Trends in The Food Industry

11/26/2019 Trends in the food industry
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Trends in the
food industry
June 16, 2019 | 11:51 pm
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Numbers Don’t Lie

By Andrew J. Masigan
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The food service industry in the Philippines is growing at a phenomenal

rate and everyone wants a part of it.
For those unaware, the food service industry is composed of all forms of
food retail. This includes fast-food chains, food kiosks, cafes, bars, take-
out and delivery stores, and full-service restaurants.
The Philippine food service industry, in 2016, generated P535.9 billion

in revenues on the back of 84,503 food outlets operating in the country.
This year, revenues are seen to top P616 billion with 3,126 more food
service establishments in operation than there were in 2016.
The insatiable demand for food comes from our enormous population of
106.5 million whose median age of 24.3 years old is the prime age for
eating out. There are 4,875 newborn Filipinos added every day.
The food service industry is seen to expand in tandem with the growing
population and rising incomes. For the year 2020 and 2021, revenues
are seen to reach P637.3 billion and P656.5, respectively.

No surprise, then, that everyone wants to put up a restaurant, be it
edgling entrepreneurs or established businessmen looking for a cash
cow on the side. To many, the food business seems likeYou can unsubscribe
an easy way to from
make money.
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I have been in the food industry for more than 30 years and I can tell you
that it is more complicated than it appears to be. The rate of closures is
nearly just as high as the rate of new openings. To be successful, one
must have the basics in place. These include a strong concept, a good
value proposal (food quality in relation to price), a favorable location, an
ef cient supply chain, tight cash and inventory controls, and enough
competitive advantages to compete with the established players in the
industry.
It is equally important to understand the trends in the market. Being

cognizant of trends and leveraging on them is like swimming along with
the tide, not against it. In many cases, it could spell the difference
between success and failure.
TWELVE TRENDS BASED ON INDUSTRY REPORTS

More foreign competition. Local companies will bring in more food
establishments from abroad rather than build their own brands from
the ground up. Although doing so will require payment of steep
franchise and royalty fees, it is justi ed by the instant recognition of the
brand, immediate market acceptance, a tried and proven business
model, and savings on recipe development. A big incentive too is that
foreign brands are more likely to secure prime retail spaces as opposed
to their local counterparts.
Not only from the US. Unlike in decades past where only food
establishments from the US were immediately recognizable We'dand like to notify you
accepted, the market today is more open to brands coming about fromthe
Japan,
latest updates
South Korea, Taiwan, ASEAN, Australia, and the European Union. This is
due to the democratization of travel among Filipinos and notitheir exposure
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to global food retailers. There is still an element of distrust from brands
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emanating from China.
Filipino food will evolve. The in ux of foreign brands will compel

homegrown Filipino concepts to up their game not only in food quality
and dining experience but also in terms of recipes and presentation. In
other words, Filipino cuisine will evolve quickly. For example, it will not
be not far-fetched for some Filipino restaurants to serve fried chicken
using the same caramel breading used by BonChon, or local kare-kare
presented in the manner of Spanish cocido. New cooking techniques like
sous-viding, smoking, and the use of foam will also nd their way into
local dishes. Evolution of the cuisine will be how retailers of Filipino
food will remain competitive amid stiff competition and an environment
where the standards of quality are constantly on the rise.
Online platforms are here to stay. To

reach a younger demographic and to
overcome the logistical barrier of traf c
and parking, online delivery services
such as Foodpanda, Honestbee (which
temporarily halted Philippine operations
in April), and GrabFood will play a more
important role in every restaurant’s
marketing strategy.
An emerging trend too is for Filipinos

abroad to order food for their loved ones during special occasions.
These online platform makes this possible.
Filipinos have also adopted the habit of making prior reservations

before visiting full-service restaurants. This makes apps like Zomato,
Eatigo, and Booky indispensable marketing tools in this category.
Customized food delivery. The increasing demand for niche cuisine like
halal, keto, pure organic, and vegan will compel many restaurants and
We'd platforms.
private chefs to offer these options by way of online delivery like to notify you
Alternative locations will emerge. Due to the high rentalYoucosts
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and from
market cannibalization among malls and commercial centers,
restaurateurs will begin mushrooming in uncustomary sites. These Allow Later
include food trucks in high-traf c areas, residential villages, commercial
spaces in the upper oors of buildings and even home dining rooms. We
will also see a new wave of expansion of casual dining restaurants in
secondary places such as CALABARZON, Central Luzon, and Greater
Cebu and Palawan.
Judged by the wine list. The Philippines is one of the fastest growing
markets for wines with imports seen to top $121 million this year. While
the A and Upper B classes have become discerning about wines, the
broad B and C markets are beginning to follow suit given their rising
incomes and evolving taste. Thus, restaurants with the wider range of
wines of various grapes, origins, and price points will have the
advantage. The wine list will become an important deciding factor as to
whether an establishment is patronized or not. This applies to both ne-
dining and casual-dining restaurants.
Cuisine curiosity and authenticity. A recent market study done by De La

Salle University revealed that Filipinos are only willing to patronize a
restaurant offering non-mainstream cuisine (e.g. Latin American,
European, or Caribbean) if the chef, proprietor, or face of the brand hails
from that country. Skepticism is high toward Filipino restaurateurs
offering exotic menus.
Increasing popularity of artisanal coffee and gastropubs. Demand for

artisanal coffee such as those offered by Toby’s Estate and Single Origin
will continue to rise given their superior value proposition. The same is
true for gastropubs or establishments that offer high quality food along
with specialty alcoholic options like craft beer and gin bars. Artisanal
coffee joints and gastropubs outperformed their traditional
counterparts by 12% last year in terms of revenue per square meter. So
strong is this category that even Starbucks, Krispy Kreme, J.CO Donuts,
and Tim Hortons are now offering premium or reserve coffee options to
grab a piece of the market.
about
Asian restaurants will rule. Independent players dominate the latest updates
the full-
You canbyunsubscribe
service restaurant category with only 25% of them operated mega- from
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chains like the Max’s Group, the Bistro Group, and Shakey’s. anytime Powered By IZooto
The rest
are independently owned. Asian themed restaurants (Chinese, Allow Later
Japanese, and Filipino) account for 67% of some 19,000 full-service
restaurants in operation today, the balance is comprised of European,

American, and Middle Eastern concepts. Asian restaurants will continue
to dominate this category in terms of market share and customer
preference.
No stopping fast-food growth. The fast-food category will posts the

highest growth rate in the years to come expanding by 12% year on
year. Interestingly, fast-food sales inside convenience stores will grow at
a more phenomenal rate of 32%, thanks to their improving quality and
democratic price. Fast-food chains are seen to expand their product
offerings to sustain demand even if it encroaches on other food
concepts. For instance, we will soon see burger chains offering pizza,
chicken chains offering salads, and pizza chains offering rice meals.
Slow growth for food kiosks. Growth in the food kiosk category will not
exceed 5% due to market saturation. In this category, the name of the
game is novelty and low prices. Those that enter the food kiosk scene
selling dimsum, shawarma, popcorn, and Jamaican patties will be
clobbered by mega-chains who have carved their own army of loyal
customers. The more ingenious, innovative, and affordable the product
offerings are, the higher the chances of success.
The food service industry will continue to show tremendous growth

over the next few years on the back of our strong, consumer lead
economy. Those who wish to take part of it should not make the mistake
of oversimplifying it. The industry is in fact akin to a high stakes poker
game where those who understand its nuances and play with a well
thought-out strategy will win.
Andrew J. Masigan is an economist.

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11/26/2019 Trends in the food industry

Numbers Don’t Lie

We'd like to notify you

The food service industry in the Philippines is growing at a phenomenal

The Philippine food service industry, in 2016, generated P535.9 billion

We'd like to notify you

It is equally important to understand the trends in the market. Being

TWELVE TRENDS BASED ON INDUSTRY REPORTS

Filipino food will evolve. The in ux of foreign brands will compel

Online platforms are here to stay. To

An emerging trend too is for Filipinos

Filipinos have also adopted the habit of making prior reservations

Cuisine curiosity and authenticity. A recent market study done by De La

Increasing popularity of artisanal coffee and gastropubs. Demand for

restaurants in operation today, the balance is comprised of European,

No stopping fast-food growth. The fast-food category will posts the

The food service industry will continue to show tremendous growth

Andrew J. Masigan is an economist.

We'd like to notify you

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