Food service sector seen to hit over P1 trillion by 2026

MANILA, Philippines — The country’s food service sector is projected to hit over P1 trillion by 2026 as consumer confidence recovers and outlets return to full capacity operations, according to data and analytics firm GlobalData.

In a statement, GlobalData said it expects the Philippine food service sector to post a compound annual growth rate (CAGR) of 17.5 percent to P1.01 trillion in 2026 from P451.1 billion last year.

For the period 2016 to 2021, the food service sector revenue declined at a negative CAGR of 9.2 percent due to the drop in number of transactions and food service outlets.

GlobalData said all food service sector channels registered a drop in transaction numbers during the period amid the pandemic, which led to a rise in economic uncertainties and hampered consumption spending.

Among the different channels, travel had the steepest decline in number of transactions with a negative CAGR or 19.9 percent, followed by the workplace channel with a negative CAGR of 15.6 percent.

Quick service restaurants (QSR), which remained the largest food service sector channel last year, had a negative CAGR of 5.4 percent. It showed greater resilience than other channels given its high penetration of take-aways and established delivery network even prior to the pandemic.

For this year until 2026, GlobalData said all sector channels are expected to grow “in line with a rebound in consumer confidence and resumption of outlet operations at full capacity.”

It said all food service sector channels in the country are expected to see its outlet count increase during the forecast period, with chain operators likely to expand at a higher rate compared to independent operators across restaurant channels.

“The COVID-19 pandemic acted as a catalyst for the proliferation of ghost kitchens as many operators decided to open smaller stores than traditional dine-in locations to cater to the growing consumer need for convenient and flexible out-of-store options,” GlobalData consumer analyst Anjali Singh said.

She said the preference for healthy and nutritious food offerings made with fresh and natural ingredients is seen to rise in QSR and full-service restaurants.

“As a result, operators need to constantly innovate their menus with health-focused and quality dishes. The key target demographics for healthy indulgence will be the youth and millennials in the Philippines,” she said.

She also said the food service sector’s sales are expected to benefit from the reopening of borders to revive the tourism industry.