Fast Food Industry

Topics: Fast food, Hamburger, Philippines Pages: 8 (2833 words) Published: August 27, 2013
Fast Food Industry: Keeping up with the Changing Lifestyle

July 2011
Senen U. Reyes
Senior Management Specialist
Center for Food and Agri Business
University of Asia and the Pacific
Fast food or quick service restaurants have come a long way since 1921 when White Castle, the first fast food hamburger chain, sold burgers at five cents apiece and ended its first day with a US$3.75 profit. Arguably, A&W was the first fast food restaurant having sold the first frosty mug of A&W root beer for one nickel in 1919. In the Philippines, Tropical Hut Hamburger is reputedly the first hamburger chain dating back to 1965. After almost 90 years from the sale of the first hamburger and root beer, the global fast food market has grown to over US$201 billion in total revenues in 2009, with growth of 3.1 percent, according to Datamonitor. On the local front, total family expenditure for food consumed outside the home reached PhP196 billion, accounting for six percent of the total family expenditure, based on the 2009 Family Income and Expenditure Survey (FIES) (Table 1). Eating-out spending has accounted for a growing share of the expenditure pie over the past two decades from less than four percent in 1991. The amount has more than doubled since the start of the millennium in 2000 from PhP90 billion to PhP196 billion in nine years. As a share of food spending, it expanded from 11.5 percent to 14.2 percent.

Table 1. Distribution of Total Family Expenditure, Philippines, various years| Item| 2000| 2003| 2006| 2009|
Total Expenditure (PhP billion)| 1,794.1| 2,038.5| 2,561.4| 3,239.2| Food Expenditure (percent of total)| 43.6| 43.1| 41.4| 42.6| Food Expenditure (PhP billion)| 782.2| 878.2| 1,059.6| 1,380.3| Food consumed at home (percent of total)| 38.6| 37.7| 35.5| 36.5| Food consumed at home (PhP billion)| 692.5| 768.0| 910.6| 1,183.9| Food consumed outside the home (percent of total)| 5.0| 5.4| 5.8| 6.1| Food consumed outside the home (PhPbillion)| 89.7| 110.3| 149.1| 196.4| Source: National Statistics Office (NSO) - FIES 2000, 2003, 2006, 2009

Fast food chains belonging to BusinessWorld's Top 1000 corporations registered average growth of ten percent in gross revenues over the past several years. Gross revenues in 2009 reached almost PhP70 billion, led by Jollibee Foods Corporation (Figure 1). Figure 1. Gross Revenues of Fast Food Chains in the Top 1000 Corporations, 2005-2009 (PhP million) Description

Source: BusinessWorld Top 1000 Corporations in the Philippines, various issues

Ten years ago, there was an estimated 50,000 restaurants in the country. The number of restaurants, bars, canteens, and other eating and drinking places has since grown to almost 92,000, based on the 2005 Annual Survey of Philippine Business and Industry. Fast food chains have been a large part of this growth not only in terms of the number of stores but also in the continuous development of variety and product offerings.

Expansions and Acquisitions
Jollibee remains to be the leading fast food chain in the country, growing from over 400 stores in 2001 to over 600 stores in 2010 (Table 2). It continues to expand overseas with 71 international stores in six countries, excluding its Yonghe King andHongzhuangyuan stores in China, which number around 200. Jollibee's early acquisitions at the turn of the millennium included pizza chain Greenwich, Chinese fast food chain Chowking, and baked goods company Delifrance. To capture other industry segments, it later acquired bakeshop Red Ribbon and recently, chicken barbecue chain Mang Inasal. These other brands have grown over the years and have also opened stores in other countries, particularly, for Chowking and Red Ribbon. Table 2. Number of Stores of Major Fast Food Chains|

Fast Food Chain| Number of Phil Stores 2001| Number of Phil Stores2010| Company/Remarks| Jollibee| >400| 623| Jollibee Foods Corporation|
Greenwich| ~200...
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