Filipino’s love for chocolates creates a huge market for sweet shops. That is why I thought it would be interesting to make a guide on how to start a chocolate shop business in the Philippines.
Who hasn’t craved chocolates? Those little chunks of sweetness can be lifesavers on a stressful day. They are also popular gifts for loved ones on special occasions.
We will be sure to answer the following questions through this article:
- Is a chocolate shop business profitable in the Philippines?
- How do I start a chocolate shop business in the Philippines?
- What are the required business permits for a chocolate shop in the Philippines?
- Where to buy cheap chocolates in Manila: Bagsakan ng Murang Chocolate?
- How much is the total capital for a chocolate shop in the Philippines?
- Where should I put my chocolate shop?
- How should I price my product?
- How do I market my chocolate shop?
Is a Chocolate Shop Business Profitable in the Philippines?
This should be your first question before starting a chocolate shop business in the Philippines. I did mention that there’s a huge market of chocolate lovers in the country, but we need to dive more into how you can transform that market into profit.
Since a chocolate shop is considered a specialty store, it’s crucial to piece together every aspect of a business plan to increase the chances for success. Unlike business ventures like Piso WiFi machine vendos that rely heavily on one factor (machine location), a chocolate shop will need a more rounded approach.
How Big is the Imported Chocolate Market in the Philippines?
Most Southeast Asians, including Filipinos, prefer western chocolate brands. Online searches for imported chocolate products hit more than twice the amount of their locally-made counterparts.
75% of the Philippines’ demand for chocolate is imported from other countries. While it is a bit sad that most of our sweet cravings are satisfied by foreign products, it shows how the imported chocolate market in the Philippines is thriving.
Fun Fact
You can make chocolate from scratch! Yes, you heard that right. We have a couple of cacao trees so we do this right before the Christmas season. It doesn’t taste the same as the commercialized ones but it’s awesome for champorado and hot chocolate drinks. I even nibble chunks of tablea as a light snack.
You just need the cacao seeds, sugar, some patience, and a reliable grinder. We do it with simple methods but there are a lot of recipes and instructions online to get more consistent results.
How to Start A Chocolate Shop Business in the Philippines
The Thrifty Pinay has covered starting guides for various food businesses in the past including ramen shops, samgyupsal restaurants, and a few summer food business ideas. We will now be tackling a whole new venture in the chocolate business.
I was lucky to get in touch with AAF Chocolate Store, a budding sweets shop in Bulacan. They just started this year so I got some fresh insight on how to start a chocolate shop business in the Philippines.
1. Write your Chocolate Shop Business Plan
A business plan is always the first step for every business. Don’t let the big words intimidate you. While big companies require formal plans, the core of a chocolate shop business plan will remain regardless of format.
If you have a trusty business consultant or plan to do a big venture in the chocolate shop business in the Philippines, employ professional help. But, for those who would like to feel the waters a bit or want to set up a smaller-scale shop, this article will cover the major points so you can make a simpler version.
2. Find Suppliers
Online searches are the easiest way to go about this. You can also ask around colleagues and friends. Do not underestimate the power of your personal connections, you can get discounts through personal referrals.
Consider locations, product price, and supplier credibility. The products they carry will be your products in the eyes of your customers. Be wary of sketchy suppliers as there are more risks of contamination and improper handling of food products. Make time to go to warehouses, check prices, and meet your suppliers personally.
Where to buy cheap chocolates in Manila: Bagsakan ng Murang Chocolate?
Metro Manila is brimming with sources for affordable chocolates. Try these places to start your search for a dependable supplier.
- Jovan’s Lucky Store – Manila
- FL Affordable chocolate Store – Manila
- JHC-Z Trading (Home of Imported Chocolates) – Mandaluyong
Chocolate Distribution Business in the Philippines: Bagsakan ng Murang Chocolate outside Manila
Nearby areas are also catching up with the trends of the city. You can find some nice chocolate sources when you go to neighboring towns.
- SMR Chocolates located at Angeles, Pampanga
- Choco Fiesta – Meycauayan, Bulacan
- CAC Chocolates and Goodies – Binangonan, Rizal
Where to buy premium chocolate in Metro Manila?
- Royce Chocolate Store
- Lindt Chocolate Store
- Patchi Chocolate Store
- Godiva Chocolate Store
Imported Chocolate Brands you should buy:
The most-searched brands in the Philippines in recent years are Toblerone, Maltesers, and Ferrero Rocher. Here’s a top-of-the-head list of other imported chocolate brands that are the most recognizable for Filipino consumers:
- Hershey’s (Bar and Kisses)
- M&M’s
- Nestle (Crunch and Kitkat)
- Cadbury
- Snickers
- Mars
Philippine Chocolate Brands you should buy:
You can mix in a few local brands on your display shelves to attract customers craving some homegrown chocolates. Throw in popular brands such as Goya, Chocnut, Flat tops, and Cloud9.
If you want to indulge your customers with some local premium brands, add some Malagos and Auro Chocolates to the bunch.
Chocolate Varieties you should buy:
While the popular brands will most likely cover your store’s essential merchandise, it’s also important to go with brand varieties that complement your location and target market.
For example, a location for younger consumers would make smaller, more sugary varieties of top brands sell faster.
Also, consider this question: Are you a chocolate shop that wants to carry only luxury chocolates or do you want to provide as much variety as possible?
3. Prepare your Capital
Make sure that you prepare funds accordingly. If you have the full amount available from your pocket, good for you! Some do not have the financial capacity for a business but there are other ways to secure the funds. Personal loan options and credible loan apps are made conveniently available to Filipino entrepreneurs.
You will be spending the majority of your start-up capital to cover the following:
- Merchandise
- Rental Fees
- Construction or Repair
- Fixtures, Furniture, and Equipment
- Business Permits
- Operating Expenses
We will go over estimated spending for each item as we go over the other steps on how to start a chocolate shop business in the Philippines.
Merchandise
A store for imported chocolates can easily go for Php 100,000 worth of products. That amount can fill a 10-15 sqm walk-in chocolate store with reasonable shelf space. You can cut down on capital by signing up for consignment agreements with suppliers.
4. Look for a Suitable Location
Where Should I Put My Chocolate Shop in the Philippines?
There are a lot of factors to consider in choosing a business location. For a chocolate shop, the key elements would be included in the list below with a few questions to consider.
- Accessibility and Traffic – Are there people walking or driving along the store location? Is it accessible via public transport? Is there enough parking area for customers and deliveries?
- Competitors – Consider your proximity to the competition. For a small start-up, it is not practical to build a store beside a fully established chocolate shop.
- Neighboring Businesses – Structure around the area can be considered opportunities to attract customers. Shops near schools and workplaces generally do well.
- Location Costs – Property and rental expenses will vary depending on the location. You should also consider maintenance and structuring costs on top of rental fees.
Rental Fees
Depending on your location and size of store space, monthly rental fees can be somewhere between ₱5,000 to ₱20,000. A premium location with a lot of foot traffic will cost more. The initial payment will usually consist of advances and deposits.
Under the Rent Control Act, rental fees will only include up to:
- 2-month deposit and
- 1-month advance
Read rental agreements well to be prepared for additional security bonds and possible penalties in case of breaches. Understanding the contract is also crucial to protect your right as a tenant.
Construction and Repair
Not all commercial spaces are ready for occupation from the get-go. You might need to tear down some of the previous tenant’s improvements to make way for necessary fixtures for the chocolate shop. Materials and labor will also cost you a few thousand depending on the needed work.
5. Purchase Fixtures, Furniture, and Equipment
Most of your furniture spending will be on shelves and maybe a few display tables. A check-out counter would be nice but that will cost you around 5,000 and up. A sturdy table with some drawers from home works well as a payment counter if want to save a few bucks.
Account for proper lighting and ventilation improvements. Chocolates should be kept in cool, dry places. Electric fans work well but going for an airconditioned store will be better for your products and customers.
6. Secure Business Permits for the Chocolate Store
What are the Required Business Permits for a Chocolate Shop Business in the Philippines?
There are 4 basic permits you need to secure to run a legitimate business in the Philippines:
- DTI Permit – Different territories will call for different fees.
Barangay – ₱ 200.00
Municipal – ₱ 530.00
Regional – ₱ 1,030.00
National – ₱ 2,030.00
If you’re aiming for a local market, a municipal business scope is enough. If you are planning to expand for a franchise in a couple of years, secure a national DTI to avoid the hassle of going through the process again.
- Barangay Permit – Go to the barangay hall that covers the area for your shop and ask for a barangay business permit. They will need a copy of your cedula (which you can also get from them) and a DTI permit (sometimes).
Fill up a form and pay fees. The clearance fee will be around ₱100-₱200 You sometimes have to wait till the next day to get a signed clearance.
- Mayor’s Permit – The process and amount will depend on the municipality that covers your store location. It can be around ₱5,000 to ₱10,000 in your first year. It will cover all local permits including health, safety, and fire.
- BIR Registration – This will cost you a little over ₱8,000 including doc stamps, registration fees, receipts, and accounting books. Note that you must go to a separate agency to have your receipts printed.
You will need all the permits previously mentioned to secure a BIR permit. Be ready to go to their office a few times as the whole procedure can take a few days to complete.
Reminders for getting business permits for a chocolate shop business in the Philippines
It’s best to secure these permits within a month. It will lessen additional verifying inquiries from government agencies which can mean additional requirements (affidavits, lease contracts, etc.) to prove the legitimacy of the business. Some penalties will be imposed when the required days of completion are not met.
6. How much is the Total Capital for a Chocolate Shop Business in the Philippines?
Overall start-up capital of a chocolate shop business in the Philippines will be in the 6 digits for a physical store with rental fees and a few months of operating expenses. Setting up a chocolate store is one of the more financially demanding income streams we have covered in the Thrifty Pinay.
Operating expenses
Water and electricity will be at least ₱3,000 monthly and the salaries of employees will depend on how many you employ. A good practice would be to prepare 6-12 months’ worth of operating expenses as a part of the initial business capital.
Another Option: Online Chocolate Shop Business in the Philippines
Setting up an online shop business in the Philippines is a more economical option when you have a limited budget. The advantages of an online store would be the lower-start up costs. It can remove the expenses related to the rental, construction, and utility expense entirely
Unless you hire additional help, your capital will consist only of the purchases for the actual products and expenses related to the acquisition of such products as delivery and handling.
The Disdavantages of an Online Chocolate Store Philippines
The online market had long been saturated with chocolates for sale. You’ll also lose the astronomical profit potential that comes with setting up in a geographically advantageous area.
Pricing your Products
Setting pricing guidelines is a skill of a great entrepinay. There is a balance that should be maintained between meeting your consumer’s buying power and a guarantee of profit. In between those considerations, you will also need to know your competition.
How should I Price my Product?
The secret to pricing for a volume of different products is consistency and market research. There is a multitude of pricing strategies that can be used for a chocolate shop business in the Philippines.
We listed a few to guide you through the pricing process:
- Cost-plus Pricing – The usual markup of food products is between 10-20% of costs. Based on this principle, if you can get supplies at a lower price point you can have more leeway in setting up prices.
- Competitive Pricing – Look around your area to know how much the competition is charging for the same product. Remember that you are doing this to get a feel of the average pricing and not to compete with price.
- Penetration Pricing – You can set your products at a lower price in the beginning stage of the business and slowly adjust once you contract and have some customer loyalty. Note that this strategy can backlash if not done properly.
Read also: How to Compute & Price Food Products (w/ example) Philippines
How Do I Market My Chocolate Shop?
There are various ways to go about marketing and promoting your business in the Philippines.
- Social Media Marketing – Building a social media presence had been the trend in recent years. Know your way around Facebook and Instagram content to gather an audience.
- Partner up – AAF Store partners up with a few food stores to display a rack with their products. It’s a great way to build a few business networks and reach more consumers. A chocolate shop is a flexible business that works well with other food items so you have a wider choice for partner businesses.
- Occasions-based Marketing – Rally your most creative ideas and promotional campaigns during special holidays and occasions. Chocolates are most popular during the Christmas season and Valentine’s day.
Read also: 20 Ways to Promote & Market Your Business in the Philippines
Opening your Chocolate Shop Business
Opening a new business will always be a challenge. A lot of entrepinays are looking for various opportunities for side hustles but if you can juggle your time well and is open for a full-time role in business, a chocolate shop can work for you.
The chocolate business can bring enough profit for your daily needs, saving goals, and emergency funds if successful. You can even cover for an additional life insurance if it works out. You may need a few months to learn the ropes in your chocolate business. Give it time and continue looking for things to improve. Find better suppliers and always look after customer satisfaction.
Now all you need to do is come up with a catchy business name and you are ready to start your chocolate shop business in the Philippines!