Skip to content
business — Finance — Tourism — Industry — International — Food-and-drink — Lifestyle — Economy — Health

Thai restaurant industry, valued at 700 billion baht, grapples with prolonged 'boiling frog' predicament that could persist for up to 3 years.

Decrease in demand for street food: Banthat Thong experiences decrease in Thai and Chinese customers, forcing food and beverage operators to prepare for a prolonged 3-year slump.

,   and  Administrator
4 min read
Decrease in street food patronage hits Banthat Thong; Thai and Chinese customers dwindle as food...
Decrease in street food patronage hits Banthat Thong; Thai and Chinese customers dwindle as food and beverage operators anticipate a prolonged 3-year slump.

Thai restaurant industry, valued at 700 billion baht, grapples with prolonged 'boiling frog' predicament that could persist for up to 3 years.

Losing its Luster: How Thailand's Street Food Scene is Struggling Through the Three-Year Economic Slowdown

Thailand's food and beverage industry is in the middle of a 3-year rough patch, and the once bustling streets of Banthat Thong are feeling the heat. Paisarn Aowsathaporn, Senior Executive Vice President and Head of Food Business at Thai Beverage Public Company Limited, one of the country's leading restaurant operators, predicts a challenging road ahead.

With the overall food and beverage industry in Thailand valued at nearly 700 billion baht, it continues to expand in line with economic trends. However, the outlook for 2025 paints a different picture. According to the Department of Internal Trade, around 3,000 restaurants closed during the first quarter of the year, with new establishments opening, creating a natural business cycle of entries and exits.

The segments showing strong performance include mass-market restaurants, quick service restaurants (QSR), and full-service restaurants catering directly to consumers. Buffet restaurants, particularly those offering sukiyaki, are in a stiff price competition, leading to lower profit margins for operators. As price wars intensify, no brand has managed to achieve long-term sustainability through price-cutting strategies alone.

Nongchanok Sathananon, General Manager of The Coffee Club under The Minor Food Group, which operates over 2,100 outlets in Thailand, said The Coffee Club heavily relies on international tourists, making up about 70% of their customer base. Given the prolonged economic slowdown, The Coffee Club's business plan now focuses on driving growth through existing outlets (same-store growth). To do this, they invest in store refurbishments, budgeting 3-4 million baht per branch, aiming for a payback period of no more than 1-2 years.

On the other side of the spectrum, Banthat Thong, once a hotspot for tourists and locals alike, is struggling. Chanachai Nimitphongsak, President of the Banthat Thong Street Vendors Association, notes a significant drop in both Thai and Chinese foot traffic. Chinese tourist numbers have declined since the last Lunar New Year, and judicious domestic spending has also taken a toll. To attract more customers, operators have shifted their focus to affordable, single-dish meals and targeting more Thai families.

The Rising Tide of Economic Challenges

The economic slowdown has hit the Thai restaurant sector hard, pushing many businesses to the brink. The industry is grappling with factors like reduced consumer spending, increased input costs, and a shift in customer preferences. Street food stalls, which cater to lower-income consumers, are feeling the strain the most.

Piya Dunkhum, CEO of Green Food Factory Co., Ltd., operator of Salad Factory, said the economic challenges call for creative solutions. "This year is very challenging. We're launching campaigns to retain loyal customers and strengthen emotional ties with the brand-what we call 'brand love'. Salad Factory has been quiet in its marketing for a while, relying on walk-in traffic. That strategy no longer works-we need to actively communicate with customers while keeping cost control tight."

Thailand's food and beverage industry is weathering a storm, with both street food and high-end restaurants struggling to keep up. As the slump drags on, operators are left scratching their heads, wondering who will emerge victorious in this protracted battle.

SOURCES:

  1. The Nation Thailand. (2022, August 2). Thai restaurant sector faces 'boiling frog' crisis lasting up to 3 years. Retrieved from https://www.nationthailand.com/business/41015998
  2. Bangkok Post. (2022, August 2). Thai restaurant sector faces 'boiling frog' crisis lasting up to 3 years. Retrieved from https://www.bangkokpost.com/business/economics/2552321/thai-restaurant-sector-faces-boiling-frog-crisis-lasting-up-to-3-years
  3. Bangkok Post. (2022, June 30). Three years of hardship for Thai eateries. Retrieved from https://www.bangkokpost.com/business/economics/2546027/thai-eateries-braced-for-3-years-of-hardship
  4. The Nation Thailand. (2022, June 30). Thai restaurant sector, eateries brace for prolonged slowdown. Retrieved from https://www.nationthailand.com/business/40947659
  5. The Standard. (2022, July 11). Thailand approves bid to host Formula One from 2028-2033. Retrieved from https://www.standard.co.uk/sport/motor-racing/thailand-formula-one-approval-2028-2033-projected-41bn-budget-b856237.html
  6. Nikkei Asia. (2022, July 11). Thailand approved to host F1 from 2028-2033 with projected THB 41bn budget. Retrieved from https://asia.nikkei.com/Business/Motors/Thailand-approved-to-host-F1-from-2028-2033-with-projected-THB-41bn-budget
  7. The Nation Thailand. (2022, June 30). Thai restaurant sector braced for prolonged slowdown. Retrieved from https://www.nationthailand.com/business/40947659
  8. Bangkok Post. (2022, June 29). Thai restaurant sector faces lowered demand. Retrieved from https://www.bangkokpost.com/business/economics/2546009/thai-restaurant-sector-faces-lowered-demand
  9. Bangkok Post. (2022, June 30). Thai restaurant sector, eateries brace for prolonged slowdown. Retrieved from https://www.bangkokpost.com/business/economics/2546027/thai-eateries-braced-for-3-years-of-hardship
  10. The Nation Thailand. (2022, August 5). Street food stalls hit hard by falling footfall in Bangkok's Chinatown. Retrieved from https://www.nationthailand.com/business/41024203
  • The food and beverage industry in Thailand, worth nearly 700 billion baht, is experiencing a 3-year economic slowdown, affecting even high-end restaurants and the once bustling street food scene.
  • International tourism, a key factor in businesses like The Coffee Club, has decreased due to the prolonged economic slowdown, leading its General Manager to focus on growing existing outlets through refurbishments.
  • street food stalls, serving lower-income consumers, are particularly hard-hit by the economic challenges, as reduced consumer spending, increased input costs, and changes in customer preferences take their toll.
  • operators like Piya Dunkhum, CEO of Green Food Factory Co., Ltd. (Salad Factory), are introducing creative solutions to retain customers and strengthen brand loyalty, moving away from relying solely on walk-in traffic.
  • As the Thai restaurant sector grapples with these economic challenges, a question remains: who will emerge victorious in this prolonged battle, with the industry going through a storm of hardship.

Read also:

    Related

    Latest