. But a shop that failed may have failed for a reason: the location, the rent, or the landlord. Before you pay key money, check the tenancy terms, the remaining term, whether the landlord consents to the transfer, and the real sales history. Our guides on taking over a shop safely and key money and goodwill cover the checks.

• Run the rent test. Keep rent and charges near 10% to 15% of realistic sales. That is the pre-pandemic F&B range Pavilion REIT reported for its malls.
• Price in cost rises. Fuel and raw materials moved fast in 2026. Build a margin buffer into the menu.
• Try a short format first. Councils run seasonal permits; for example, MBSJ Ramadan bazaar permit applications usually open one month before Ramadan (MBSJ licensing FAQ). A season of trading tells you more than a spreadsheet.
• Pick the right row, not the cheapest. A cheap unit in a half-empty row costs you in sales. Use our 15-point location checklist.

Open if your concept has proof (a stall, a previous outlet, or strong delivery numbers), your rent passes the sales test, and you have at least six months of operating cash. Wait if you are relying on the shop location alone to create demand. Our tenant team can shortlist ground-floor units that fit a sales target.

Written by Tok Ginstee (REN 37505), CID Realtors Sdn Bhd (E (1) 1855). Updated November 2026.