Display mode (Doesn't show in master page preview)

26 Feb 2014


Fast Food Business, 2014: Plagued by Sluggish Economy, Costs and Politics (Current Issue No. 2469 Full Ed.)

We at KResearch are of the view that fast food businesses will continue to expand branches and services within Greater Bangkok, major and secondary provinces during 2014. It has been found that due to various constraints toward finding new locations in Bangkok and surrounding areas, many stand-alone fast food chains will focus on adding such new services as drive-through and online ordering or even extend their opening to 24 hours.
Upcountry, it has been seen that many fast food chains are tapping into busy locales and tourism destinations. In quieter provinces, there is a tendency toward setting restaurants at large retail malls to take advantage of being the first of such operator, so that they can expand the customer base in that area. They are even trying new branches at large gas stations along major roads as standalones or drive-through food service points to serve travelers.
KResearch believes that fast food chains will continue marketing campaigns consistent with their target customers in 2014. However, they may face several short-term challenges, including the sluggish economy, rising operating costs and political uncertainty. Given this, we expect that fast food businesses in Thailand will have turnover of about THB30.6-31.2 billion in 2014, up 5.7-7.8 percent YoY, versus THB29 billion in 2013.
Steady growth in turnover has attracted new entrants, thus offering more dining choices than ever before. However, this will steepen competition among fast food chains as they will try to attract more customers to expand their market shares, even upcountry where many have already gone. We think that this heightened competition is also due to the entry of new players, especially Japanese food restaurants that have positioned themselves as fast food chains. Such chains focus on self-service at prices comparable to other fast foods, though highlighting unique and diverse menus, with meticulously prepared dishes using quality ingredients.

Meanwhile, a myriad of choices such as instant, ready-prepared and frozen ready-to-eat foods that can be purchased at convenience stores, relatively low purchasing power of consumers residing in secondary provinces will pose long-term challenges for fast food business in fine-tuning their strategies to stay competitive in the future.

View full article