Foodservice Profile – Thailand

Macroeconomic profile and consumer foodservice trends

In 2021, Thailand's total population was 69.95 million people. The country's gross domestic product (GDP) was US$505.7 billion with a real annual GDP growth of 1.5%. Consumer per capita expenditure on foodservice (food & drink) decreased by −34.5% from its peal of US$429.1 in 2019 to US$281.0 in 2021.

Due to the more rapid rate of infection of the delta variant of the SARS-CoV-2 virus in 2021, Thailand's foodservice sector was hit hard in the second quarter of the year. On-site dining and drinking at restaurants, departments and hypermarket stores across the country were restricted and not eased for up until the fourth quarter, when more people received their double vaccinations and with Thailand allowing international tourists without quarantine over November-December.^{Footnote 1}

Commercial cooking facilities such as ghost kitchens, also known as cloud or dark kitchens, began to be created to reach a broader geographic range of customers with takeaway and delivery services. As well, foodservice companies launched campaigns to increase the frequency of consumption of their menu items.^{Footnote 1}

The foodservice market

In 2021, Thailand's consumer foodservice food and drink sales totalled US$19.7 billion (year-over-year rates). Between 2016 and 2021, foodservice sales decreased by a CAGR of 3.7% with a steep negative dip in sales during the pandemic period (2019-2021) - declining from US$30.7 billion in 2019. Both food & drink foodservice categories are expected to register a CAGR of 8.5% over the forecast period (2021-2026) to reach US$29.6 billion in 2026.

In Thailand, standalone foodservice outlets accounted for 75% of sales (US$14.7 billion) in 2021, followed by 20% in retail (US$3.9 billion), and 2% in leisure (US$402.4 million) locations. No channel outlets registered a growth between 2016 and 2021 at CAGR declines in lodging (28.4%), travel (25.4%), leisure (16.1%), retail (10.7%), and standalone (1.2%) locations. Over the forecast period (2021-2026), all foodservice channels are expected to report strong CAGRs between 5.3% and 43.8% with the highest growths coming from within the locations that were hardest hit during the pandemic period (2019-2021).

Renowned for its local culinary traditions, Thailand is home to numerous independent players across consumer foodservice categories. However, independent operators have faced considerable challenges during the COVID-19 crisis and as a result have joined with food delivery services such as Grab, LINE MAN, and Food Panda. Independents have also, launched more takeaway packages to tap into the rapid rise in demand for delivery services and compensate for losses resulting from dine-in restrictions.

Meanwhile, chained operator rivals continued to expand their services prior to the outbreak and remain strong, supported by their franchising strategies and their capacity to exploit the expansion of locations in shopping centre food courts, hypermarkets, department stores, and convenience/petrol stations. Chained consumer foodservice players have also recognized the need to tailor to the particular tastes and preferences of Thai consumers. Foreign chains within specialist coffee and tea shop brands such as Coffee Club and street stalls/kiosk chain (5 Star Fried Chicken) have tailored their menu items specifically for the Thai consumers, even by introducing differentiation between different geographic regions throughout the country.^{Footnote 1}

In 2021, Thailand's largest foodservice channel in terms of sales were from within street stalls or kiosks at a total registered value of US$7.4 billion. Sales in LSRs were the 2nd largest channel at a value of US$4.4 billion. Top Thai LSR foodservice channels were from within convenience stores (53.9%), followed by chicken (14.6%), bakery product (5.8%), pizza (5.8%), and burger LSRs (4.8%). Other smaller Thai LSR categories that reported sales were ice cream (4.0%), and Asian restaurants (0.3%).

In 2021, cafés/bars (US$4.4 billion) were the 3rd largest Thai foodservice outlets by type consisting of bars/pubs at a sales value of US$3.2 billion, specialist coffee and tea shops (US$845.5 million), cafés (US$236.2 million), and juice/smoothie bars (US$32.7 million). Sales from within Thai specialist coffee and tea shops recovered the most over the 2020 and 2021 period.

Lastly, FSRs registered sales of US$3.5 billion, followed by self-service cafeterias at US$7.6 million in 2021. Asian restaurants accounted for 75.7% of FSR sales, followed by North American (6.9%), pizza (4.1%), and European FSRs (3.4%) over the year.

Foodservice sales: chained franchises versus independent operators

In 2021, independent operators (63.6%) were the largest foodservice providers over chained franchises (36.6%) in Thailand with value sales of US$12.5 billion and US$7.2 billion, respectively. However, chained franchises remained more stable during the pandemic at a slight negative CAGR of 1.7%, while independent operators experienced a decline in sales at a negative CAGR of 7.5% between 2016 and 2021. Independent operators are expected to gain more market share by percent breakdown with growing sales value at a CAGR of 11.3% over the forecast period (2021-2026), while sales in chained franchises are expected to grow at a CAGR of 7.9%.

In 2021, independent operators of street stalls/kiosks in Thailand registered total sales of US$6.3 billion, followed by independent sales in cafés/bars (US$3.5 billion), FSRs (US$2.1 billion), and LSRs (US$603.8 million). Due to the pandemic, all independent foodservice categories suffered in loss of sales between 2016 and 2021. Nevertheless, all independent outlets are expected to recover and report growth over the forecast period (2021-2026).

Chained franchises of LSRs was the largest foodservice segment in Thailand at sales of US$3.8 billion, followed by sales in chained FSRs (US$1.4 billion), street stalls/kiosks (US$1.0 billion), cafés/bars (US$868.2 million), and self-service cafeterias (US$7.6 million) in 2021. During the pandemic, those chained foodservice categories that adjusted well to providing new/existing food delivery options and that showed period growth (2016-2021) were specialist coffee and tea shops, and pizza and chicken LSRs. Yet, all chained franchise foodservice outlets are forecast to recover between 2021 and 2026.

Foodservice: Eat-in versus delivery and to-go sales

Eat-in foodservice sales managed to remain at the highest total value in the sector of US$7.5 billion, despite being the hardest hit since 2016, decreasing by 48.9% in 2021. Takeaway services registered US$6.2 billion, home delivery (US$4.7 billion), and drive-through (US$1.3 billion) in sales over the year.

Despite losing overall sales during the pandemic, eat-in services were still preferred, while sales were made-up in home delivery or takeaway service options in 2021, as reported respectively, in the following foodservice outlets: cafés/bars (77.3%; 2.7%; 20%), FSRs (38%; 35%; 25%), and self-service cafeterias (65.8%; 23.7%; 10.5%). Over the year, FSRs also registered US$70.6 million (2%) in sales within drive-through services.

Street stalls/kiosks had more consumers choosing takeaway services (55.0%) over eat-in (22.8%) and home delivery (22.2%) services. Meanwhile, LSRs had the largest sales due to its home delivery services (38.4%), followed closely by drive-through (27%), eat-in (26.1%), and then takeaway (8.5%) services - with eat-in LSR services declining by a CAGR of 11% (2016-2021).

Between 2021 and 2026, takeaway services are expected to decline by a CAGR of 0.6%, while foodservice outlets will return more to the provision of eat-in (14.0%) or drive-through (11.0%) services to its consumers and home delivery (8.3%) will also continue to grow.

Foodservice sales: Offline versus online

In Thailand, offline foodservice sales totaled US$15.2 billion (year-over-year rates) (77.2%) versus online sales of US$4.5 billion (22.8%) in 2021. E-commerce sales accounted for 19.8% from within street stalls/kiosks, in LSRs (43.8%), cafés/bars (0.4%), FSRs (27.1%), and self-service cafeterias (24%) over the year. Significant growth in online value sales occurred respectively in cafés/bars (42.2%), LSRs (38.4%), streets stalls/kiosks (38%), and FSRs (34.5%) between 2016 and 2021.

Top 15 chained foodservice companies in Taiwan

Company and brand sales from within the foodservice sector is highly diversified within Thailand. In 2021, Seven and I Holdings Company Ltd. (brand: 7-Eleven) was Thailand's top chained foodservice company with value sales of US$1.4 billion, representing a 7.1% share of the foodservice market. The Charoen Pokphand Group (Lotus's, 5 Star Roasted/Fried Chicken, Chester's Grill) was the second largest foodservice company with value sales of US$707.8 million (3.6%), followed by Yum! Brands Incorporation (KFC, Pizza Hut) at US$632.7 million (3.2%), PTT PCL (Café Amazon, Jiffy) at US$447.7 million (2.3%), and MK Restaurants Company Ltd. (MK, Yayoi) at US$398.1 million (2%) in 2021. These top 5 company's, accounted for only 18.2% of the total foodservice market in Thailand.

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Resources

• Euromonitor International, 2022
• Euromonitor International, March 2022. Country Report: Consumer Foodservice in Thailand

Foodservice Profile – Thailand
Global Analysis Report

Prepared by: Erin-Ann Chauvin, International Market Research Analyst

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