Bangkok: “Thai restaurants are being squeezed,” echoes business owners as sales plummet and costs soar, potentially leading to a systemic economic crisis. Amid pressures from the global economy and soaring energy costs, Thailand’s small restaurant and accommodation businesses are facing a “crisis within a crisis” that is not just about costs but also directly impacts consumer purchasing power.
According to Thai News Agency, Steve Sorathep Rojpojnarach, President of the Restaurant Business Association and Honorary Advisor to the Thai Hostel and Small Accommodation Association, clearly reflected that the current situation is not just a “slowdown,” but is entering a point of high risk of widespread collapse. Sales have dropped by 30%, a dangerous sign for the restaurant business. One of the most worrying figures is that restaurant sales have dropped by an average of 30%, and weekend sales, which used to be a major revenue stream, have also seen a decline of around 20%.
The main factors stem from changing consumer behavior, with people “tightening their belts” and spending less, coupled with economic uncertainty, leading to a significant decrease in eating out and traveling. This situation reflects that the problem isn’t just on the business side, but rather “purchasing power in the system” that is shrinking.
While revenue decreased, costs increased simultaneously in almost every area. Food ingredients, shipping costs, packaging costs, electricity, and energy costs have surged by approximately 15-20%. The problem is that restaurant businesses, especially small ones, only have a gross profit margin of around 10-15%. When costs increase at this level, profits disappear immediately. The only options left are to raise prices, risking losing customers, or temporarily suspend operations. In reality, “price increases followed by decreases” are virtually impossible in the food business, as prices tend to rise and then remain at that level.
The most concerning group is small restaurants and street food vendors, who have limited working capital. Steve estimates that without urgent assistance measures, at least 30% of small restaurants could close down. This isn’t just a problem for restaurants; it will have a ripple effect throughout the system, affecting fresh market vendors, carriers, shop workers, and related businesses, as restaurants are one of the “mechanisms that drive the grassroots economy,” linking many industries together.
From an entrepreneurial perspective, the concern is not just the economic problems, but also the “delay in implementing government measures.” Steve suggested that the government needs to prepare measures in advance and be able to implement them immediately. Key proposals include accelerating measures to stimulate spending, such as the “co-payment scheme” (Half-Half), tax deductions for tourism and restaurant expenses, offering soft loans to help entrepreneurs, and expediting measures to stabilize energy costs. They warned that if the measures were delayed until after April, it could have widespread consequences and “many small businesses might not survive.”
From the business side, adaptation is also essential. Recommended approaches include reducing energy consumption in the store, managing the air-conditioned zones, controlling kitchen costs, and planning cash flow carefully. This includes reassessing revenue in crisis situations, such as estimating a 50% reduction in sales, to prepare for any unforeseen event.
Ultimately, Steve left us with an important perspective: helping restaurants isn’t just about helping the owners, but about helping the entire economy. Every expenditure at a restaurant distributes income to multiple sectors, from upstream to downstream. “If the restaurant can survive, others can too.” And in times of crisis like this, “not stopping spending” may be one of the key ways to help keep the entire economy going.