The Philippines' food service industry is expected to revert to pre-pandemic sales levels next year, after an anticipated 12-percent growth this year on the back of strong demand among Filipino diners, according to the United States Department of Agriculture (USDA).

In a Dec. 17 report, USDA-Foreign Agricultural Service's (FAS) Manila office pointed to local food service players' store expansion as well as restaurants' high customer traffic, auguring well for US agricultural exports.

"As more consumers dine out, restaurant chains open new restaurants, cafes, kiosks, and bars, as well as franchise international restaurants in the Philippines," the report noted.

It also helps that a "strengthened tourism industry with more than five million international visitors in 2023 boosts sales as events resume in hotels and event venues," the report added.

FAS Manila sees the food service sector expanding faster than domestic food manufacturing as well as retail food sales, which are both estimated to grow by a "moderate" five percent this year.

In the food processing sector, FAS Manila noted that "local companies continue to face increasing input costs like higher costs of raw materials," such that "some manufacturers have increased prices due to higher production costs."

The retail food sector is also expected to post slower growth "due to thriftier spending and less home cooking," FAS Manila said.

Meanwhile, FAS Manila expects hotels and restaurants to further expand the food services sector "amid back-to-normal consumer spending and lower inflation."

"Due to their affordability and convenience, most of the population regularly eats at quick service restaurants (QSRs), providing opportunities for direct shipment of US food ingredients, including chicken, beef, potato fries, and cheeses," FAS Manila pointed out.

"With most consumers dining out, event bookings resuming, and the influx of tourists in hotels, FAS Manila estimates the food service industry will reach pre-pandemic levels by 2025," it added.

"Restaurant chains expand to new locations in rural areas, while many hotels and restaurants feature imported and premium ingredients. Key stores open new branches, franchise international restaurants, and offer promotions to generate higher sales than last year," the report said.

Already, FAS Manila noted that "customer queues in some restaurants during peak hours are reaching pre-pandemic level seating capacity."

Besides robust Philippine economic growth, FAS Manila said food service industry sales growth drivers include the boost coming from the resumption of face-to-face classes and work; traffic congestion forcing more mobile Filipinos to eat out or buy "drive-through" food; availability of online food delivery apps and websites; as well as a rising middle- and upper-class clientele who "dine out for the experience and explore new dishes or restaurants."

The Philippine food service sector is also experiencing growth due to food retailers' diversified menu; the entry of non-traditional players, like clothing stores, that open cafes within store premises; and social media influence, as the country's status as the world's vlogging capital is driving restaurants and hotels to actively promote their ingredients and menus online.  

As full-service restaurants, limited-service or more popularly known as "fast-food" chains and convenience stores, bars and cafes, as well as food kiosks and street stalls all continue to grow across the board, FAS Manila sees opportunities for American food products despite challenges caused by high shipping costs and tariffs plus market access issues compared to the Philippines' neighboring exporters.

Still, "Philippine culinary professionals and food and beverage hotel managers rely on US ingredients for quality, consistency, reliability, and availability in the market," according to FAS Manila.