Thai Restaurants 'Struggling' in 2025, Pin Hopes on Government Subsidy Windfall

 

The Thai restaurant sector is facing a "tired" operational environment in 2025, according to the Thai Restaurant Association, which nevertheless pins its hopes on the government's "Khon La Khrueng" (Half-Half) subsidy scheme to generate an economic "whirlwind" and drive growth.

 

Operators are being advised that effective profit management is the critical factor for survival.

 

Industry figures confirm that the restaurant business remains a key magnet for attracting footfall to shopping centres, with consumers viewing "eating out" as a personal reward or a special family occasion.

 

Aggressive promotions and price wars are now essential variables for boosting sales figures.

 

Thaniwan Kulmongkol, president of the Thai Restaurant Association, addressed recent public discourse surrounding quiet retail malls during long weekends and the closure of small eateries, which fuelled fears of an "end of the restaurant business."

 

She acknowledged the challenging economic conditions and constrained purchasing power this year but maintained that restaurants continue to serve consumers, as dining out is seen as a form of self-reward and a special family treat.

 

She emphasised the historic and ongoing role of restaurants in retail settings.

 

"Restaurants have long been a magnet for retail malls, providing mutual support," she said. "New malls today explicitly announce plans to bring in famous restaurant brands as their main draw... they need to be in the best, most visible spots to attract customers."

 

She dismissed the notion of widespread "quiet malls," suggesting it applies only to certain locations.

 

 

The Challenge of 'Overpriced' Food

Thaniwan highlighted a significant trend: the market and consumers are facing what she terms "overpriced" food, which has paradoxically become a niche selling point. Examples include noodles priced at several hundred baht, Hainanese chicken rice starting at over 50 baht, and coffee or green tea beverages costing hundreds of baht.

 

"Food courts in malls are also seeing price increases, meaning that 100 baht in hand may not be enough to purchase goods or sustain three meals," she noted.

 

While high prices are driving value-based growth in the overall sector, the number of registered corporate restaurants has shrunk dramatically.

 

Data indicates a decline from 44,058 corporate entities in August 2024 to 25,485 by June 2025—a drop of 43%. The vast majority of those lost were small businesses.

 

"When the economy is struggling, people talk more about value for money," Thaniwan said.

 

Families who previously spent thousands of baht per meal are now comparing that cost to buying raw ingredients to cook at home, which provides multiple meals.

 

This trend is forcing retail mall restaurants to downsize their tables from large layouts previously designed for 4-8 customers.

 

The Subsidy Whirlwind

The SCB Economic and Business Research Centre (SCB EIC) estimates that the restaurant market value for 2025 will reach 674 billion baht, a 3.1% growth, with a forecast of 3.3% growth to 697 billion baht in 2026.

 

However, competition remains fierce.

 

Despite the contraction in the number of operators, the Thai Restaurant Association is banking on the Khon La Khrueng Plus measure, with a budget of approximately 44,000 million baht, to create an economic "whirlwind" across three cycles, revitalising the sector.

 

 

"For ten months, the restaurant business was left to its own devices... But with the Khon La Khrueng Plus scheme, we expect the business to rebound, because that 44,000 million baht will generate an economic boost equivalent to three cycles, soaring into the hundreds of billions of baht. Restaurants will certainly benefit," the Association stated.

 

 

 

Profit Management: The Survival Key

Pun Paniangvait, general manager of Thai President Foods PCL (operators of brands including Kourakuen and Saboten), admitted that operating in 2025 is "quite tiring," stressing that growth must now come from opening new branches, as same-store sales growth is unlikely.

 

"Survival this year depends entirely on excellent management," he commented. While promotions and price wars are necessary to generate sales, the critical issue is ensuring the business remains profitable.

 

He noted varied performance across his portfolio: CHAGEE (13 branches) is well-received, while Saboten's sales are stable but profit is sensitive to high rental costs.

 

 

 

Giants' Wars Impact Small Shops

The closure of small restaurants, such as shabu outlets, is partly attributed to the price wars initiated by major chains.

 

Large brands use aggressive promotions to stimulate demand and drive sales; failing to do so could lead to sales contraction.

 

Ultimately, food remains a basic necessity, and restaurants are still a vital component—a "magnet"—of retail malls.

 

However, the business atmosphere is tough: "The number of people using restaurant services hasn't dropped drastically, but it may not be as high as last year," one operator explained. "The key challenge is whether all those necessary promotions leave any profit."

 

A survey of major restaurant groups for the first half of 2025 highlighted the struggle:

Minor Food Group (2,659 total branches) saw same-store sales decline by 2.9%.

MK Restaurant Group reported sales of 7,334 million baht (down 8.9%) and net profit of 509 million baht (down 31.9%).

S&P saw sales of 2,701 million baht (down 7%) and net profit of 84 million baht (down 54%), attributing the drop to fewer customers in malls and airports, alongside increased raw material costs.

Central Restaurants Group reported total sales of 6,491 million baht (down 1%), but net profit increased by 35% to 349 million baht.

After You reported sales of 809 million baht (up 13%) but net profit decreased by 7% to 118 million baht.