Thailand's restaurant industry is facing a turbulent period marked by declining sales, shrinking profits, and a wave of closures that stretch from street food vendors to well-known establishments. According to the President of the Restaurant Business Operators Club, the sector is grappling with a "fire burning" scenario, driven primarily by diminished purchasing power among Thai consumers amid a soaring cost of living and a sluggish economy.
Consumer behavior has shifted noticeably, with many cutting back on dining out due to economic pressures. The government's stimulus measures have fallen short of expectations, prompting more frugal spending habits. Foreign tourist arrivals, a critical source of revenue for many restaurants, have also plummeted with no clear sign of recovery on the horizon, further squeezing the industry.
The cost burden on restaurants remains heavy, with sustained increases in prices for raw materials, electricity, and fuel since last year. This squeeze has forced many establishments—ranging from small eateries to large chains—to shutter or endure profit losses exceeding 50%. The ripple effects extend beyond the eateries themselves, threatening the livelihoods of fresh market vendors, farmers, transport workers, and restaurant employees. Analysts warn this could exacerbate household debt problems nationwide.
Despite some optimistic forecasts by research centers predicting a 5% growth in the restaurant sector in 2025 valued at 5.7 trillion baht, recent data paints a more cautious picture. The first quarter of 2025 saw growth of only 2.7%, reflecting waning confidence among restaurateurs about opening new outlets. While new restaurant openings continue, the sector is caught in a cyclical pattern: approximately 100,000 restaurants open annually, only for an equal number to close the following year.
More alarmingly, the typical lifespan of new restaurant businesses is shrinking. Where once half of new eateries closed within a year, now many fail within just seven to eight months. Kasikornthai Research Center reports a sharp 87.6% increase in closures in 2024 compared to 2023, with 805 restaurants shutting down versus 429 previously. Meanwhile, openings barely rose by 0.6% over the same period. Early 2025 figures show a 13% drop in new openings and a 16.9% rise in closures compared to the previous year.
The research center highlights that the restaurant business is easy to enter but equally easy to exit, especially as consumer habits evolve alongside rising living costs and shrinking disposable incomes. With around 700,000 restaurants and beverage outlets operating in 2025—excluding street food and convenience stores—consumers enjoy a plethora of choices, which dilutes traffic to some establishments.
Notably, younger generations display less brand loyalty, favoring new experiences, differentiation, and value for money over traditional dining options. Kasikornthai Research Center projects that the overall restaurant market will grow by only 3% in 2025, down from 5% in 2024, influenced by the economic climate and tourist numbers. Growth is expected to vary by segment: full-service restaurants may grow by just 1%, limited-service by 2.7%, while street food vendors could see growth between 4% and 5%.
The surge in street food popularity is attributed to its affordability and necessity, especially as consumers tighten their belts. This trend has even led some full-service restaurants to enter the street food market, intensifying competition. To survive, restaurants must adapt to changing consumer preferences by enhancing food quality, service, overall experience, value, convenience, and fostering positive word-of-mouth.
However, adaptation is not straightforward. Restaurateurs face tough decisions about whether to chase every trend or focus on their core strengths and target audiences. Missteps in timing or strategy can increase costs without guaranteeing success. Establishing a clear identity and catering effectively to the right customer segments is critical.
Pricing strategies are equally nuanced. Premium or high-value restaurants can justify higher prices to attract their target clientele. Conversely, eateries that inflate prices merely to appear trendy risk alienating customers if the perceived value or experience does not match expectations, leading to reduced patronage. The key lies in aligning product and service offerings with the intended market, ensuring consumers perceive prices as fair and affordable.
Many consumers, especially those in the mass market with moderate to low incomes, often feel certain restaurants are not meant for them, primarily due to cost concerns. From the restaurant's perspective, this segmentation is intentional, focusing on customers who appreciate the value offered. Marketing plays a role but is not the sole determinant of success. Some establishments thrive through reputation, unique identity, or lack of nearby competition, relying on organic word-of-mouth rather than aggressive marketing campaigns.
Looking ahead, Kasikornthai Research Center forecasts that the restaurant industry’s growth in 2026 may slow further to between 1% and 3%, heavily dependent on the broader economic environment.
Meanwhile, Thailand's franchise sector presents a contrasting story of resilience and growth. The franchise market continues to expand robustly, boasting an 18% growth rate and a total market value exceeding 300 billion baht. The 21st annual "Thailand Franchise & Business Opportunities (TFBO 2025)" event, held at BITEC Bangna from June 4 to 7, 2024, showcased this vibrant sector, attracting both Thai and international investors.
Ms. Aroman Sapthaveetham, Director-General of the Department of Business Development, Ministry of Commerce, emphasized the franchise industry's role in creating thousands of new entrepreneurs and tens of thousands of jobs. The sector also bolsters the use of domestic raw materials, aligning with government policies aimed at stimulating economic growth. The TFBO event serves as a vital platform for franchise owners and investors to connect and negotiate, reinforcing Thailand's position as a regional business hub in ASEAN.
Mr. Kvin Kittiboonya, Managing Director of Kvin Intertrade Co., Ltd., revealed that Thailand currently hosts 661 franchise businesses. The top five categories by number are food and bakery (217 businesses), beverages and ice cream (168), education (105), services (76), and real estate and retail (48).
Looking to 2025, Mr. Kvin predicts that economic conditions, evolving consumer behavior, the aging population, and rapidly advancing technology will drive new franchise trends that cater to diverse consumer needs. Mr. Sutthichai Panitnaragool, President of the Franchise and License Association, identified the top 10 rising franchise sectors for 2025, highlighting dynamic shifts in the market.
Conversely, some businesses face declining trends, including large restaurants, parcel delivery services, traditional grocery stores, video rental, photocopying and printing services, photo labs, and car rental and used car businesses. This decline in large restaurants aligns with the struggles observed in the broader restaurant sector, underscoring the challenges traditional dining faces amid changing consumer preferences.
In sum, while Thailand’s restaurant industry navigates a challenging landscape marked by economic headwinds and shifting consumer habits, the franchise sector shines as a beacon of growth and innovation. Both sectors illustrate the complex interplay of market forces shaping Thailand's food and business ecosystem in 2025 and beyond.
