Eateries to grow on entrepreneur interest

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The market for restaurants, coffee shops, bakeries and ice cream will grow by 7% to nearly 480 billion baht next year, according to a forecast by Asia Horeca Co, a unit of the TCC Group owned by billionaire Charoen Sirivadhanabhakdi.

Ladda Mongkolchaivivat, the company's managing director, said the continuing growth of these business categories is backed by strong interest from young entrepreneurs.

Additionally, the expansion of tourism in Thailand also stimulates consumption at restaurants, coffee shops and bakeries.

"During the past three years, businesses that Gen Y entrepreneurs wanted to do the most were restaurants and coffee shops and we believe this trend will continue next year," she said.

Mrs Ladda said the restaurant sector is valued around 375-385 billion baht and will grow about 4-6.8% this year. The restaurant industry has two segments, franchise and non-franchise.

There are 2,663 franchised restaurants with a market value of around 108-110 billion baht, accounting for 28.5% of the industry.

The market of non-franchise restaurants is valued 267-275 billion baht, or 71.5% of the industry.

In general, the franchised restaurant segment witnesses a higher growth rate between 6.9 to 8.9% while the non-franchise restaurant group grows 2.9-5.9%.

There are approximately 3,700 leading brands for coffee shop, bakery, and ice cream, with a combined market value of 62 billion baht this year. The coffee shop category is worth 30 billion baht, followed by bakeries at 17 billion baht and ice cream at 15 billion baht.

Mrs Ladda said the market share of mid-priced coffee shops is 40%. Coffee shops continue to grow because Thais drink coffee at a rate of 200 cups per person per year.

"There is still high demand to open new coffee shops at gas stations especially in the provinces," she said.

However, she said the chance that Gen Y entrepreneurs succeed in running food businesses is only 50%. The main reason for failure is a lack of information and experience, misinterpretation of market trends, market opportunities and customer tastes.

Parinya Chumrum, former director of Brand Studies and Research Center at the University of the Thai Chamber of Commerce, said if entrepreneurs want to succeed, they need to know their business sector well.

Their businesses have to have quality products and signature, creative service, proper location, decor to reflect product positioning, consumer insight and a unique selling point.

Asia Horeca will open its first branch of Horeca Square shopping centre on Feb 9 on 12,000 square metres of space at Cyber World Tower on Ratchadaphisek Road.