Surviving in the food business

1. The drive for healthy products has created a climate of ingredient demonization with focus on one particular ingredient and are like a dog with a bone – we’ve seen it with fat and now the attention has turned to sugar. This is creating a culture of ‘cut it out’, where consumers are choosing to exclude certain ingredients from their diet in the hope that this will improve their health and well-being. It is this which is fueling the healthy growth in the free-from markets, such as gluten-free and lactose-free.

2. Right now, there is a flood on beverage businesses, particular in teas. The milk tea industry will clean itself out. The strong will survive and the weak will go down the drain. There are always a few people who jump on a wave and ride it as long as it is going and then disappear just like every wave is disappearing.

3. There might be other segments coming and going like we had in the recent past. Consider the Mango craze we had in the last 2 years but now they are already leveling as they reached their plateau and some even in the down trend.

4. Delivery: more and more people use food delivery services which affects the food industry as well. While initially most owners found it a good idea, there is now a dark cloud over their head coz with food deliveries big outlets can’t get full occupancy anymore and particular restaurants are suffering where they cannot fill anymore the sitting capacity for which they pay rent and on the other hand have to pay 25% to the delivery company as share. Luckily the cart and kiosk businesses do not suffer as restaurant owners.

5. Black Kitchen: That will be the trend in the food deliver business. A black kitchen is operated by a food delivery company. They set up a commissary compound and invite the top food companies from whom they previously picked up to set up a kitchen only without any dine-in or pickup facility, just for the exclusive use of the delivery company. This is for food operators a damned if you do – damned if you don’t situation. It will be good to be invited by the delivery company to be in their black kitchen because that means you have access to their delivery system in the future at a higher volume but all retail outlets will suffer because they no longer pick up from the outlets. Mall food outlets will be safe from the Black Kitchens.

6. Payment options: more and more payment options are flooding the market and stores, even kiosk have to adapt to it accepting cashless payments, if they like it or not but that is trend that will go stronger every year and one day cash will be obsolete like so many other items we thought can never live without but are no longer needed. Think of a fax machine, alarm clock, or Kodak films, all products which are no longer needed or not even available anymore today.

7. Innovation. Business operators have to be innovative to keep the ship flowing and every Franchisee can be part of it. If you are a Franchisee and you have any idea, share it with the Franchisor. Every franchisor will be happy if you come up with ideas. You cannot implement ideas; they have to be submitted to the Franchisor but if you have any good idea then please submit them and if it’s as good as you think it is then Franchisor will be very happy to make it part of the system.

8. What will franchising bring in the future. The Philippines has still one of the biggest growth regions in Franchising since we are a country with many islands and areas still under development. Look at the Calabarzon, how rapidly it grew to urban centers with sub-divisions, infrastructure and shopping facilities. Huge growth potentials are in particular in provinces north of Pampanga, in the Bicol region, and throughout Visayas and Mindanao and a number of companies can look also at international markets. 38 of our Filipino Franchise clients have already Franchisees outside the Philippines. On the global market we have still excellent growth areas in the Middle East and other parts of Asia like Vietnam, Myanmar and Papua New Guinea among others.

9. While we have social media and food delivery, Filipinos still love to go out and hang out with friends and we do that preferable in a mall, unlike in other countries where there are big choices of venues for meeting peers, we are mall rats. Therefore, retail outlets, food and beverage outlets, carts, kiosk and counters will still do good in malls for a long period of time since malls are our preferred social gathering place. I am more worried about food and beverage outlets outside malls which will be more affected by black kitchens. While malls charge higher rent and regulate opening hours, it is still the place to be to survive for a lot of businesses. Changes will not only reflect the food and beverage industry but all other businesses. Retail businesses will shift more to online selling than store based and even the vanity sector will be affected, as the next target of delivery companies are to deliver the salon services to the client’s home.

10. Social media is probably the most important aspect of growing a business today and even just to announce a new flavor or a new product line, you no longer launch them in the store or outlets, you introduce them on social media first before you offer them in your outlets.