street stallskiosks in the philippines

STREET STALLS/KIOSKS IN THE PHILIPPINES

Euromonitor International

November 2013

S T R E E T S T A L L S / K I O S K S I N T H E P H I L I P P I N E S P a s s p o r t I

E u r o m o n i t o r I n t e r n a t i o n a l

LIST OF CONTENTS AND TABLES

Headlines ..................................................................................................................................... 1 Trends .......................................................................................................................................... 1 Competitive Landscape ................................................................................................................ 2 Prospects ..................................................................................................................................... 3 Category Data .............................................................................................................................. 3

Table 1 Street Stalls/Kiosks: Units/Outlets 2007-2012 .............................................. 3 Table 2 Sales in Street Stalls/Kiosks: Number of Transactions 2007-2012 .............. 4 Table 3 Sales in Street Stalls/Kiosks: Foodservice Value 2007-2012 ....................... 4 Table 4 Street Stalls/Kiosks: % Units/Outlets Growth 2007-2012 ............................. 4 Table 5 Sales in Street Stalls/Kiosks: % Transaction Growth 2007-2012 ................. 4 Table 6 Sales in Street Stalls/Kiosks: % Foodservice Value Growth 2007-

2012 ............................................................................................................. 5 Table 7 GBO Company Shares in Chained Street Stalls/Kiosks: %

Foodservice Value 2008-2012 ..................................................................... 5 Table 8 GBN Brand Shares in Chained Street Stalls/Kiosks: % Foodservice

Value 2009-2012 .......................................................................................... 5 Table 9 Forecast Street Stalls/Kiosks: Units/Outlets 2012-2017 ............................... 6 Table 10 Forecast Sales in Street Stalls/Kiosks: Number of Transactions 2012-

2017 ............................................................................................................. 6 Table 11 Forecast Sales in Street Stalls/Kiosks: Foodservice Value 2012-2017 ........ 6 Table 12 Forecast Street Stalls/Kiosks: % Units/Outlets Growth 2012-2017 .............. 7 Table 13 Forecast Sales in Street Stalls/Kiosks: % Transaction Growth 2012-

2017 ............................................................................................................. 7 Table 14 Forecast Sales in Street Stalls/Kiosks: % Foodservice Value Growth

2012-2017 .................................................................................................... 7

S T R E E T S T A L L S / K I O S K S I N T H E P H I L I P P I N E S P a s s p o r t 1


STREET STALLS/KIOSKS IN THE PHILIPPINES

HEADLINES Street stalls/kiosks value sales grow by 4% and reach Ps82.3 billion in 2012

The milk tea craze in the Philippines drives growth in 2012

Independent players dominate and contribute 74% of value sales

Sales per transaction improve by 3%

Ramcar Inc is the largest chained player in 2012 with a 4% value share

Street stalls/kiosks will experience moderate growth in the forecast period with a constant

value CAGR set at 2%

TRENDS Street stalls/kiosks remained relatively popular and recorded moderate value growth in 2012.

Sales in this channel rose by 4% while the entire category reached Ps82.3 billion. Street

stalls/kiosks affordable food items gain the patronage of on-the-go budget-conscious

customers. The new variety of snack items and meals offered by operators keeps customers

excited, provides more alternatives and stimulates demand. The vibrant economic

performance in the country continued to boost purchasing power among middle-income

consumers, which helped in sustaining demand for street stalls/kiosks products.

With a larger number of lower- and middle-income consumers, the Philippines provides a very

lucrative market for affordable products that are readily available and accessible to buyers.

This category accounted for 20% of total sales in the consumer foodservice industry in 2012,

and is dominated by small independent players catering to small locations. The most typical

street stalls/kiosks players are small eateries called carinderias. Carinderias serve the needs

of lower-income consumers by selling affordable rice meals, viands, snack items and bottled

carbonated drinks. These carinderias are often found in neighbourhoods, and cater to busy

housewives, budget-conscious buyers, students and employees. Other traditional formats

include street food vendors, which sell fish balls, banana cue, barbecued meat and innards,

and other native delicacies such as halo-halo (mixed sweetened fruits and vegetables with ice

shavings), binatog (boiled corn kernels with coconut meat and sugar) and rice cakes, among

others.

The products of chained street stalls/kiosks are more varied and often have foreign

influences. Among the most popular consumer foodservice products sold are burgers. In

recent years, buy-one-take-one burgers gained popularity in the local market, bringing about

the ascent of brands such as Angels Burger and Minute Burger among others. Filipinos are

known to have a sweet tooth and are fond of pastries, thereby warranting the popularity of

doughnuts (Mister Donut and Dunkin Donuts), cakes and brownies (Brownies Unlimited). On

the other hand, the tropical climate also provides very lucrative business for cold drinks and

shakes (Fruit Magic, Zagu, Orbitz, and Fruitas). Despite the foreign influences, chained

brands featuring native delicacies are also popular (Chichariffic sells pork crackling and Kiss

King of Balls sells fish balls).

The huge number of independents in the country coupled with the lax implementation of

legislation gives rise to the large number of unlicensed operators in the Philippines. Most

carinderias, street food vendors and ambulant vendors do not have business permits.



Because these players often operate in small locations, they go unnoticed by local

government units. The government is stricter with chained operators, which need to secure

business permits and be checked for sanitation regularly.

Independent players dominate street stalls/kiosks in terms of outlets, transactions and value

sales. During 2012, it is estimated that these smaller operators accounted for 79% of total

outlets, 80% of total transactions and 74% of total value sales. Despite their lesser

contribution in this category, chained operators have continually grown thanks to the lower-

priced franchised packages available to small entrepreneurs.

Food took 82% of the average receipt in street stalls/kiosks in 2012. Customers frequenting

street stalls/kiosks are often budget-conscious and usually just want to spend on food items.

Affordable beverages such as bottled carbonated drinks, iced tea and water are often

available in chained street stalls/kiosks. Drink-focused brands such as Zagu, Orbitz,

ChaTime, Serenitea and Fruitas derive most of their revenues from beverages but these

players remain small compared with other market operators.

COMPETITIVE LANDSCAPE With most chained brands owned by smaller franchisees, various franchisees held 5% of total

value sales in street stalls/kiosks in 2012. Ramcar Inc, the operator of Mister Donut in the

Philippines, is the largest chained player in street stalls/kiosks. During 2012, the business

organisations sales from its Mister Donut stalls reached Ps4.2 billion, and the company had

5% of total value sales. Other important brands include Burger Machine, Smokeys, Tender

Juicy Hotdog and Zagu.

During 2010-2012, Filipino consumers witnessed and warmly embraced the launch of milk tea

brands such as ChaTime, Serenitea and Gong Cha, among others. Milk teas capitalise on the

healthy image of tea promoted by the media in recent years. Serenitea, the first brand

introduced in 2010, reaped significant success and was followed by other brands. Cha Time,

which is operated by Tea Bros Corp, was able to grow its outlet number to 24 stores in a

years time indicating warm acceptance of bubble tea among local buyers.

It should be noted that these milk tea brands are increasingly competing with specialist coffee

shops. Despite their street stalls/kiosks outlet format, some customers prefer milk tea to

coffee because of its lower price and health benefit. Often served as a cold beverage, milk tea

sits well with the tropical weather in the Philippines.

Brand leader Mister Donut continues to launch new product developments in order to provide

more alternatives to its customers. The brands most famous innovation in 2012 is called

Mister Donut Bavarian Doubles, which features two Bavarian flavours in a single doughnut.

On the other hand, other players did not offer new variants, and stuck to their original

products. Most chained brands stick to customers loyalty.

While most independent players are found in neighbourhoods, most chained brands are

fixtures in high-traffic areas such as shopping centres, bus terminals and stations, tourist

spots, schools and wet markets. Street stalls/kiosks have longer operating hours than fast

food and full-service restaurants, and benefit from higher transactions per outlet. While some

customers eat in front of the kiosks, most customers take their snacks and meals and eat

them on the go. It should be noted that customers can often have a filling meal for Ps20 to

Ps25 from street stalls/kiosks.

The most successful brands in street stalls/kiosks bank on their ability to continually capture

the interest of diners through affordable pricing and consistency in food quality. It should be

noted that customers usually flock to novel and exciting offerings but will go back to their old

favourites. Affordability is a key success factor for operators but value in terms of taste and



product quality is also very important to customers. Having a unique product that is priced

affordably is important in street stalls/kiosks. On the other hand, a product might not be

unique, but giving customers a new way to experience it could guarantee success. For

instance, Mango-Ong sells green mango halves in different sauces, thereby allowing

customers to experience this traditional product in a new way (that is, with different sauces).

PROSPECTS After recording negative constant value sales CAGR over the review period, street

stalls/kiosks face brighter prospects. Its constant value sales CAGR over the forecast period

is expected to hit 2%. The operation of street stalls/kiosks will be supported by the large

number of lower- and middle-income consumers who gravitate towards more affordable and

highly accessible alternatives. The emergence of new concepts and new products among

chained players is expected to stir interest and encourage purchases from more customers.

The lower-priced franchising packages offered by chained operators will improve the number

and contribution of chained players in street stalls/kiosks. By the end of 2017, chained

operators are expected to control 23% of total outlets, 22% of total transactions and 29% of

total value sales in this category. Chained players will be at the forefront of introducing new

and exciting products. Concepts revolving around traditional products could further emerge

among chained operators taking advantage of urban dwellers penchant for native food.

The increasing number of competitors in the category could lead to the shrinking of sales and

transactions per outlet. With more players battling for patronage, operators would be faced

with the problem of how to keep customers. The competitive pricing scheme employed by

each brand makes switching relatively easy. It is expected that Filipinos will be more

adventurous and keen on trying out new brands and products in the category for the sake of

experience.

Street stalls/kiosks could also rival fast food chain operators, which are beefing up their

menus with more value meals. It should be noted that chains such as Jollibee, Chowking, 7-

Eleven and Ministop are offering rice meals with Ps39 to Ps49 price points in order to attract

more budget-conscious diners. This could pose competition with street stalls/kiosks offering

rice meals in the same price band.

With most Filipinos served by street stalls/kiosks being highly price-sensitive, price increases

in the forecast period will be very minimal. Operators are expected to maintain their pricing

scheme in order to ward off competition. Because of this, value sales per transaction will

remain stable in the next five years.

The milk tea craze in the Philippines will continue in the forecast period. Companies such as

Teabros Corporation and Serenitea Kitchen Inc will aggressively push for expansion, and

penetrate more locations through franchising. Instead of focusing on Metro Manila, these

companies will be seen to venture into key provincial cities in Northern Luzon and Vis-Min

areas.

CATEGORY DATA

Table 1 Street Stalls/Kiosks: Units/Outlets 2007-2012

outlets 2007 2008 2009 2010 2011 2012 Chained Street Stalls/ 6,431 7,010 7,238 7,600 7,828 8,014



Kiosks Independent Street 27,499 28,681 29,685 29,863 30,012 30,132 Stalls/Kiosks Street Stalls/Kiosks 33,930 35,691 36,923 37,463 37,840 38,146

Source: Euromonitor International from official statistics, trade associations, trade press, company research, trade interviews, trade sources

Table 2 Sales in Street Stalls/Kiosks: Number of Transactions 2007-2012

Mn transactions 2007 2008 2009 2010 2011 2012 Chained Street Stalls/ 399.4 390.6 388.7 395.0 408.0 415.1 Kiosks Independent Street 1,595.0 1,636.4 1,661.0 1,669.3 1,674.3 1,677.6 Stalls/Kiosks Street Stalls/Kiosks 1,994.3 2,027.0 2,049.7 2,064.3 2,082.3 2,092.8


Table 3 Sales in Street Stalls/Kiosks: Foodservice Value 2007-2012

Ps million 2007 2008 2009 2010 2011 2012 Chained Street Stalls/ 18,165.1 18,621.0 18,751.4 19,932.7 20,929.4 21,682.8 Kiosks Independent Street 47,637.4 51,210.2 54,538.8 56,993.1 58,417.9 60,579.4 Stalls/Kiosks Street Stalls/Kiosks 65,802.4 69,831.2 73,290.2 76,925.8 79,347.3 82,262.2


Table 4 Street Stalls/Kiosks: % Units/Outlets Growth 2007-2012

% Units/Outlets growth 2011/12 2007-12 CAGR 2007/12 Total Chained Street Stalls/Kiosks 2.4 4.5 24.6 Independent Street Stalls/Kiosks 0.4 1.8 9.6 Street Stalls/Kiosks 0.8 2.4 12.4


Table 5 Sales in Street Stalls/Kiosks: % Transaction Growth 2007-2012

% transaction growth 2011/12 2007-12 CAGR 2007/12 Total Chained Street Stalls/Kiosks 1.7 0.8 3.9 Independent Street Stalls/Kiosks 0.2 1.0 5.2 Street Stalls/Kiosks 0.5 1.0 4.9




Table 6 Sales in Street Stalls/Kiosks: % Foodservice Value Growth 2007-2012

% value growth 2011/12 2007-12 CAGR 2007/12 Total Chained Street Stalls/Kiosks 3.6 3.6 19.4 Independent Street Stalls/Kiosks 3.7 4.9 27.2 Street Stalls/Kiosks 3.7 4.6 25.0


Table 7 GBO Company Shares in Chained Street Stalls/Kiosks: % Foodservice Value 2008-2012

% value Company 2008 2009 2010 2011 2012 Duskin Co Ltd 14.2 14.1 14.3 14.6 15.0 Dunkin' Brands Group Inc 7.3 7.6 9.9 10.0 10.1 Burger Machine Inc 14.1 12.8 11.2 11.2 8.6 Waffle Time Inc 5.9 7.6 7.8 7.8 8.1 San Miguel Corp 5.4 5.9 6.1 6.1 5.9 Zagu Foods Corp 3.1 3.2 3.4 3.5 3.7 Nine Dots Corp 1.5 1.8 1.8 1.8 1.8 Fruit Magic Co 1.6 1.7 1.8 1.9 1.8 Kiss King of Balls Inc 4.9 4.4 4.3 1.8 1.6 Cinco Holdings Co 0.9 1.3 1.2 1.2 1.4 Sonyda Foods Corp 1.6 1.4 1.2 1.1 1.1 Desserts Plus Inc 1.1 0.9 1.0 1.0 1.1 Milkin Corp 0.9 0.6 0.6 0.7 0.8 Metro Grind Corp 1.2 1.2 1.3 0.7 0.7 Panaderia Antonio Corp 0.5 0.6 0.6 0.6 0.6 JEE Franchising Systems 0.4 0.4 0.4 0.4 0.4 Inc Emyth Inc 0.1 0.1 0.1 0.3 0.3 Buy the Bucket Corp 0.3 0.3 0.1 0.1 0.1 Pernod Ricard Groupe - - - - - Allied Domecq Plc - - - - - La Salsa Inc - - - - - Others 35.0 34.3 32.9 35.1 36.8 Total 100.0 100.0 100.0 100.0 100.0


Table 8 GBN Brand Shares in Chained Street Stalls/Kiosks: % Foodservice Value 2009-2012

% value Brand Global Brand Owner 2009 2010 2011 2012 Mister Donut Duskin Co Ltd 14.1 14.3 14.6 15.0 Dunkin' Donuts Dunkin' Brands Group Inc 7.6 9.9 10.0 10.1 Burger Machine Burger Machine Inc 12.8 11.2 11.2 8.6



Waffle Time Waffle Time Inc 7.6 7.8 7.8 8.1 Zagu Zagu Foods Corp 3.2 3.4 3.5 3.7 Tender Juicy Hotdog San Miguel Corp 3.0 3.1 3.1 3.1 Smokey's San Miguel Corp 2.9 3.0 3.0 2.9 Royal Carribean Nine Dots Corp 1.8 1.8 1.8 1.8 Jamaican Patties Fruit Magic Fruit Magic Co 1.7 1.8 1.9 1.8 Kiss King of Balls Kiss King of Balls Inc 4.4 4.3 1.8 1.6 Potato Corner Cinco Holdings Co 1.3 1.2 1.2 1.4 Sonyda Ichiban Sonyda Foods Corp 1.4 1.2 1.1 1.1 Brownies Unlimited Desserts Plus Inc 0.9 1.0 1.0 1.1 Fiorgelato Milkin Corp 0.6 0.6 0.7 0.8 Orbitz Metro Grind Corp 1.2 1.3 0.7 0.7 Plato Wraps Panaderia Antonio Corp 0.6 0.6 0.6 0.6 Chicharific JEE Franchising Systems 0.4 0.4 0.4 0.4 Inc Nacho King! Emyth Inc 0.1 0.1 0.3 0.3 Buy the Bucket Buy the Bucket Corp 0.3 0.1 0.1 0.1 Dunkin' Donuts Allied Domecq Plc - - - - All Star Desserts Plus Inc - - - - Tacomio La Salsa Inc - - - - Dunkin' Donuts Pernod Ricard Groupe - - - - Others 34.3 32.9 35.1 36.8 Total 100.0 100.0 100.0 100.0


Table 9 Forecast Street Stalls/Kiosks: Units/Outlets 2012-2017

outlets 2012 2013 2014 2015 2016 2017 Chained Street Stalls/ 8,014 8,222 8,453 8,707 8,986 9,292 Kiosks Independent Street 30,132 30,222 30,282 30,312 30,327 30,478 Stalls/Kiosks Street Stalls/Kiosks 38,146 38,444 38,735 39,019 39,313 39,770

Source: Euromonitor International from trade associations, trade press, company research, trade interviews, trade sources

Table 10 Forecast Sales in Street Stalls/Kiosks: Number of Transactions 2012-2017

Mn transactions 2012 2013 2014 2015 2016 2017 Chained Street Stalls/ 415.1 423.4 432.3 442.3 453.3 466.0 Kiosks Independent Street 1,677.6 1,679.3 1,680.1 1,678.5 1,675.9 1,672.6 Stalls/Kiosks Street Stalls/Kiosks 2,092.8 2,102.7 2,112.5 2,120.7 2,129.3 2,138.6


Table 11 Forecast Sales in Street Stalls/Kiosks: Foodservice Value 2012-2017



Ps million 2012 2013 2014 2015 2016 2017 Chained Street Stalls/ 21,682.8 22,289.9 22,958.6 23,716.3 24,546.3 25,479.1 Kiosks Independent Street 60,579.4 61,185.2 61,735.8 62,229.7 62,665.3 63,041.3 Stalls/Kiosks Street Stalls/Kiosks 82,262.2 83,475.1 84,694.4 85,946.0 87,211.7 88,520.4


Table 12 Forecast Street Stalls/Kiosks: % Units/Outlets Growth 2012-2017

% Units/Outlets growth 2012-17 CAGR 2012/17 TOTAL Chained Street Stalls/Kiosks 3.0 15.9 Independent Street Stalls/Kiosks 0.2 1.1 Street Stalls/Kiosks 0.8 4.3


Table 13 Forecast Sales in Street Stalls/Kiosks: % Transaction Growth 2012-2017

% transaction growth 2012-17 CAGR 2012/17 TOTAL Chained Street Stalls/Kiosks 2.3 12.3 Independent Street Stalls/Kiosks -0.1 -0.3 Street Stalls/Kiosks 0.4 2.2


Table 14 Forecast Sales in Street Stalls/Kiosks: % Foodservice Value Growth 2012-2017

% value growth 2012-17 CAGR 2012/17 TOTAL Chained Street Stalls/Kiosks 3.3 17.5 Independent Street Stalls/Kiosks 0.8 4.1 Street Stalls/Kiosks 1.5 7.6


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