Favorable trends such as rising income levels and urbanization are supporting the growth of “eating out” across Southeast Asia. In countries like Malaysia, Indonesia, the Philippines and Vietnam, growing populations and demographics (the young are more likely to dine out than older individuals) are further boosting demand.

Consumer expenditure at foodservice outlets has grown by 8% annually in the six large Southeast Asian countries over the past decade, to close to US$120 billion today. It is estimated that 20,000 new food outlets open across the region every year.

Yet the foodservice industry suffers from insufficient coverage by suppliers, distributors and retailers alike. A significant proportion of operators, primarily the small independent outlets, rely on traditional markets to meet many of their needs, particularly in fresh food. Many operators they are forced to purchase from many different channels, making the process of running a business all the more difficult.

This Executive Insights examines the rise of new models emerging across Southeast Asia for grocery retailers to capture a greater share of foodservice expenditure. The level of changes to the business model, organization and capabilities required will differ based on the scale of the retailer’s ambitions in this untapped market.

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