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September 20, 2017

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Food service sector revenue up 2.5 percent year-on-year

TAIPEI, Taiwan -- Food service industry revenue for the period between January and August rose 2.5 percent year-on-year to a record-high NT$293.7 billion, according to a report released by the Economics Ministry on Monday.

Fed by the nation's growing appetite for dining out, food service sales for the whole year could also hit a record high, said ministry officials.

In fact, the food service sector has been growing by the year, as domestic recreational travel becomes increasingly popular. Food-related sales totaled NT$424.1 billion last year, with restaurants collecting 85 percent of the revenue and drink stores accounting for 11 percent.

To meet market demand, food operators have adopted creative modes of interior design, developed innovative products and pushed new brands into the market, the Economics Ministry said.

The number of fast food brands grew from 203 in 2011 to 251 in 2015 and the number of cafe chains increased from 61 to 90 over the same period, according to the Taiwan Chain Stores and Franchise Association. In the restaurant sector, the number increased from 259 to 413, and in the drink business it grew from 101 to 151.

Food service companies have opted for a multi-branding strategy in a bid to seize greater market share and to provide more options to consumers.

Due to competition, especially for breakfast options, the total number of fast food joints fell from 18,522 in 2011 to 18,294 in 2015. The number of cafes rose, however, from 1,721 to 2,000. The number of restaurants increased from 2,663 to 4,144, and the number of drink stores jumped from 5,974 to 6,600.

Store Expansion Domestically and Abroad to Continue

The trend is likely to continue, as surveys showed that food service companies, in order to stay competitive, intend to open more stores in the domestic market. Among large businesses that employ 100 or more workers, roughly 63 percent say they plan to open new stores in the future, while 21 percent of small and medium-sized companies indicated the same.

Locations close to department stores, commercial districts or MRT stations are the top picks for establishing new stores, the survey showed.

Despite food operators' plans to further cultivate the domestic market, overseas sales have gradually taken hold. Financial data from the nation's six listed food companies show that foreign revenue in 2015 accounted for 46.9 percent of total sales, down from 59 percent in 2012. Last year marked the first time foreign revenue surpassed domestic sales for the six companies.

When asked which area of business operations deserved the greatest attention, 62 percent cited improvements in food safety control and audits as top priority, followed by 40 percent who cited reducing raw material costs, and another 40 percent who cited new product research and development as first priority.

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