Five Reasons JustKitchen is Expanding into the Philippines
On November 15, 2021 JustKitchen announced its expansion into the Philippines. In this post, we explain why we believe the Philippines represents an ideal market for JustKitchen’s hub-and-spoke ghost kitchen model, and why we see so much potential in this burgeoning consumer market.
1.) The Philippines is home to a thriving population and a healthy, growing economy:
The Philippines has a population of around 111 million, and is the second largest consumer market in ASEAN (Association of Southeast Asian Nations), after Indonesia. The country’s GDP consistently grew at around 6% a year from 2010 – 2019, reaching US $361.5 billion in 2020, and is expected to increase substantially to over US $540 billion by 2026.
“The Philippines is set to experience the highest consumption growth in ASEAN by 2030. At the centre of the country’s consumption spending is food and beverage (F&B), which will account for up to 40 per cent of consumption, according to the WEF.” – UOB ASEAN Insights, Sept 2021
2.) A large workforce and a growing middle-class with disposable income to spare:
The Philippines is home to a large, young and well-educated middle class that is growing quickly. Millennials (born between 1981 and 1996) and Gen Z (born between 1997 and 2015) comprise the majority of the population of the Philippines, with the median age being 25.7 years. A young and discerning working class has emerged and is known to prioritize spending money on food, especially if it is convenient, high-quality, and affordable.
“The foodservice market in the Philippines is highly driven by the rise in value-conscious consumers willing to try new restaurants with a wide range of menu options, including interesting international and local cuisines, which also cater to increasingly busy lifestyles.” – Mordor Intelligence Philippines Foodservice Market Forecast, 2021- 2016
We believe JustKitchen’s portfolio of proprietary and third-party delivery-only brands is a perfect fit for this market. Our menus feature a wide variety of Asian and Western cuisines from both fast casual and upscale brands, with several of our proprietary brands catering to health-conscious but time-strapped young professionals.
3.) The Philippines has one of the highest rates of online engagement in the world:
Filipinos are extremely internet savvy, spending an average of 10 hours on the internet each day, in contrast to the global average of 6 hours 42 mins. This robust level of internet penetration, combined with rising access to smartphones and simplified e-banking systems have resulted in Filipinos making more purchases through online channels. This is beneficial for delivery-only brands like JustKitchen’s, as social media promotional campaigns are one of our main strategies for increasing consumer engagement and creating brand awareness. Growing consumer engagement on social media platforms in the Philippines is key factors that will have a positive impact on the online food delivery services market in the region, according to Mordor Intelligence.
4.) More than 43% of Filipinos order food from food delivery apps at least once per week:
According to Statista, of the combined 43% of people in the Philippines that order from food delivery apps at least once per week, 23% do so 1-2 times a week, 12% do so 3-6 times per week, 3% do so once per day, and 5% order food from apps several times a day. Additionally, Filipinos seem to spend a fair amount per order. The average ARPU in the online food delivery segment in the Philippines is projected to be US$28.67 in 2021.
5.) Dense, highly urbanized population:
The total population density of the Philippines is 368 per square kilometre, but with 45.7% of the country’s total population living in urban areas, it is highly skewed toward cities. In fact Manila is the world’s most densely populated city with 42,857 people per square kilometer, or 111,002 people per square mile, all contained within an area of 42.88 square kilometers (16.56 square miles).
JustKitchen’s hub-and-spoke model, in which there are central “hub” kitchens that serve smaller spoke kitchens located throughout high-density urban zones, was built for this exact scenario. Why? Our larger hub kitchens are located outside of central cities and focus on early food preparation such as washing, chopping and marinating ingredients. These ingredients are then sent daily to our smaller spoke kitchens – located throughout heavily populated urban areas – where last-minute food prep such as cooking, assembling and packaging for delivery takes place. Because orders are automatically routed to the spoke kitchen nearest to the customer, this model allows JustKitchen and to reach a greater number of customers in both crowded and under-served areas. It also means we can deliver food much faster – within 30 minutes or less – so our customers enjoy food that is fresher, faster.