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2 Jan 2020

Services

In 2020, restaurant business braces for challenges amid changing forms of competition as the industry is expected to reach THB437– 441 billion (Current Issue No.3067)

​The restaurant business is one of the most important to the country's service sector and economy with small and big operators involved and the turnover exceeding 400 billion Baht, representing 4.7 percent of the gross domestic product (GDP) of the service sector.

In the past 4-5 years, the restaurant industry has grown due to an investment from both the existing business operators and newcomers. KResearch expects the total turnover of restaurant business in 2020 to reach 437-441 billion Baht, up 1.42.4 percent from 2019. Despite the growth, the operators are facing tough challenges ahead such as the decline in revenue of the same store sales, which has steadily fallen from 15.2 million Baht/branch in 2016 to 14.3 million Baht in 2019. Moreover, their operation costs are set to rise. At the same time, consumers' behavior and their demands have rapidly changed. Hence, the restaurateurs have to control their operation costs while maintaining the quality of their products and services to meet consumers' expectations. Additionally, as technological trends have played a more prominent role in people's lives, the operators are facing a big test on how to adapt to such trends in order to deal with more complicated supply chains.

These challenges will put pressure on the restaurant business operators, especially small and medium sized ones and streetfood with storefronts. These food stores will have to rethink their business operations. They may choose to follow the priority based on immediate challenges and their resources such as increasing channels to reach out to consumers to address their falling sales or differentiating from others by adding the value of their products and services to encourage the customers to keep coming back or adjusting  their business process to boost their flexibility and efficiency.

KResearch views that although the restaurant business will expand in 2020 due to new investments, restaurateurs are set to face challenges from a more competitive environment. This may result in a shortened life cycle of a restaurant business as the existing and new players are expected to start off or close down their business more often than before.



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