Up to 85 Percent of Restaurant Owners Are Seeing Measurable Sales Decline

The Philippine restaurant industry is reaching a critical point as energy costs, mall rentals, and shifting consumer habits affect margins across the board. Recent data from the Restaurant Owners of the Philippines (RestoPH) reveals that nearly 85 percent of its members are recording measurable sales declines. For most of them, the drop is substantial, with 79 percent reporting a 10 to 30 percent slump in revenue.

Why? On the big picture, it's the global oil crisis amid the tension in the Middle East. But specifically, it's the rising costs of LPG.

While a mid-sized restaurant typically consumes about three 50kg LPG tanks per week, the price surge since late February has been staggering. Costs jumped from approximately P3,300 to a peak of P7,000 per 50kg tank, forcing mid-sized outlets to shell out roughly P84,000 a month just to keep the stoves running.

RestoPH President David P. Sison explains that the pressure is being felt universally, "Our members are feeling [the energy crisis] across the board. Foot traffic is down, especially in mall and non-mall-based concepts, and we are seeing clear trading-down behavior: smaller group sizes, fewer add-ons, and a shift toward value meals and solo dining options. Average check sizes have softened noticeably since the first quarter of the year."

For the 53 percent of RestoPH members located within malls, the energy crisis made the already difficult environment much worse. High rent and rising utility costs for power and water have led many to conclude that the traditional mall-based model is becoming unsustainable. Currently, only about 26 percent of operators describe their costs as "manageable."

The internal survey indicates that while 72 percent of businesses are pushing through, the strain is manifesting in significant operational and labor shifts.

"The industry is absorbing the pressure for now, but this is not sustainable," Sison said.

The crisis is also reshaping how Filipinos eat out. "Diners are eating out less frequently, and when they do, they’re being more deliberate with their spend.”

With 42 percent of customers now spending below P500 per visit, the focus has shifted from growth to pure protection of margins. This has led to a defensive posture regarding employment: 63 percent of businesses have implemented a total hiring freeze, while 19 percent have been forced to reduce their existing staff.

To survive, RestoPH members are pivoting toward leaner operations—trimming menus to minimize waste, leaning harder into delivery and takeout to offset quiet dining rooms, and using loyalty promos to maintain frequency. While the suspension of the excise tax on fuel has provided a slight rollback, the structural costs of rent and utilities continue to keep the country’s 26,000+ registered food service outlets on high alert.

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