The market has witnessed a certain impact due to COVID-19 outbreak on the overall foodservice business in Thailand with various types of foodservice establishments such as full-service restaurants being affected in varying degrees in the country. The pandemic also created a huge disruption in the supply chain across the country due to various trade restrictions across various countries.

Food supply chains have demonstrated a remarkable resilience in the face of these stresses. In-restaurant dining is the worst-hit segment, largely due to the travel curbs and a general avoidance of people in getting into larger gathering, and social distancing regulations closing millions of restaurants. Such factors resulted consumers to switch from in dining to on-line food delivery services. Accordingly, many restaurants shifted their focus to delivery and takeaway, which have become the vital sales drivers.

Thailand is one of the major countries in the consumer foodservice industry, among the Southeast Asian countries. Over the medium term, the country’s tourism industry will be been one of the primary factors of growth for its foodservice industry once the situation gets better. According to the country’s Department of Tourism, such significant growth in tourism is attributed to the domestic stability, the development of low-cost airlines, and considerable government measures to boost tourism.

Additionally, social networking sites, such as Facebook, Twitter, and Instagram, played a crucial role in augmenting the growth of the Thai foodservice market. Celebrities from the entertainment industry have been posting images and providing feedbacks about their healthy lifestyles, which have contributed to and boosted the health and wellness trend in Thailand. The growing health and wellness trend in the country provided an opportunity for the restaurants offering vegan and organic food menus. Moreover, in order to cater the consumers’ needs, various food service establishments in the country are providing customized meals based on the consumer’s preferences and diets.

Key Market Trends

Full Service Restaurants are Gaining Popularity in Thailand

Full-service restaurants have a significant share in the restaurant industry. In Thailand, Japanese restaurants are highly preferred by the consumers followed by Italian, Chinese, American, and Vietnamese restaurants. ​While chained full-service restaurants make up just over a third of the full-service sector, these restaurants are growing due to increased consumer preference for convenience, hygiene, and high-quality standards. High-end restaurants reach teenagers and young professionals by offering high-quality food in a unique ambience. Many full-service restaurant chains offer takeout and delivery options which are also popular. The country shows potential in terms of price competitiveness, health and hygiene, ICT (Information and Communication Technology) readiness, business environment and tourist service infrastructure.

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Rapid Expansion of Quick Service Restaurants

Yum! Brands, one of the largest foodservice providers in Thailand, with popular brands, such as KFC and Pizza Hut, is embarking on huge expansion plans across the country, to effectively penetrate its presence in targeted cities, such as Bangkok, Pattaya City, Chiang Mai, Phuket, Mueang Chiang Rai, Hat Yai, etc. For instance:​ In 2018, Yum Restaurants International Thailand, the operator of the KFC fast food chain, signed a franchise agreement worth THB 11.3 billion with The QSR of Asia (QSA), an indirect, wholly-owned subsidiary of ThaiBev, to operate 240 KFC stores in Thailand. The move put KFC branches under three franchisees, which include the Central Restaurant Group, Restaurant Development Co., and QSA. ​Moreover, consumers have strong access to social media and the Internet, which further exposes them to various international products, activities, and lifestyles, including the newly opened foodservice providers driving sales thjrough QSR’s.

Competitive Landscape

The market is highly competitive with the presence of prominent companies including Yum! Brands Inc., Starbucks Corporation, MK Restaurants Co. Ltd, McDonald's Corp., Seven & I Holdings Co. Ltd, Minor International PCL and Thai Beverage PCL. Companies are focusing on investing in small to medium-sized acquisitions or invest in start-ups, in order to further strengthen the organization’s organic growth capabilities.

Furthermore, players are expanding their presence in the country to gain more consumer attraction and have a competitive advantage over other players. ​ MCTHAI Co. licensed operator of McDonald’s restaurants in Thailand has set its 2020 vision to invest THB 5 billion and significantly increase the number of stores from 227 the present to 400 in five years. The company may also recruit 1,000 new staff every year over the next five years.

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