The country’s food service industry has continued to improve over the past years due to the stronger consumers’ purchasing power, influenced by today’s fast-paced lifestyle. Food service players are increasing their network to cater to more Filipinos who demand for more convenience.
Different types of food establishments are being set-up across the country to provide Filipino consumers with their needs. Based on the final results of the 2015 Annual Survey of Philippine Business and Industry (ASPBI) released by the Philippine Statistics Authority (PSA) last October, a total of 27,028 establishments in the formal sector of the economy were engaged in accommodation and food service activities.
Restaurants led the sector with 6,652 establishments, which accounted for 24.6% of the total number of establishments. Fast food chains ranked second with 4,477 establishments (16.6%), followed by refreshment stands, kiosks and counters with 3,772 establishments (14%).
Other industries with more than a thousand number of establishments include cafeterias with 3,748 establishments, hotels and motels with 2,276 establishments, bars and cocktail lounges with 1,445 establishments, and other restaurants and mobile food service activities with 1,353 establishments.
The same report showed that the total income generated by the sector amounted to P471.3 billion. Among the industries, restaurants contributed the major share with P158.1 (33.5%), followed by fast food chains with P144.8 billion (30.7%). On the other hand, these two industries incurred more than half of the total expense for all accommodation and food service activities, with restaurants amounting to P126.7 billion (32%) and fast food chains with P125.4 billion (31.7%).
In addition to food service industry’s contributions to the Philippine economy in terms of value sales, outlets and transactions, it also generates employment to many Filipinos. As data in 2015 ASPBI showed, the total employment generated by the sector engaged in accommodation and food service activities reached 433,260 workers. Among the industries, fast food chains employed the most number of workers with 130,304, or 30.1% of the total number, followed by restaurants, and hotels and motels with 116,556 (26.9%) and 62,392 workers (14.4%), respectively.
Globally, chicken fast food was the strongest retail format in 2016, according to Stephen Dutton, a consumer food service associate in global market research firm Euromonitor International.
“The strongest performing format in 2016 was chicken fast food, which grew 8% by value to reach $65.6 billion in total global sales. As a menu offering, chicken enjoys universal appeal, and unlike more regional-specific items such pizza or burgers, chicken can be found on menus in all world markets and is highly adaptable to local consumer preferences,” Mr. Dutton said in an article posted in Euromonitor’s Web site.
Relatively, this format is highly observable in the Philippine market. As showed on a 2014 report by Euromonitor, the Philippine market continues to be led by Jollibee Foods Corp., with sales totalling to $1.67 billion in 2012. McDonald’s Corp. came second with a total sales of $533 million (5.5%), followed by Yum! Brands, Inc. with $200.8 million (2.1%) sales.
Aside from chicken fast food format, specialist coffee shop was the second fastest growing format in 2016 by value. Mr. Dutton said that it continued to perform well in all world regions. The specialist coffee shop format grew fastest in Latin America and Asia Pacific regions, which demand for coffee shops is driven by a consumer base with greater access to disposable income who can afford the relative luxury of specialty beverages.
In the Philippines, Starbucks Corp. is also joining the list of top companies in the food service industry. The company posted a total sales of $107.4 million or 1.1% of the total food service market in 2012.
With the growing urbanization across the country, Filipinos are having more busy lifestyles that pushed them to buy cooked foods or simply dine out. Also, those who are residing or working in key cities are also facing a worsening traffic and transportation issues which resulted to the growth of home delivery or takeaway outlets.
Convenience store is another format to watch, Mr. Dutton said, noting that convenience stores grew 6.1% by value in 2016.
“The food service offerings at convenience stores continue to improve as operators increasingly look to food service to attract customers. With a blend of on-trade and off-trade offerings at value-oriented prices that appeal on variety and convenience, c-stores are becoming the food service format that modern consumers need. Modern c-stores increasingly offer more healthful menu offerings and in-store dining options,” Mr. Dutton said.
Of all the food service outlets in the country, chained operators still lead in value terms. “Chained operators accounted for the majority value share in 2017 as they capitalized on consumer familiarity and brand loyalty. Chained operators also benefit from Filipinos’ increasing interest in franchising,” Euromonitor’s 2018 report on consumer food service in the country noted.
At present, food service players focus on attracting millennials who comprised one third of the country’s population and are recognized as the biggest spenders. Given this, this consumer group continues to inspire innovations within the food service industry. More digital initiatives will be seen from the industry players to extend their reach, especially on social media. — Mark Louis F. Ferrolino