THE improved purchasing power of the country’s growing middle class will enable them to dine out more and allow the food service industry to sustain its expansion in the next five years, a global report said.
According to a Global Agricultural Information Network report, sales of the Philippine food service industry could go up by at least 8 percent next year to a record $16.11 billion. This year, the Gain report estimated that the sector recorded sales of $15 billion, 8.5 percent higher than last year’s $13.73 billion.
“The Philippine food service sector will continue its steady growth over the next three to five years, propelled by consumers’ stronger purchasing power, a larger middle class, higher urbanization, and increasing dining options,” read the recently published report.
“Improved purchasing power, a growing middle class, and rising urbanization have led to an increasing preference of Filipinos to dine out, contributing to the sustained growth of the food service industry,” it added.
The report noted that the growing number of shopping malls built annually is also a factor for the “steady growth” that the food service industry is currently enjoying.
“Shopping malls in the Philippines are all-in-one destinations that not only provide shopping and entertainment but in particular numerous dining options,” it explained.
Millennials, biggest spenders
Filipino millennials, who comprise about a third of the total population, will continue to drive the sector’s growth as they are the biggest spenders for food, according to the report.
“Millennials are willing to spend more money eating out as long as their dining experience is convenient, fun, exciting, has high-quality food and service, and is yet affordable,” it said.
The report noted as well the growing number of gas stations venturing into “nonfuel-related businesses” to take advantage of the growing demand for convenience in dining for the traveling public.
“With changing customer behavior, food service is not only limited to retail spaces,” the report read.
“Moreover, the worsening traffic situation in Manila, and other major cities is a major constraint on people’s time and energy, leading consumers to purchase cooked meals or dine out, rather than preparing food at home,” it added.
In 2018, 45 percent or about $6.75 billion of the food industry’s sales came from retail food services, or those located in shopping malls followed by stand-alone food service with a 38-percent market share or $4.68 billion sales.
The Gain report also noted that there is a growing number of foreign brands in the Philippine food service industry. Their entry is facilitated mostly by franchising or joint ventures.
“Local food service companies prefer to bring in a foreign brands rather than create their own local restaurant,” it said.
“This strategy seems to provide better prospects for success, since less effort is required to build an established foreign brand restaurant. This approach in the food service industry works as Filipinos in general have a high regard for imported brands, which they become familiar with either through their travels abroad or through social media,” it added.
Some of the popular brands from the United States and other countries that have opened in the country or are about to open in 2020 are Red Lobster, Shake Shack, Popeyes, Honolulu HK Café, Mos Burger, Panda Express, Gram Café and Pancakes, and Elephant Grounds.
The Gain report was prepared by the United States Department of Agriculture Foreign Agricultural Service in Manila.