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7 Nov 2022

Econ Digest

Revenue of restaurant business is expected to show growth in 2022-2023 despite the challenge of operating costs and maintaining profitability


        KResearch views that the revenues of restaurant businesses are likely to continue to grow in 2023, but at a slower pace with the recovery limited to certain types of restaurant services and certain areas. Limited service restaurants, restaurants in tourist areas and restaurants in shopping centers have a good chance of recovery, driven by Thailand’s economic activity that has gradually returned to normal, along with the recovery in the tourism sector. Other factors include restaurants holding home delivery marketing campaigns with online platform providers, large-scale operators expanding their branch and adjusting services to a limited service model to reduce costs and adapting to changing consumer behavior, and the introduction of new foreign restaurant chains to penetrate new customer segments.

        However, the recovery of restaurants remains fragile as purchasing power has not fully recovered, while their operating costs continue to increase, particularly the prices of domestic cooking gas and electricity as global energy prices soar. KResearch projects that operating costs of the restaurant business will increase by an average of 14% YoY in 2022, forcing many restaurant operators to raise food prices by an average of approximately 10% over 2021. In addition to fierce competition among the businesses, rapidly changing consumer behavior and the wide range of food choices for consumers make it necessary for new investors to be cautious when investing and to focus on operating cost management.

        KResearch views that the restaurant industry will continue to grow slowly. The sales turnover of the restaurant industry in 2023 may reach THB418-425 billion, up by 2.7-4.5% YoY, slowing from the estimated growth of 12.9% in 2022. The total value will remain below pre-COVID-19 levels due to difficulties in the recovery of full-service restaurants. While street food stalls and limited-service restaurants may be earning higher revenue than pre-pandemic levels, maintaining profitability remains a challenge for business operators, as they must operate business with caution.

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