Thailand’s 700-billion-baht restaurant sector faces ‘boiling frog’ crisis lasting up to 3 years

Paisarn Aowsathaporn, Senior Executive Vice President and Head of Food Business (Thailand) at Thai Beverage Public Company Limited—one of the country's four leading restaurant operators with brands such as Shabushi, KFC, Hyde & Seek, and Food Street—said the company is set to reach 888 outlets by the end of this year.

He noted that the overall food and beverage industry in Thailand, across all segments, is valued at nearly 700 billion baht and continues to expand in line with economic trends.

However, the outlook for 2025 points to a slowdown. According to a report by the Department of Internal Trade, around 3,000 restaurants closed during the first quarter of the year. At the same time, a significant number of new establishments also opened, reflecting the natural business cycle of entries and exits in the sector.

He added that 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, remain highly competitive in terms of pricing. Paisarn described the intense price wars as a normal occurrence in the market, though they have led to lower profit margins for operators. He stressed that no brand has achieved long-term sustainability through price-cutting strategies alone. ThaiBev, he said, does not compete on pricing as a core strategy.

Low season strategy: focusing on break-even performance

Nongchanok Sathananon, General Manager of The Coffee Club under The Minor Food Group—which operates over 2,100 outlets in Thailand through major brands such as The Pizza Company, Swensen’s, Sizzler, Dairy Queen, and Bonchon—said The Coffee Club relies heavily on international tourists, who account for up to 70% of its customer base.

As a result, the company focuses on maximising sales during the high season, particularly in the first and fourth quarters of the year. During the low season, the strategy is to maintain operations without incurring losses, rather than actively pushing expansion.

Given the prolonged economic slowdown, The Coffee Club’s business plan now focuses on driving growth through existing outlets (same-store growth). The strategy involves selective investments in store refurbishments, with a budget of 3–4 million baht per branch and a targeted payback period of no more than 1–2 years. The aim is to appeal to consumers through quality food and comfortable seating, rather than short-term promotional discounts.

“Foreign tourists remain key to profitability, but with the decline in arrivals, we’ve increased the proportion of Thai customers from 30% to 40% to support sustainable growth,” Nongchanok explained.

A key strategy involves improving seat efficiency. Traditionally, solo customers would occupy a table designed for four. The Coffee Club is now redesigning its seating layout to include more single-diner tables, catering to students and office workers looking for a place to study or work for extended periods.

Thai restaurant sector faces ‘boiling frog’ crisis lasting up to 3 years

Phan Paniangwet, Managing Director of Thai President Foods Public Company Limited, the maker of “Mama” instant noodles and operator of the Kourakuen, Saboten, and Mama Station restaurant brands, has warned that Thailand’s food and restaurant industry is now in a deep slump, with no clear signs of recovery.

In addition to its in-house brands, the company had previously partnered with other investors to open “Craze Mama” at ICONSIAM. However, due to high rental costs, the outlet was closed and relocated to Banthat Thong Road, where rents are more affordable.

Mama Station is not only a dine-in restaurant but also offers catering services, delivering delicious meals off-site.

Mama Station, which offers both dine-in and catering services, continues to perform reasonably at its RCA branch. However, sales at other restaurants, including Kourakuen and Saboten, have declined across the board—except at select locations such as J-Park and Nihonmura in Sriracha, which benefit from a Japanese working clientele.

“The economy and weakened purchasing power have directly hit the food and restaurant business. It’s not that people don’t have money—it's that the money is gone,” Phan said. “Much of it has been drained out of the system, including through scams like call centre fraud. When purchasing power disappears, businesses are forced to slash prices—but how can they survive like that? Eventually, it leads to collapse.”

When asked whether the industry is entering a reset phase, Phan responded bluntly: “We are living through a boiling frog scenario—this is not a sudden crash. It’s a slow, deep, and drawn-out decline.”

He continued: “Why three years? Because there are no visible signs of recovery. We don’t know when it will bounce back, but I can confidently say it won’t be any sooner than three years. The question is no longer how to survive, but who will survive.”

Still, he noted a key strength of the restaurant business: “We operate on a cash basis, generating daily cash flow. But on the flip side, we purchase ingredients on credit.”

Banthat Thong hit by tourist drop, cautious spending, and ‘artificial demand’

Chanachai Nimitphongsak, President of the Banthat Thong Street Vendors Association, said the commercial district has suffered significantly from a decline in Chinese tourists and cautious domestic spending. Foot traffic has plummeted to just 2,000–5,000 visitors per day, down from a peak of 15,000–30,000 daily visitors last year—a six to seven-fold drop. The visitor ratio was previously around 60% Thai and 40% Chinese.

Chinese tourist numbers have declined since the last Lunar New Year, partly due to negative news coverage about Thailand. At the same time, Thai customers have cut their spending by 50%. Misinformation circulating on social media has also discouraged new local customers from visiting the area, further impacting the 378 restaurants operating in the Banthat Thong zone.

Sitthichan Wutthipornkul, advisor to the Banthat Thong Street Vendors Association and owner of Lobster City, said the area has been hit hard by the sharp drop in foreign visitors, especially Chinese, who used to make up the bulk of the restaurant’s clientele, along with tourists from Hong Kong and Taiwan.

“At its peak last year, Lobster City welcomed 500–600 customers a day. That number has now fallen to around 200–300, or about a 50% decline,” he said.

To cope, the restaurant has shifted its focus to single-dish meals and targeting more Thai families. Existing staff have been reassigned to outlets in better-performing locations. No layoffs have been made.

“As part of the Banthat Thong vendors’ association, we’ve advised all restaurant operators in the area not to engage in price wars. Given the weak domestic economy and falling tourist numbers, cutting prices is not a sustainable strategy,” Sitthichan said.

A restaurant owner in the area, speaking on condition of anonymity, added that Banthat Thong has been overwhelmed by ‘artificial demand’, driven largely by influencers who hype up food quality and pricing. “This doesn’t necessarily attract diners, but instead attracts more restaurant operators to open here. Now, however, we’re seeing sales decline across the entire zone.”

Changing tastes and rising costs reshape Banthat Thong dining scene

Rents for restaurant spaces in the area typically start at 40,000 baht per month, with subletting rates as high as 130,000 baht. Taking over an entire shophouse can cost up to 4 million baht. With such high overheads, restaurant operators are questioning how survival is possible, especially as additional shocks loom, such as rising minimum wages and increasing input costs.

Food service sector cautious amid domestic demand slowdown

Ricardo Boarotto, Chief Executive Officer of Central Food Wholesale Thailand under Central Food Wholesale Co., Ltd., said Thailand’s food service market is under pressure on multiple fronts—not only from the sluggish recovery in international tourism, but more critically from weakening domestic demand.

“Research indicates that Thai consumers are dining out less often, as households grow increasingly cautious with spending amid economic uncertainty,” Boarotto explained. “Restaurant owners are adapting to survive—cutting costs, streamlining menus, eliminating high-cost dishes, and sourcing more affordable ingredients.”

Although the restaurant sector as a whole is experiencing a downturn due to the tourism slowdown, Central Food Wholesale’s business remains resilient, as it does not primarily rely on tourist-driven demand. The company continues to expand its customer base and outlet network.

Oliver Gottschall, Chief Operating Officer of Betagro Group, said Betagro has seen minimal impact and continues to grow. The group recorded year-on-year growth of 10%, with the food service segment growing at an even higher rate. “Our growth is largely driven by chain restaurant clients, which make up a significant share of our portfolio,” he said. “Meanwhile, small restaurants and SMEs still show promising potential.”

Thais cut back on dining out as street food stalls struggle

Saowakit Preeprem, President of the Chefs Federation of Thailand, said that while international tourist arrivals have declined, hotel-based chefs have not been significantly affected. Many hotel sales departments have pivoted towards new markets with solid demand, such as Europe, particularly Germany, the Netherlands, and Russia, as well as the domestic Thai market, which continues to dine at hotel restaurants.

However, when focusing on Thai customers alone, spending on dining out has dropped by an estimated 20%, reflecting the broader economic strain. Despite this, higher-income Thais continue to frequent hotel dining establishments. In contrast, street food operators are facing intense competition and steeper challenges. “Lower-income consumers, the core base for street food vendors, are feeling the economic pressure most acutely, leading to slumping sales in many areas,” Saowakit noted.

He added that while the number of international tourists has declined, most hotels have not reduced kitchen staff, and some are even short-staffed.

Operators pivot to survive

Piya Dunkhum, CEO of Green Food Factory Co., Ltd., operator of Salad Factory, said the restaurant business grew modestly in Q1 on momentum from the late-2024 high season. However, Q2 has presented fresh challenges, including the economic impact of the recent earthquake. The latter half of the year will require operators to carefully navigate issues related to tourism, government stimulus policies, and improvements in product and service quality.

“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,” Piya said.

Rosarin Tiyavarapan, Executive Director of Miracle Planet Co., Ltd., which owns Lucky Suki, said economic concerns have made consumers more cautious with their spending. However, Lucky Suki's affordable buffet pricing has helped cushion the impact.

Naphasul Rambut, Managing Director of Company B Co., Ltd. and operator of Neua Tae (Premium Beef), acknowledged the contraction in the dining-out market but believes there is still room for all players. “As consumers visit malls and restaurants less often, we must find new markets.”

Neua Tae now serves over 60,000 customers and logs around 50,000 transactions monthly across all branches. The brand is exploring new opportunities with ready-to-eat product development aimed at the mass market. The company is also expanding its quick-serve restaurant line, Neua Tae Wok, with plans for 5–6 outlets using low investment and flexible locations. “If a location underperforms, we can quickly relocate,” Noppasul said.

“The restaurant business is struggling with declining foot traffic. Customers know eating out costs more now. But delivery and food court channels are growing,” he added.