Restaurants industry accounts for majority of establishments

The final results of the 2016 Annual Survey of Philippine Business and Industry (ASPBI) showed that a total of 30,889 establishments in the formal sector of the economy were engaged in Accommodation and Food Service Activities.

Industry-wise, restaurants led the sector with 7,218 establishments, accounting for 23.4 percent of the total number of establishments. This was followed by cafeterias with 4,725 establishments (15.3%) and fast-food chains with 4,411 establishments (14.3%). Other industries with more than a thousand in number of establishments were the following:

• Refreshments stands, kiosk and counters - 4,209 establishments
• Hotels and motels - 2,767 establishments
• Other restaurants and mobile food service activities, n.e.c. - 1,679 establishments
• Bars and cocktail lounges - 1,548 establishments
• Resort hotels - 1,112 establishments

Figure 1 displays the percentage distribution of Accommodation and Food Service Activities establishments by industry sub-class in 2016.

Fast-food chains industry employs the most number of workers

Total employment generated by the sector reached 495,973 workers in 2016. Paid employees constituted 485,422 or 97.9 percent of the total and the remaining were working owners and unpaid workers.

Among industries, fast-food chains employed the most number of workers with 138,051 (27.8%). Restaurants came second with 130,965 workers (26.4%). On third place were hotels and motels with 69,828 workers or 14.1 percent.

Figure 2 shows the distribution of employment for all Accommodation and Food Service Activities establishments by industry sub-class in 2016.

The average number of workers per establishment or the sector was recorded at 16.

Industry-wise, seven surpassed the national average level in 2016 and these were the following:

• Fast-food chains, 31 workers per establishment
• Resort hotels, 29 workers per establishments
• Camping sites/facilities, 28 workers per establishment
• Hotels and motels, 25 workers per establishment
• Restaurants and condotels, 18 workers per establishment each
• Event catering, 17 workers per establishment

Hotels and motels industry pays the highest average annual compensation

In 2016, the sector paid a total compensation of PHP74.2 billion, translating to an average annual compensation of PHP152.8 thousand per employee.

By industry sub-class, fast-food chains paid the highest compensation of PHP22.1 billion or 29.8 percent of the total. Restaurants followed with PHP19.5 billion (26.3%). Hotels and motels ranked third with PHP14.8 billion (20.0%).

Furthermore, five industries surpassed the national average annual compensation and these were the following:

• Hotels and motels, PHP214,826 per employee
• Camping sites/facilities, PHP177,515 per employee
• Fast-food chains, PHP161,104 per employee
• Event catering, PHP160,826 per employee
• Other short term accommodation activities, n.e.c., PHP153,412 per employee

Figure 3 shows the average annual compensation per employee of the top five industries for all establishments of the sector in 2016.

Fast-food chains industry generates the biggest share in income and expense

Total income earned by the sector in 2016 was estimated at PHP551.1 billion.

At the industry level, fast-food chains generated the highest income of PHP203.0 billion (36.8%). This was followed by restaurants with PHP129.8 billion or 23.5 percent of the total.

Other industries that contributed more than PHP20.0 billion in terms of total income in 2016 were as follows:

• Hotels and motels, PHP90.2 billion(16.4%)
• Resort hotels, PHP29.6 billion (5.4%)
• Cafeterias, PHP27.9 billion (5.1%)
• Refreshment stands, kiosks and counters, PHP25.9 billion (4.7%)

Meanwhile, the sector incurred a total expense of PHP477.7 billion in 2016

Among industries, fast-food chains spent the highest expense of PHP181.7 billion (38.0%). Restaurants followed with a total expense amounting to P112.5 billion (23.5%). Completing the top three in terms of expense incurred was hotels and motels with PHP75.5 billion (15.8%).

Other industries that spent more than PHP20.0 billion worth of expense were the following:

• Cafeterias, PHP24.3 billion (5.1%)
• Resort hotels, PHP23.6 billion (4.9%)
• Refreshment stands, kiosks and counters, PHP21.9 billion (4.6%)

Figure 4 shows the top five industries in terms of income and expense for all Accommodation and Food Service Activities establishments in 2016.

Income-expense ratio stands at 1.15

The income generated per peso expense for the sector stood at PHP1.15. This means that for every peso spent, a corresponding income of PHP1.15 was generated.

By industry, other beverage serving activities, n.e.c. recorded the highest income-expense ratio of 1.52, followed by resort hotels and event catering with income-expense ratio of 1.25 each. Third in place was night clubs with income-expense ratio of 1.24.

Fast-food chains industry generates the highest value added

Value added generated by the sector was estimated at PHP182.3 billion in 2016.

The top three contributors to the total value added in 2016 accounted for 75.0 percent of the total or PHP136.6 billion. These industries comprised the following:

• Fast-food chains, PHP52.2 billion (28.6%)
• Hotels and motels, PHP43.2 billion (23.7%)
• Restaurants, PHP41.2 billion (22.6%)

Most labor productive workers are in hotels and motels industry

Labor productivity, (value added per total employment) for Accommodation and Food Service Activities sector stood at PHP367.5 thousand per worker.

The most labor productive workers in 2016 were registered in hotels and motels establishments with PHP618.8 thousand per worker. Other beverage serving activities, n.e.c. followed with labor productivity of PHP569.7 thousand per worker. Other restaurants and mobile food service activities, n.e.c. placed third with labor productivity of PHP503.1 thousand per worker.

Figure 5 displays the top five industries in terms of labor productivity for all establishments of the sector in 2016.

Gross additions to fixed assets reach PHP15.2 billion

In 2016, gross additions to fixed assets (capital expenditures less sale of fixed assets) acquired by the sector was valued at PHP15.2 billion.

Among industries, four acquired more than PHP1.0 billion worth of fixed assets each or a combined share of 86.5 percent of the total gross additions for the sector. These four industries were the following:

• Fast-food chains, PHP7.0 billion (45.8%)
• Hotels and motels, PHP2.7 billion (17.8%)
• Dormitories/boarding houses, PHP1.8 billion (11.9%)
• Resort hotels, PHP1.7 billion (11.0%)

Total change in inventory amounts to PHP2.8 billion

Change in inventories, defined as the value of ending less beginning inventory was valued at PHP2.8 billion in 2016.

Industry-wise, the top three industries recorded a total change in inventories of PHP1.9 billion or 65.8 percent of the total. Fast-food chains had the highest change in inventories worth PHP781.1 million (27.5%). This was followed by restaurants with PHP546.1 million (19.2%), and refreshments stands, kiosks and counters with PHP542.3 million (19.1%).

Sales from e-commerce transaction totals to PHP5.6 billion

E-commerce sales generated by the sector amounted to PHP5.6 billion in 2016. Among industries, three reported e-commerce transactions during the year. Hotels and motels recorded the highest e-commerce transactions worth PHP4.0 billion or 71.2 percent of the total for the sector. Resort hotels and fast-food chains followed with e-commerce sales of PHP1.5 billion (26.7%) and PHP119.3 million (2.1%), respectively.

TECHNICAL NOTES

Introduction

This Special Release presents the preliminary results of the 2016 Annual Survey of Philippine Business and Industry (ASPBI) for all Accommodation and Food Service Activities establishments (Sector I).

The 2016 ASPBI is one of the designated statistical activities of the Philippine Statistics Authority (PSA). Data collected from the survey provide information on the levels, structure, performance, and trends of economic activities of the formal sector in the entire country for the year 2016.

The survey was conducted nationwide in 2017 with the year 2016 as the reference period of data, except for employment which is as of 15 November 2016.

Establishment Data Management System (EDMS) was utilized in the decentralized processing of 2016 ASPBI questionnaires in the provinces as well as the online accomplishment of questionnaire through the PSA website.

Data are presented by industry sub-class or 5-digit 2009 Philippine Standard Industrial Classification (PSIC) at the national and regional level..

Legal Authority

The conduct of the 2016 ASPBI is authorized under Republic Act 10625 known as the Philippine Statistical Act of 2013, which mandates reorganizing and strengthening of the Philippine Statistical System (PSS), its agencies and instrumentalities.

Scope and Coverage

The 2016 ASPBI covered establishments engaged in 18 economic sectors classified under the 2009 PSIC, namely:  

• Agriculture, Forestry and Fishing (A)
• Mining and Quarrying (B)
• Manufacturing (C)
• Electricity, Gas, Steam, and Air Conditioning Supply (D)
• Water Supply; Sewerage, Waste Management and Remediation Activities (E)
• Construction (F)
• Wholesale and Retail Trade; Repair of Motor Vehicles and Motorcycles (G)
• Transportation and Storage (H)
• Accommodation and Food Service Activities (I)
• Information and Communication (J)
• Financial and Insurance Activities (K)
• Real Estate Activities (L)
• Professional, Scientific and Technical Activities (M)
• Administrative and Support Service Activities (N)
• Education (P)
• Human Health and Social Work Activities (Q)
• Arts, Entertainment and Recreation (R)
• Other Service Activities (S)

The survey was confined to the formal sector of the economy, which consists of the following:  

•  Corporations and partnerships
•  Cooperatives and foundations
•  Single proprietorship with employment of 10 and over
•  Single proprietorship with branches

Hence, the 2016 ASPBI covered only the following economic units:

• All establishments with total employment (TE) of 10 or more, and;
• All establishments with TE of less than 10, except those establishments with Legal Organization = 1 (single proprietorship) and Economic Organization = 1 (single establishment), that are engaged in economic activities classified according to the 2009 Philippine Standard Industrial Classification (PSIC).

Frame of Establishments

The frame for the 2016 ASPBI was extracted from the 2016 List of Establishments (LE). The estimated number of establishments in operation in the country in 2016 totaled to 902,213. About 294,494 establishments (32.6% of the total establishments) belong to the formal sector of which 255,403 (86.7%) comprised the establishment frame. This frame was used to draw the sample establishments for the survey.

Unit of Enumeration

The unit of enumeration for the 2016 ASPBI is the establishment. An establishment is defined as an economic unit under a single ownership or control which engages in one or predominantly one kind of activity at a single fixed location.

Taxonomy of Establishments

An establishment is categorized by its economic organization, legal organization, industrial classification, employment size and geographic location.

Economic Organization refers to the organizational structure or role of the establishment in the organization. An establishment may be single establishment, branch, establishment and main office with branches elsewhere, main office only, and ancillary unit other than main office. 

Legal Organization refers to the legal form of the economic entity which owns the establishment. An establishment may be single proprietorship, partnership, government corporation, stock corporation, non-stock corporation, and cooperative. 

Industrial Classification of an economic unit was determined by the activity from which it derives its major income or revenue. The 2009 PSIC which was approved for adoption by government agencies and instrumentalities through PSA Resolution No. 1 Series 2017-158 signed on 14 February 2017 was utilized to classify economic units according to their economic activities.

Size of an establishment is determined by its total employment (TE) as of specific date. Total employment (TE) refers to the total number of persons who work in or for the establishment.

This includes paid employees, working owners, unpaid workers and all employees who work full-time or part-time including seasonal workers. Included also are persons on short term leave such as those on sick, vacation or annual leaves and on strike.

Geographic Classification  refers to the grouping of establishments by geographic area using the Philippine Standard Geographic Code (PSGC) classification. The PSGC contains the latest updates on the official number of regions, provinces, cities, municipalities, and barangays in the Philippines. The PSGC as of 31 December 2016 was used for the 2016 ASPBI.

Methodology

Sampling Design

Selection of sample establishment for the 2016 ASPBI was done using stratified systematic sampling with 5-digit PSIC serving as industry strata and employment size as the second stratification variable.

For establishments with TE of Less Than 20.

a.  Non-Certainty Stratum

The estimate of the total of a characteristic   for the non-certainty employment strata in TE of 20 and over for an industry domain in each region 

where:

      s = denotes the non-certainty employment strata in TE of 20           

   X_sj = value of the j^th establishment in the non-certainty employment stratum in TE of less than 20 in S^th industry domain

       j = 1,2,3,..., n_s establishments                                                 

  W_sj = weight of the j^th establishment in the non-certainty employment stratum in TE of less than 20 in S^th industry domain

   N_s = total number of establishments in the non-certainty employment stratum in TE of less than 20 in Sth industry domain

    n_s = number of sample establishments in the non-certainty employment stratum in TE of less than 20 in Sth industry domain

 

b.  Certainty Stratum

       The total of a characteristic (X_c ) for the certainty employment stratum in an industry domain in each region

where:

       c = denotes the certainty employment strata in TE of less than 20 in the cth industry       

   X_cj = value of the j^th establishment in the certainty employment strata in TE of less than 20 in the c^th industry domain

       j = 1,2,3,..., m_c establishments                                                 

  m_c = number of establishments in the certainty employment strata in TE of less than 20 in the c^th industry domain

 

c.  Total Estimate for TE of Less Than 20

For all sections except B and C, national level estimates of the total of a characteristic   for the industry domain was obtained by aggregating the estimates for all employment strata  (non-certainty and certainty) in the same industry domain,

 

where d denotes the industry domains in each region

For establishments with TE of 20 and over, the 18 administrative regions serve as the geographic domains while the 5-digit level of the 2009 PSIC serves as the industry domains.

 

Estimation Procedure for Establishments with TE of 20 and Over

a.  Non-Certainty Stratum (strata of TE 20 to 49 and TE 50 to 99)

Sections A, C, E, F, G, H, I, J, K, L, M, N, P, Q, R and S.

       The estimate of the total of a characteristic  for the non-certainty employment strata in TE of 20 and over for an industry domain in each region 

 

where:

      s = denotes the non-certainty employment strata in TE of 20 to 49 and TE 50 TO 99        

      p = 1, 2,..., 18 regions (geographic domains)        

   X_spj = value of the j^thestablishment in the non-certainty employment strata with TE of 20 to 49 and TE 50 to 99 for an industry domain in each region  

       j = 1,2,3,..., n_sp establishments                                                 

  W_spj = weight of the j^th establishment in the non-certainty employment strata with TE of 20 to 49 and TE 50 to 99 for an industry domain in each region                                                                                                                                                                                      

   N_sp = total number of establishments in the non-certainty employment strata in TE of 20 to 49 and TE 50 to 99 for an industry domain in each region

    n_sp = number of sample establishments in the non-certainty employment strata in TE of 20 to 49 and TE 50 to 99 for an industry domain in each region

 

b.  Certainty Stratum (Establishments under the following: Section B and D, ICT core industries, BPM industries, GOCC's and with TE 100 and over)

       The total of a characteristic for the certainty employment stratum in an industry domain in each region

where:

       c = denotes the certainty employment strata in TE of 20 and over        

       p = 1,2,...18 regions (geographic domains)

   X_cpj = value of the j^th establishment in the certainty employment strata in TE of 20 and over for an industry domain in each region 

       j = 1,2,3,..., m_cp establishments                                                 

  m_cp = number of establishments in the certainty employment strata in TE of 20 and over in an industry domain within each region

 

   c.  Total Estimate for TE of 20 and Over

The estimate of the total of a characteristic  for the industry domain in each region (geopraphic domain) was obtained by aggregating the estimated for all employment strata  (non-certainty and certainty) in the same industry domain,

 

where dp denotes the industry domains in each region

National level estimate of the the characteristic by industry domain were obtained by aggregating separately the estimates  for  the particular industry domain from all the regions,

 

Weight Adjusment Factor for Non-Response

To account for non-response in the non-certainty strata, the adjusment factors, and (n/n') was multipled with the sampling weight (W) of each of the sampling unit. The sampling weight which is defined as N/n was recomputed as

Thus, the adjusted weight (W'_spj) for the non-certainty employment stratum for the industry domain with TE 20-99 was

Where:

 N_sp = total number of establishments in the non-certainty employment stratum with TE 20-99 for the industry domain within each geographic domain (region)

 n'_sp = number of responding establishments in the non-certainty employment stratum with TE of 20-99 for the industry domain within each geographic domain (region)

 

Weight Adjusment Factor for Non-Response

To account for non-response in the non-certainty strata, the adjusment factors, and (n/n') was multipled with the sampling weight (W) of each of the sampling unit. The sampling weight which is defined as N/n was recomputed as

Thus, the adjusted weight (W'_spj) for the non-certainty employment stratum for the industry domain with TE 20-99 was

Where:

 N_sp = total number of establishments in the non-certainty employment stratum with TE 20-99 for the industry domain within each geographic domain (region)

 n'_sp = number of responding establishments in the non-certainty employment stratum with TE of 20-99 for the industry domain within each geographic domain (region)

Response Rate

Response rate for Accommodation and Food Service Activities sector was 86.8 percent (1,234 out of 1,422 establishments). This included receipts of "good" questionnaires, partially accomplished questionnaires, reports of closed, moved out or out of scope establishments.

Of the total responses, 31 establishments responded online.

Reports of the remaining non-reporting establishments were taken from other available administrative data sources and financial statements from Securities and Exchange Commission (SEC). However, there were establishments which were found to be duplicates, out-of-scope and out of business in 2016.

Limitation of Data

Only the formal sector was covered in the survey.

Concepts and Definitions of Terms

Establishment is an economic unit under a single ownership and control, i. e. under a single entity, engaged in one or predominantly one kind of economic activity at a single fixed location.

Economic activity is the establishment’s source of income. If the establishment is engaged in several activities, its main economic activity is that which earns the biggest income or revenue.

Total employment is the number of persons who worked in for the establishment as of 15 November 2016.

Paid employees are all persons working in the establishment and receiving pay, as well as those working away from the establishment paid by and under the control of the establishment. Included are all employees on sick leave, paid vacation or holiday. Excluded are consultants, home workers, receiving pure commissions only, and workers on indefinite leave.

Compensation is the sum of salaries and wages, separation/retirement/terminal pay, gratuities, and payments made by the employer in behalf of the employees such as contribution to SSS/GSIS, ECC, PhilHealth, Pag-ibig, etc.

Salaries and wages are payments in cash or in kind to all employees, prior to deductions for employee’s contributions to SSS/GSIS, withholding tax, etc.  Included are total basic pay, overtime pay and other benefits.

Income or Revenue refers to cash received and receivables for goods/products and by-products sold and services rendered. Valuation is at producer prices (ex-establishment) net of discounts and allowances, including duties and taxes but excluding subsidies.

E-commerce refers to the selling of products or services over electronic systems such as Internet Protocol-based networks and other computer networks. Electronic Data Interchange (EDI) network, or other on-line system. Excluded are orders received from telephone, facsimile and e-mails.

Expense are cost incurred by the establishment during the year whether paid or payable. This is treated on a consumed basis. Valuation is at purchaser price including taxes and other charges, net of rebates, returns and allowances. Goods and services received by the establishment from other establishments of the same enterprise are valued as though purchased.

Value added  is gross output less intermediate input. Gross output for Accommodation and Food Service Activities sector is the sum of the total income (less interest income, rent income from land, dividend income, royalty income and franchise income), capital expenditures of fixed assets produced on own account and change in inventories. Intermediate input is equal to the sum of the following expense items: materials and supplies purchased; fuels, lubricants, oils and greases purchased; electricity purchased, water purchased; industrial services done by others; non-industrial services done by others (less rent expense for land); goods purchased for resale; research and development expense; environmental protection expense; royalty fee; franchise fee; and other expense.