12 Ways on How to Run a Successful Canteen Business in the Philippines


The food retail business is popular among Filipinos because it can take on different forms. If you want to pursue your passion for food, you can buy a food franchise, set up your own restaurant, get into food delivery service or manage a canteen business.

Of these, the canteen may provide you the best conditions for earning a profit because of 3 reasons:

  • Captive Market – The building administrator solicits bids for canteen operators so that tenants and visitors can have an immediate place for food and refreshments. A canteen provides the building another source of revenue and a captive market for the operator.
  • Lower Marketing Expenses – With a captive market, the canteen operator does not have to spend much on marketing and promotional activities. Whether it’s a school, office or factory canteen, most people would prefer to stay close their area especially during inclement weather and heavy traffic.
  • Lower Overhead Costs – As many food retailers know rent is a profit killer. The rental rates, especially in the popular malls, can be exorbitant. In some malls, rent is calculated at 34% of gross sales. So if your food cost is 50%, what are your chances of making a profit once you’ve paid off wages, utilities, and benefits?

In the canteen business, you can enter into a consignee arrangement whereby rent is calculated as a percentage of gross sales with utilities factored in. The rates can vary, but they are nowhere near the rates of a commercial mall.

As someone who ran a chain of fast-food restaurants from 1998 to 2008, I know what it was like to operate as a food retailer in a mall, a non-mall location and as a consignee.

Our worst performing restaurants were located inside a mall. In addition to onerous rental agreements, the competition was tight, and the mall-going public did not ring in the registers.

In terms of sales volume, the non-mall location did the best. However, the location with the consignee arrangement turned in the most profit.

If you can land a consignee arrangement for a canteen, you’ve won more than half of the battle for profitability.

Types of Canteens

There are four types of canteens. Each one has their advantages and disadvantages:

School Canteen

Students prefer to buy food at the canteen than eat their baon because they want their meals hot and fresh.

School canteens are busy throughout the day. In addition to students, they also cater to parents, teachers, drivers, nannies, school personnel, and visitors.

Unfortunately, you only get busy five days a week and nine months of the year. Plus if there are holidays and school cancellations due to inclement weather you don’t make any sale.

Office Canteen

The office canteen gives building tenants and visitors an affordable option to eat hot home-cooked meals without having to worry about time, traffic and unpredictable weather.

In my days as a 9-to-5 employee, I enjoyed the canteen food at the old Royal Match building in Ayala Avenue and Citibank.

Over the last ten years, the office canteen has evolved into exquisite food courts. There are more food varieties, and the interiors are elegant.

While you do get good foot traffic here, business on weekends screeches to a near halt.

If you are thinking of getting into the food court setting, some lessors allow only one concept per tenant which is good for protecting your market. But the rent is on the high side; almost comparable to a mall’s.

Factory Canteen

With a factory canteen, you are busy almost seven days a week. You cater to a market that could reach thousands of people every day depending on the size and activity of the factory.

Factory owners want to make sure their people are well-fed, so they are usually more reasonable when it comes to negotiating terms. Most will only charge a small percentage of sales as rent which is inclusive of utilities.

However, there is a catch.

You will not be allowed to increase prices.

This will be a problem especially at this time when factors of production are rising, and the Philippine Peso is nearing its worst levels. Your profit margins will be seriously compromised.

Remember, the Philippines is a net importer. The products that you believe are “100% Proudly Filipino” have imported components. And as you know, when oil goes up, everything goes up.


The carinderia is the smaller scale version of the canteen. You see them located in high-traffic areas near schools, government offices and places populated by the informal sector.

Related: How to Start a Carinderia with Small Capital in the Philippines

Some carinderias are set up straight out of the proprietor’s home. It’s done in make-shift fashion; monobloc tables and chairs within proximity of a stall that cooks the food.

It will not cost much to set up a carinderia, but you will have to contend with customers who want to eat on credit and sanitation issues.

There are also city governments that have very strict zoning rules on carinderias. If you’re operating in an unauthorized area, your stall will be dismantled.

How to Run a Successful Canteen Business

Wanting to run a canteen business and being able to operate one are two very different objectives.

In the first place, many of these canteen consignors award development rights through a bid process. And it can get very competitive. Of course, in the Philippines politics exists everywhere even within private arrangements.

You can never discount the possibility of collusion between the administrator and a specific party.

But if you are lucky; or perhaps blessed is the more appropriate word, to win the award as operator or consignee, here are important steps you need to take to ensure a successful canteen business:

1. Study the Terms and Conditions of the Agreement

Getting the nod to become the new canteen operator over other bidders is certainly an incredible accomplishment. Many food operators are constantly competing to be the consignee of a canteen as it ensures you a steady market of diners.

But off the celebratory pat-on-the-back until you have read the terms and conditions of the Lease Agreement or Consignee Agreement.

As my lawyer advised me when we were reviewing the contract with a popular mall in Makati, “The lease agreement can contain provisions that serve to be ticking time bombs.”

Do not get carried away with the thrill of becoming the canteen operator. The agreement is the document that governs your arrangement with the Consignor or Lessor for the duration of the contract. You have to make sure your rights and interests are protected.

The contract and its provisions are written from the perspective of the Consignor. Thus, the focus is primarily on the interest of one party. Hire a lawyer to review the contract and to negotiate on your behalf. Keep in mind that every contract is negotiable.

2. Research on Your Market

The prospect of becoming the sole operator of food services in an enclosed population should not lull you into a feeling of complacency.

Yes, you have a captive market, but you should know how to cater to their tastes and preferences. Otherwise, you will lose them to outside proprietors or have the administrator revoke your rights to operate.

You should do research to find out what your market likes to eat, and their food consumption habits. Here are a few methodologies you can incorporate in your research:

  • Conduct surveys
  • Take note of the types of food they eat
  • Come up with a close estimate of the average expenditure per person

Surveys are also an effective way of drumming up interest for your canteen. It is an opportunity to get close to your captive market and find out first-hand what they think of your proposed menu offerings. It is a great way to start building up a relationship.

3. Create a 30-Day Menu

Once you have all the information you need, develop a menu that is good for 30 days.

People expect a canteen to serve home-style meals or lutong bahay. They do not want to eat adobo or sinigang every day. People expect a variety of choices from a canteen.

A 30-day menu allows you to plan your daily offerings and at the same time find out which meals are selling faster. It will be easier to coordinate deliveries from suppliers and schedule food preparation. Proper planning and organization ensure you of better food quality and less wastage.

In time, you may be able to figure out your signature dish; one that your market will expect every time.

When I was a high school student in La Salle Greenhills, the signature dish of the canteen was Pork Barbecue with rice and gravy. The plate was literally swimming in gravy. It was delicious!

Related: 20 Small Food Business Ideas with Small Capital in the Philippines

4. Set up an Accounting System

If you were able to get favorable concessions for rent, your attention should now focus on food cost. For most restaurants especially those with low-priced meals, food cost is the profit killer.

There are many factors that can affect food cost:

  • Cost of raw materials
  • Cost and usage of packaging
  • Cost and usage of disposable utensils
  • Cost and usage of sauces and condiments
  • Wastage
  • Pilferage

An effective accounting system can help you keep track of your food cost. Instruct your accounting team to provide you with a food cost report every end of the month. Accounting can point out the factors which are contributing significantly to food cost.

In a canteen business, it is very important to manage your food cost especially in arrangements that prohibit you from raising prices.

Accounting can also down track labor and utility costs. Learning and understanding these figures can help you design systems that can run the canteen business more efficiently.

5. Set up a Reliable POS System

A Point-of-Sale system is not just used to record sales. You can get valuable data on which foods are selling fast or slow. Some POS systems can generate reports that can be used to calculate food cost and track inventory.

Usually, the building administrator is responsible for setting up the POS system. But if you will be held responsible for your POS, keep in mind, this can be expensive.

For a canteen, one cash register should suffice. You can have printers located in the production or assembly area. The vendor must regularly maintain the POS.

6. Purchase Good Quality Equipment

The type of food business does not matter. You must always ensure the quality and consistency of the food you sell to your market.

It’s not always about the recipe. For the most part, your choice of equipment plays a major role in food quality.

Good quality equipment does not mean you should buy expensive equipment. There are many fabricators in the Philippines that can design and build excellent equipment for cooking.

And it’s not just cooking equipment. Food storage is equally important. Make sure your refrigeration and freezing systems can maintain the desired temperature for maintaining the quality of ingredients.

7. Institute Cleanliness, Sanitation, and Waste Disposal Procedures

As the Consignee, you are responsible for providing diners not just excellent food but a clean and enticing dining experience. Nothing turns off a customer than a dirty dining area.

During my days as a private employee, my office mates and I liked to have lunch in other nearby canteens. In one of the canteens we visited, as soon as we opened the door, a large, hairy rat which was as big as the cat ran out.

We never set foot in the canteen. One of my office mates says that up to this day the experience still gives her nightmares!

A canteen has to be clean everywhere: cooking area, food preparation station, storage, and dining. It has to be a thorough job. You have to clean grease traps, exhaust covers and the areas behind the grill, oven and fry stations.

All plates, utensils and cooking ware must be washed with hot water and cleaned with industrial strength chemicals. They must be dried properly before storage. Water can breed bacteria.

Accumulated grease is flammable. Wet floors will grow molds and mildew. Food debris will attract vermin and lead to contamination.

Take the time to upgrade procedures and orient the staff frequently. Prepare a cleaning schedule and make sure these are performed every day.

Cleaning is an activity that knows no end in any food business. You start and end the day cleaning the restaurant. During slack hours, the kitchen and dining areas must be kept clean.

Strictly follow the garbage disposal guidelines by the administrator. Buy trash bins with an air-tight cover to keep cockroaches and ants from coming inside.

Lastly, coordinate with the administrator to schedule monthly pest control services.

8. Set up Inventory Control Measures

Improper inventory can result in poor quality food due to spoilage and can seriously impact on food cost. Your accounting group should be able to set up an efficient inventory system.

Designate someone from your kitchen staff to be the stockman who shall be responsible for receiving and recording all food supply deliveries to the canteen.

Accounting and Purchasing should work together to organize and document all receipts and invoices received by the canteen. This is important to have precise tracking of food cost and smart money management.

Then set up a rotation system for all stocks. You should have an idea of weekly consumption patterns, shelf life, and the stockman should always keep track of expiration dates of all products.

The rotation system shall apply even to frozen items and food that is being marinated. Frozen products usually take three days to thaw out properly in the refrigerator. Once frozen food is transferred to the refrigerator, you should not bring it back to the freezer.

9. Prepare the Cooking, Food Preparation Guidelines and Quality Control Standards

One of the most expensive private schools in Makati also has the worst canteen food I have ever tasted. I couldn’t finish it even though I was so hungry.

Even though canteen food is priced lower than other venues, it doesn’t mean you should compromise quality for the sake of profit. If your usual ingredients are getting more expensive, negotiate with the suppliers. If these are frozen ingredients, you can request for lower pricing in exchange for volume.

You can also look for cheaper substitutes but make sure the quality or taste of the food will not be compromised. For example, when making fried chicken, you don’t have to use the popular brand of flour. You can switch to generic brands of flour that can maintain the original version of your recipe.

Another option is to make food items from scratch. A good example is French fries. You don’t have to spend good money to buy packaged, imported, frozen French fries delivered to the canteen. You can make good quality fries from raw potatoes. And food cost will be significantly lower!

10. Hire Good People

The most important asset in your canteen business will be the people you hire to manage the different stations. Here are a few tips when it comes to hiring canteen staff:

  • Hire based on personality; anyone can be trained to become productive in the canteen service.
  • Experience is overrated; if the person is willing to learn and has the right personality, hire him or her.

Personally, people with experience tend to be a burden more than a boost in the food business. They are set in their ways and believe their approach is better than yours.

Related: 5-Step Process on How to Hire an Employee

In the years I ran a restaurant, everyone I hired with experience proved to be a disappointment.

  • Always conduct due diligence work; the resume, references and the usual clearances are never enough. Check their social media accounts to get a better perspective on who they are as people. You want people you can grow the business with not potential trouble makers.

Finally, don’t be afraid to regularize good people because talent with personality is hard to come by. Many restaurants do not regularize because they are afraid of being unionized.

When running a business, always look at the big picture. You want to manage a successful canteen that can give you a better life. Therefore, your decisions should be made with maintaining food and service quality in mind.

Remember that the right to form unions is provided for by our Labor laws. Treat your people well, pay them on time, update their benefits and include their interests when managing the canteen and you will not have to worry about unions.

11. Invest in Training Your People

It’s not enough that you hire good people. You have to invest in their training and development. If you don’t have the skills or experience, hire someone who does.

Before we launched our restaurant, we hired a chef to teach our service crew the food preparation techniques. We asked our suppliers to bring in resource people to show designated crew troubleshooting procedures for the kitchen equipment.

Service is very important even if you are running a self-service canteen. You have to make sure the place is always clean, tables are frequently bussed, sanitized utensils are available, food is served warm, and customers are treated with respect and courtesy.

Your people should also look and dress the part. It should go without saying that proper hygiene is a given in the food business. We still find the occasional “hair in the pansit”!

Service crew should always wear hairnets, look and smell clean before working their shift and observe the correct dress code.

12. Consider Other Revenue Avenues

Despite a captive market, a canteen will have its “dead hours.” Find ways to generate sales during the hours of the day where you have very few to zero customers.

Here are a few suggestions:

  • Offer specially priced merienda meals
  • Sell packaged goods like cookies, candy, and snacks
  • Offer limited delivery services
  • Offer catering services

Before coming up with a campaign, always check with the administrator to make sure you are not violating provisions in your contract.

Start a Canteen Business in the Philippines

A canteen could be one of the most profitable opportunities for you to consider in 2017. The keys to running a successful canteen business are the same as any other food retail business namely:

  • Maintain high quality of food and service
  • Keep the canteen clean and sanitary
  • Offer competitively priced meals

If you can consistently maintain your standards, you could have a long and rewarding career as a proprietor of a successful canteen business.

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