MARKET ACCESS SECRETARIAT Global Analysis Report Foodservice Profile Philippines July 2014 EXECUTIVE SUMMARY CONTENTS The Philippine economy has been posting fluctuating but positive Executive Summary ........................ 1 growth, with strong upward surges in 2010, 2012 and 2013, to register a total value of US$167.5 billion in 2013. Increasing Sector Overview ............................. 2 workforce participation, particularly among women, as well as a population of time-pressed, urban consumers eagerly seeking Subsectors ...................................... 4 convenient meal options, have supported growth in the country’s foodservice market, valued at just under US$9.7 billion in 2012 Locations ........................................ 5 (Euromonitor, 2014). Top Companies .............................. 7 Independent operators represent the majority of the industry, but only by a slight margin. Chains are expected to post stronger Conclusion ...................................... 7 growth rates in terms of value sales, outlets, and transaction numbers, as they work to take advantage of the country’s strong Resources....................................... 7 economy and extend their presence in the market. Filipino consumers have a keen interest in foreign cuisine and international brands across all formats. Fast food establishments remain the key subsector and are expected to continue registering strong sales growth, due largely to the wide product offering, convenience, and affordability they can provide consumers. However, other formats are quickly gaining favour in the market, including 100% home delivery/takeaway, which outpaced all other subsectors in terms of value growth over the 2008 to 2012 period. Operators that can provide value-conscious consumers with a wide range of menu options including interesting international fare and familiar brands, which also cater to an increasingly busy lifestyle, will likely find favour in this market going forward. Source: Shutterstock. SECTOR OVERVIEW As shown in the table below, the Philippine foodservice sector was valued at US$9.7 billion in 2012. Between 2008 and 2012, the market recorded a compound annual growth rate (CAGR) of 4.2% and is expected to continue expanding with a CAGR of 5.6% until 2017, reaching total sales of US$12.7 billion. The top chained brands in the market include Jollibee, McDonald’s, Chowking, Mang Inasal, and Greenwich. Foodservice subsectors consist of fast food, full-service restaurants, cafés/bars, street stalls/kiosks, self-service cafeterias (for which there is currently no Philippine market/data), and 100% home delivery/takeaway. Fast food was the dominant subsector in 2012, representing 30% of the total market. However, the fastest-growing subsector was 100% home delivery/takeaway, which increased its sales by a significant CAGR of 10.3% over the 2008 to 2012 period. Historic Market Value and Growth of Philippine Foodservice by Subsector, US$ millions CAGR % 2008 2009 2010 2011 2012 2008-12 Consumer Foodservice 8,202.3 8,447.3 8,843.8 9,195.4 9,686.4 4.2 Fast Food 2,105.5 2,221.4 2,402.4 2,594.4 2,875.1 8.1 Full-Service Restaurants 2,211.6 2,230.2 2,297.4 2,306.9 2,366.4 1.7 Cafés/Bars 2,026.1 2,017.0 2,058.5 2,131.3 2,190.9 2.0 Street Stalls/Kiosks 1,647.3 1,728.9 1,814.7 1,871.8 1,940.6 4.2 100% Home Delivery/Takeaway 211.8 249.8 270.8 290.9 313.4 10.3 Pizza* 355.4 374.7 393.3 422.0 452.1 6.2 Forecast Market Value and Growth of Philippine Foodservice by Subsector, US$ millions CAGR % 2013 2014 2015 2016 2017 2013-17 Consumer Foodservice 10,195.3 10,760.4 11,364.3 11,996.7 12,660.5 5.6 Fast Food 3,086.0 3,312.2 3,547.3 3,788.7 4,036.5 6.9 Full-Service Restaurants 2,451.6 2,549.7 2,654.6 2,767.2 2,887.7 4.2 Cafés/Bars 2,280.3 2,383.5 2,500.3 2,621.7 2,748.8 4.8 Street Stalls/Kiosks 2,042.6 2,155.3 2,274.7 2,400.5 2,534.0 5.5 100% Home Delivery/Takeaway 334.8 359.7 387.5 418.7 453.6 7.9 Pizza* 483.5 518.2 554.6 593.1 633.3 7.0 Source for both: Euromonitor, 2014. CAGR = compound annual growth rate. *Pizza consumer foodservice data is compiled from three different subsectors (fast food, full-service restaurants, and 100% home delivery/takeaway) for the purposes of comparison, but remains reflected within the figures for these subsectors, and thus the consumer foodservice total. As such, pizza is not counted as its own sector within the consumer foodservice total. In 2012, the Philippine foodservice sector had 80,813 outlets and recorded more than 3.6 billion transactions. By subsector, street stalls/kiosks had the most outlets and transactions at 38,146 and just over 2 million, respectively. Aside from pizza, which cuts across several formats in the industry, the 100% home delivery/takeaway subsector registered the fewest outlets and transactions in 2012. In 2012, a typical foodservice outlet earned US$119,861 from about 45,000 transactions, or US$2.66 per transaction. Cafés/bars had the highest average transaction value at just US$7.33; however, with US$458,548 fast food recorded the highest average sales per outlet, showcasing consumers’ frequent use of this quick, convenient and generally affordable format. Page | 2 Outlets and Transactions of Philippine Foodservice by Subsector, 2012 Average Sales Average Sales Transactions Subsector Outlets per Outlet per Transaction (millions) (US$) (US$) Consumer Foodservice 80,813 3,644.1 119,861.9 2.66 Fast Food 6,270 832.2 458,548.6 3.45 Full-Service Restaurants 18,156 357.3 130,337.1 6.62 Cafés/Bars 15,568 299.0 140,731.0 7.33 Street Stalls/Kiosks 38,146 2,092.8 50,873.0 0.93 100% Home Delivery/Takeaway 2,673 62.9 117,246.5 4.98 Pizza* 1,552 73.6 291,301.5 6.14 Source: Euromonitor, 2014. **Pizza consumer foodservice data is compiled from three different subsectors (fast food, full-service restaurants, and 100% home delivery/takeaway) for the purposes of comparison, but remains reflected within the figures for these subsectors, and thus the consumer foodservice total. As such, pizza is not counted as its own sector within the consumer foodservice total. Independent operators are the prevalent foodservice providers in the Philippines but only by a slight margin, accounting for US$5.6 billion or 58% of the total foodservice market in 2012, as shown in the table below. However, chained operators are expanding their sales presence in the country at triple the rate of their independent counterparts, registering a CAGR of 7.6% from 2008 to 2012. Chained operators are expected to continue gaining market share with a CAGR of 7.2% over the 2013-2017 forecast period, to reach sales of US$5.8 billion, or 46% of the overall foodservice market in 2017. Historic Market Value and Growth of Philippine Foodservice by Type, US$ millions CAGR % 2008 2009 2010 2011 2012 2008-12 Consumer Foodservice 8,202.3 8,447.3 8,843.8 9,195.4 9,686.4 4.2 Independent 5,148.0 5,228.7 5,368.6 5,451.5 5,587.0 2.1 Chained 3,054.3 3,218.5 3,475.2 3,743.9 4,099.4 7.6 Source: Euromonitor, 2014. CAGR = compound annual growth rate. Forecast Market Value and Growth of Philippine Foodservice by Type, US$ millions CAGR % 2013 2014 2015 2016 2017 2013-17 Consumer Foodservice 10,195.3 10,760.4 11,364.3 11,996.7 12,660.5 5.6 Independent 5,796.4 6,035.1 6,294.5 6,566.3 6,851.7 4.3 Chained 4,398.9 4,725.3 5,069.7 5,430.4 5,808.8 7.2 Source: Euromonitor, 2014. CAGR = compound annual growth rate. Independent operators accounted for over 63,000 outlets and 2.3 billion transactions in 2012. However, on a per-outlet basis, chained outlets had over twice as many transactions, higher sales, and an average transaction value that was slightly higher than their independent counterparts. Page | 3 Outlets and Transactions of Philippine Foodservice by Type, 2012 Average Sales Average Sales Transactions Subsector Outlets per Outlet per Transaction (millions) (US$) (US$) Consumer Foodservice 80,813 3,644.1 119,861.9 2.66 Independent consumer foodservice 63,010 2,301.8 88,668.5 2.43 Chained consumer foodservice 17,803 1,342.3 230,264.6 3.05 Source: Euromonitor, 2014. SUBSECTORS The information in this section was sourced from Euromonitor, 2013. Please see the resources at the end of this report for a complete list of documents consulted. Fast Food The largest subsector within Philippine consumer foodservice, fast food saw a CAGR of 8.1% between 2008 and 2012, reaching total sales of about US$2.9 billion. Future sales growth is expected to slow slightly, with a CAGR of 6.9% forecast between 2013 and 2017. With the exception of McDonald’s, which ranked second in 2012, the top five brands in the fast food subsector are all owned by domestic player Jollibee: Jollibee (1st), Chowking (3rd), Mang Inasal (4th) and Greenwich (5th). Burger fast food is currently the largest category in terms of value sales, but chicken fast food establishments have shown the strongest growth, and ice cream fast food is quickly gaining favour among the Filipino population. Over 6,200 fast food outlets recorded 832 million transactions in 2012, having grown by a compound annual rate of 7.0% and 6.0% respectively, since 2008.