RESEARCH | Staff Reporter, Philippines

Rising incomes to boost Philippines' foodservice sector

Spending at restaurants and hotels account for most non-essential spending, which could further rise by 2023.

With recent developments in the Philippine’s foodservice space, businesses are starting to note the opportunities available in the market as its demand heats up, according to Fitch Solutions.

Most recently, Japanese chain Mos Burger announced intentions to open 50 stores in the country. Prior to this, Shakey’s Pizza acquired local Filipino restaurant chain Peri-Peri Charcoal Chicken and US chain Shake Shack had also just launched its Philippine debut store in May.

The report noted that the growing dining-out culture is thanks to the country’s rising disposable income, which will further drive spending.

“Whilst consumer spending categories across the board will benefit from this spending, we highlight non-essentials as set to record strong growth in 2019 and over the medium-term as disposable incomes pick up and consumers pursue more aspirational lifestyles,” Fitch Solutions said.

Spending at restaurants and hotels account for most non-essential spending and could also expand further to account for 7.9% of total consumer spending in 2023. The report also noted that the industry will also see spending accelerate by an average of 8.9% per annum over the medium-term to 2023.

Overall, real household spending in the Philippines could further grow 6.2% (year-on-year) YoY in 2019, as compared to the 5.5% YoY increase in 2018.

In addition, consumers are spending more money on eating out to try new restaurants and cuisines which may have explored on overseas travels. Fitch Solutions noted that this is mainly driven by the development and expansion of the middle class.

Also read: Mos Burger continues Southeast Asia expansion with 50-store plan in the Philippines

However, the report warned that the Philippines’ income levels still remain low, meaning that greater opportunities are available for food service brands with a mass-market appeal and offer more affordable items.

Growing demand in home delivery
Foodpanda recently announced that they are planning to expand its reach to 19 cities across the country, up from 13 cities. In 12 January, GrabFood has expanded its restaurant options in the country as it added 12 new restaurants.

These developments could also hint a growing demand for third-party food delivery platforms.

“Although consumers will continue to visit brick-and-mortar restaurant locations when dining out, we highlight that it will also be crucial for food service companies to have a home delivery option. This is the result of consumers demanding greater convenience in services which extends into meal and food delivery,” Fitch Solutions said. 

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