Food service sector may post 13% drop in sales

MANILA, Philippines — Sales of the country’s food sector are seen to further decline by 13 percent this year as consumers remain hesitant to return to restaurants amid the spread of the Delta variant, according to the United States Department of Agriculture (USDA).

In its latest report, the Foreign Agricultural Service of the USDA said it forecasts Philippine food sector sales to drop to $7.44 billion this year from $8.55 billion last year.

The projected decline, however, is smaller than the 44 percent plunge in food service sales in 2020.

“With the onset of the Delta variant, people became apprehensive to dine in despite the government sporadically allowing modest openings,” the USDA said.

It said the recent lockdown measures also triggered further losses on on-premises sales.

“Most food service providers remaining in operation have shifted to online delivery platforms and curbside pickups. Larger chain restaurants have made inroads by selling ready-to-cook meals at retail stores,”the USDA said.

According to the USDA, the abrupt changes in government regulations continue to impact dine-in and events, severely affecting the food service sales and delaying the recovery of food and beverage stores.

It said some owners closed establishments due to low foot traffic, while others converted some hotels into quarantine facilities.

“Due to the continued apprehension of consumers to dine in, more owners of establishments have shifted to online delivery platforms, drive-throughs, and curbside pickups to help cushion declining sales,”the USDA said.

Based on USDA’s research and interviews, full service restaurants are expected to post a 20 percent decline in sales to $1.134 billion this year.

Asian stores, including Filipino restaurants, form the majority of the market, followed by pizza and American restaurants.

“American chains continue to flourish as Filipinos recognize US brands and trust US standards for food sanitation. Local chains continue purchasing US food and beverage ingredients to meet quality standards, while American dishes remain popular. Premium restaurants and hotels prefer imported ingredients,”the USDA said.

Sales from limited service restaurants are also forecast to drop by 10 percent this year to $4.285 billion.

According to the USDA, limited service restaurants have fared slightly better than full service restaurants due to having a wider area coverage and pre-lockdown delivery, pick-up and drive-through services for chicken, pizza, and bakery products.

Meanwhile, the USDA sees sales of cafes and bars to drop by 15 percent this year to $986 million as small gatherings and meetings are still being avoided.

In 2020, the cafes and bars sector registered the largest decline in sales at 57 percent.

Similarly, sales from street stalls or kiosks are also expected to fall by 15 percent to $1.099 billion.

“Since most street stalls and kiosks are in shopping malls and public transportation hubs, affected by reduced foot traffic in public areas and lower consumer spending,”the USDA said.

Despite reduced food service sales and strong competition from other suppliers, US consumer-oriented agricultural exports to the Philippines are projected to increase by 30 percent to $1.426 billion this year.

The USDA attributed the projected increase to the retail sector’s growth and a lesser decline in food service compared to last year.