The Philippines’ food service industry is expected to return to pre-pandemic levels beginning this year, with sales on an upswing as restaurants expand to take advantage of consumers dining out more frequently, according to the United States Department of Agriculture (USDA).

In a Dec. 30 report, the USDA’s Foreign Agricultural Service (FAS) in Manila estimates that the country’s food service sales this year would grow by eight percent to $14 billion from around $13 billion last year.

If this forecast is realized, it would mean that the food service industry is back to the $14 billion in sales recorded in 2019, or the year before the start of the Covid-19 pandemic.

The USDA expects growth to continue into next year, with sales forecast to increase by 10 percent to around $15.4 billion.

“This sales growth in 2025 and 2026 is driven by the expansion of quick-service restaurant (QSR) chains and international restaurant concepts, which are increasing their market presence by opening new outlets,” the report read.

“As consumers increasingly seek convenience and prioritize experiential dining, the hotel, restaurant, and institutional sectors are thriving, even in the face of inflationary pressures,” it added.

Despite the Philippine economy being projected to grow at a slower pace amid domestic and external headwinds, the USDA said consumer spending on food remains robust, supported by a higher employment rate and a growing middle class.

The foreign agency said this results in “increased frequency and spending on food options at food service establishments.”

A booming tourism sector, the popularity of online deliveries, and even the recent debut of Michelin Guide are all expected to drive sales next year.

The USDA said the majority of consumers eat at limited-service restaurants (LSRs), which represent more than half of food service sales, or 61 percent of the total.

LSRs, which include fast-food establishments, are projected to post a 10-percent growth in sales next year to $9.52 billion from this year’s $8.64 billion.

“Market trends include ongoing expansion into untapped areas, the rise of value-for-money menu options, and digital marketing innovations, while major players such as Jollibee Foods Corp. (JFC) and McDonald’s continue to drive the sector’s rapid development,” the report read.

Full-service restaurants (FSRs), which account for 15 percent of industry sales, are expected to hit $2.18 billion next year, up three percent from $2.11 billion this year.

The foreign agency said the arrival of new international players, the development of innovative restaurant concepts, and increasing consumer demand for unique dining experiences are among the growth drivers for this segment.

Meanwhile, street stalls and kiosks are seen growing five percent to $1.97 billion next year from $1.88 billion as demand for quick and affordable food and beverage options remains strong.

Street stalls and kiosks, which include the likes of Angel’s Burger Group, Potato Corner, and Fruitas Holdings Inc., account for 13 percent of food service sales.

Cafes and bars make up the remaining 11 percent of industry sales, with growth next year pegged at $1.74 billion from this year’s $1.63 billion.

“This segment is driven by rising consumer mobility, the popularity of specialty coffee and tea shops, and the growing influence of Millennials and Gen Z, who are fueling demand for innovative beverages and café experiences,” the USDA said.