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KUALA LUMPUR: Malaysia's food and beverage (F&B) sector, a significant contributor to the nation's Gross Domestic Product (GDP), continues to expand steadily despite inflationary challenges.
This growth is driven by population expansion, higher disposable incomes, and a flourishing tourism industry.
The sector's expansion is evident in the rising number of food establishments, including restaurants, cafes, bars, food courts, and hawker centres, as more people go out to eat for convenience and lifestyle.
According to the Department of Statistics Malaysia (DOSM), there were 136,453 F&B service establishments in Malaysia in 2022, generating a gross output of RM99 billion and employing nearly 1.08 million people.
While the number of establishments declined by 18 per cent since 2015, gross output surged by 49 per cent from RM66.4 billion.
In 2023, Malaysia's F&B sector generated RM228.66 billion in revenue, with a projected compound annual growth rate (CAGR) of 7.95 per cent from 2023 to 2027. The industry contributed 3.3 per cent to Malaysia's GDP, with projections indicating an increase to 3.9 per cent by 2028.
DOSM has yet to release the latest statistics for the F&B sector.
Dining Out Persists Despite Rising Food Inflation
Malaysia has experienced a sharp rise in food inflation over the past year, with the cost of essential goods continuing to climb into early 2025.
In September 2023, the price of imported white rice surged 36 per cent, from RM2,350 to RM3,200 per metric tonne, prompting increased demand for locally sourced alternatives. Food prices remain high, with notable hikes in vegetables, poultry, and cooking oil.
Despite financial pressures, many Malaysians continue to dine out, reflecting shifting consumer behaviour and spending priorities. For urban dwellers, eating out is often a necessity rather than a luxury, driven by long working hours and extended commutes that make home-cooked meals impractical.
A 2022 survey by Rakuten Insight found that 43 per cent of respondents dined out several times a week, while 19 per cent ate out at least once daily. The same survey revealed that 73 per cent of Malaysians typically dined with family members, emphasising the social significance of eating out—particularly among white-collar workers.
According to the National Security Council, Malaysians spent an average of RM800 to RM1,200 per month dining out last year, highlighting the deep-rooted nature of this habit despite economic uncertainties.
The F&B sector has also seen significant expansion within shopping malls. Sunway Real Estate Investment Trust (REIT) chief executive officer Clement Chen noted that F&B outlets now make up 20 per cent to 25 per cent of mall tenants, compared to 10 per cent to 15 per cent a decade ago.
"In most families, both parents are probably working, so there is more of a necessity for them to dine out more often," he said during a panel discussion at the CGS International 17th Annual Malaysia Corporate Day 2025.
Datuk Sunil Sachdev, owner of The Corner Sports Bar & Cafe in Petaling Jaya, noted that Malaysia's growing urban population, especially those in dual-income families, is driving demand for dining options.
He emphasised that for many, eating out is no longer a luxury but a necessity due to busy lifestyles and long working hours.
"While inflation impacts purchasing power, middle- and high-income Malaysians continue to dine out. Many opt for budget-friendly eateries but still prioritise convenience and experience. Our sports bar and cafe caters to all,," he said.
Sachdev, who has been involved in the F&B business for over 10 years, also highlighted the cultural significance of communal dining in Malaysia, whether at hawker centres or high-end restaurants.
Additionally, he pointed out that tourism plays a crucial role in sustaining the sector, as visitors significantly contribute to restaurant, café, and street food sales, leading to the rapid expansion of eateries.
He identified key trends shaping the F&B industry post-pandemic, including a shift toward healthier eating habits.
"Malaysians are becoming more health-conscious, increasing demand for organic, nutritious, and plant-based options. In response, restaurants and cafes are introducing wellness-focused menus with fresh, wholesome ingredients," he told Business Times.
The digital transformation of the industry is another notable shift, with more businesses adopting online ordering, reservations, and food delivery services to enhance customer convenience.
"Malaysia's rich culinary heritage continues to inspire innovation, blending traditional flavours with global influences to attract adventurous diners. More restaurants are also offering customised meal options to cater to individual dietary preferences, elevating the dining experience and fostering customer loyalty," he added.
As the F&B sector evolves, Sachdev believes that businesses that embrace these trends will remain competitive and well-positioned for long-term success.
"Despite economic uncertainties, these factors ensure that Malaysia's F&B industry remains resilient and continues to grow," he said.
Divya, an account executive in Kuala Lumpur, shared her experience. "I leave home at seven in the morning and return after eight at night. Most nights, I'm too exhausted to cook. Eating out or ordering food delivery is just easier, even if I have to cut back on other expenses to afford it," she noted.
University student Nadia Farhana echoed this sentiment, saying that meal prices on campus have increased, but cooking is not always practical.
"I live in a shared apartment with no proper kitchen, so cooking is not really an option for me. Even though food prices have gone up, I just try to find more affordable places or eat at hawker stalls instead of cafés," she said.
Beyond convenience, dining out is also a key social activity in Malaysia. Restaurants, cafés, and food stalls serve as meeting points for family, friends, and colleagues, reinforcing the idea that shared meals justify the extra expense.
Businesses Struggle with Rising Costs
While dining out remains popular, restaurant owners are feeling the strain of rising costs. Many face tough decisions to keep their businesses afloat while remaining affordable for customers.
Jason, who owns a banana leaf eatery in Kajang, said inflation has affected his business, with the cost of essential ingredients like chicken, vegetables, and cooking oil rising drastically.
"We try to absorb some costs and cut down on waste, but it is getting harder to maintain quality without raising prices.
"While we have had to adjust our prices slightly, we try to be mindful of our customers' budgets. Instead of reducing portion sizes, we focus on offering value-for-money sets or promotions to keep our regular customers coming back.
"It is a tough balance, but if we raise prices too much, we risk losing business. At the same time, we cannot absorb all the extra costs either," he said.
The Economic Perspective
Despite inflationary pressures, consumer behaviour indicates that Malaysians continue to prioritise dining out over home cooking, even at a higher cost. Many are adapting by choosing budget-friendly eateries, avoiding premium food options, or cutting back on other expenses.
Economist Geoffrey Williams noted that dining out is driven by both culture and necessity.
However, he told Business Times that there are also economic challenges, as cooking at home can be difficult for working individuals, making dining out a solution for those experiencing "time poverty" and lacking the time to prepare meals at home.
Williams also pointed out that affordable dining options still exist, with many shifting toward lower-cost eateries as mid-range restaurants increase prices.
However, he emphasised that food price hikes remain a major issue, primarily due to supply-side restrictions such as cartels controlling essential goods, subsidies and price controls, lack of competition, import restrictions, and cost pass-through by wholesalers and retailers.
"Until these are tackled, there will continue to be problems and affordability issues, especially for low-income groups," he said.
Williams added that food inflation is a key driver of overall inflation, which can only be mitigated through increased market competition and the removal of trade barriers, red tape, and regulatory restrictions.
Source: https://www.nst.com.my/business/economy/2025/04/1196564/malaysias-fb-sector-key-economic-driver-rapid-growth