The Philippine fast food industry

According to the Institute for Development and Econometric Analysis, Inc. (IDEA) latest Industry Trends, a regular publication produced by IDEA, food is always viewed as an indispensable household necessity. Based on the 2009 Family Income and Expenditure Survey (FIES), around 42.6 percent of the total expenditure of a typical Filipino household is solely being allocated for food. Changing consumer behavior and lifestyle, however, are some of the factors that continuously shape and influence households’ decisions on food consumption. The increasing numbers of white-collar workers, the women’s changing role in the society, the shifting consumers’ preferences towards leisure and convenience, and urbanization have heightened consumer demand for food services—particularly for fast food services.

Per IDEA, a fast food refers to a type of restaurant that offers quick services and affordable food. This thriving industry has transformed the landscape of Filipinos’ diet and culture. Buying of fast food has now become an everyday routine for most people, especially for middle class earners engaged in productive activities. Most fast food establishments are located in Metro Manila and in several major cities in Central Luzon and Southern Tagalog. As of 2009, there are around thirty-two thousand fast food outlets in Metro Manila area alone. Emerging urban areas outside Luzon—including Metro Cebu and Metro Davao—are also considered as strategic locations for outlet expansion.

Per same published report, it was revealed that according to the 1994 Philippine Standard Industrial Classification (PSIC) handbook, fast food services are classified under class 55210—restaurants, cafes and fast-food centers. This classification comprises all activities concerned with the sale of prepared foods and drinks for immediate consumption in the premises such as restaurants, cafes, lunch counters and fast food outlets. It is also concerned with take-out operation activities which includes drive-thru option.

Furthermore, it was also revealed that Gross Value Added (GVA) in the hotel and restaurant industry remains to be in the uptrend in the past decade (Figure 1). The industry posted a decade?best of 9.3 percent GVA growth in 2007, but was immediately followed by modest GVA growth rates of 3.1 percent and 2.7 percent in 2008 and 2009, respectively. The slow down illustrated the industry’s difficulties in sustaining high growth during the height of the Global Economic Crisis (GEC) in 2008 and 2009. The industry reverted back to its bullish growth in 2010 with 9.1 percent. The sustained positive growth of the industry during the last decade can be attributed to the robust performance of the restaurant sector, particularly the fast food subsector given that approximately 80 percent of the restaurants in the country are classified as fast food. Based on a report released by the Department of Primary Industries–Victoria, Australia, the Philippine Fast Food subsector is valued at USD 3 billion, with growth rates ranging from 10% to 15% in the last decade. This subsector is immune to most economic turmoil given its large pool of consumers, ranging from middle class workers to wealthy local and expatriate customers. In addition, the fast food industry has managed to capture high-end restaurant goers when general prices are rising; this was said to be evident during the GEC, according to IDEA.

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