Filipinos’ love of food makes restaurants and other food outlets the core of the country’s vibrant mall sector, but breaking into the business can be a challenge, given the strong preference for established brands, the president of a successful Filipino food chain said.
Rommel Juan, president of Binalot Fiesta Foods Inc., which operates the Filipino-menu chain Binalot, said that established food brands are key drivers of mall operations, and are often preferred by mall operators to draw in crowd of consumers.
He cited a 2014 report by Euromonitor International, which indicated that various food franchisees constitute the largest presence in malls in the same year, accounting for a value share of 34 percent of all types of stores in a shopping mall.
Jollibee Foods Corp. (JFC) operating the novelty chain Jollibee had the most presence among the established food brands, having a value share of 34 percent.
The Euromonitor report pointed out JFC’s wide brand portfolio is present in every mall nationwide, and is almost universally recognized among Filipinos. These brands include Jollibee, Mang Inasal, Chowking, Greenwich, Red Ribbon and Burger King.
Despite their dominance in current mall presence, the report said fast food chains in the Philippines will see slower growth in the next few years, cooling to an annual growth rate of about 3 percent from the 5-percent growth the sector recorded over the last few years.
“The slowdown in growth is indicative of the category’s maturity, which limits its prospects for sustained increases in growth rates,” the report said.
“Another factor is the Philippines’ growing middle class, many of whom are likely to trade up to affordable full-service restaurants at the expense of fast food,” it added.
But regardless of the category, food sales per outlet in the Philippines are seen to improve in the next few years due to the entry of more foreign brands, which will also lead to stiffer competition among chains and restaurant operators.
This environment, the report said, will result “in the creation of more premium offerings, which is also set to boost sales per outlet in fast food over the forecast period.”
Binalot’s Juan stressed it takes a lot of time, energy and persistence to establish a brand name and earn top-of-mind name recall to fully enter the Philippines’competitive food landscape.
“But once you have it, it can translate into a very good advantage for the brand owner when he decides to grow the business and expand it further, specifically in the country’s top malls,” Juan said.
“In our case, we established Binalot in 1996 as a food delivery business and got our first big break when we eventually got mall space. Since then, Binalot has grown into a franchise operation with 34 branches, and 1 branch in Dubai with plans of opening more in the GCC (Gulf Cooperation Countries),” he said.
“Malls are always on the lookout for established brands that have name recall, a successful following and an established system. This ensures the mall operator of higher success rates for their store spaces and at the same time, they entice more mall visitors not just to window shop but to really shop,” he added.
The country’s largest retailers and mall operators — Ayala Land Inc. (ALI), SM Prime Holdings Inc., and Robinsons Land Corp. (RLC) — are expected to launch more shopping malls in line with their five-year plans from 2015 to 2020. The bulk of the leasing spaces of these future malls are anticipated to accommodate more food and fashion brands on the back of rising incomes.
SM Prime and RLC both have plans to build four to five malls yearly towards 2020, while ALI is putting up retail spaces in every township it establishes nationwide.
Citing a Savills World Research report, Juan said that by 2018, the total pipeline of additional leasing space in the country would amount to 600,000 square meters.
Leveraging on the growth of malls in the country, Juan said it plans to expand its Binalot stores nationwide this year, mostly through franchising.
“This year, we plan to just open 10 more stores,” the Binalot president said.
Aside from local expansion, Binalot earlier bared its five-year plan to open 20 Binalot branches in the Middle East by 2021. To date, Binalot has 34 outlets nationwide.
The homegrown fast food chain is know for its All Time PinoyVorite Meals all wrapped in banana leaves such as tapa, adobo, sinigang, tocino, bistek, and daing na bangus, among others.