Restaurants adapting to cost increases

Restaurants adapting to cost increases

Operators trying to avoid raising prices

Diners check in at a restaurant in Future Park Rangsit mall with a thermal test, which has become the norm during the pandemic. Apichit Jinakul
Diners check in at a restaurant in Future Park Rangsit mall with a thermal test, which has become the norm during the pandemic. Apichit Jinakul

Restaurant operators are adapting their business strategies to cope with rising operating costs, mainly from higher prices of raw materials, oil and logistics.

According to Natalie Phanphensophon, chief operations officer at Coca Holding International Co, the operator of Coca Sukiyaki restaurants, operating costs for eateries increased the past 5-6 months as the pandemic caused farmers and suppliers who import raw materials to pause their activities.

Labour costs have sharply risen following the country's reopening, which has driven demand for workers in several fields, particularly in the service sector such as the hotel and restaurant industry.

"Our operating costs have increased by 15%," said Ms Natalie.

"Normally raw materials make up 30% of our operating costs. Now they represent up to 40% or even 50% during some periods."

She said Coca Holding has been trying its best to reduce operating costs by shifting to buy imported raw materials directly rather than via an agent.

"For Coca, we see the labour shortage as the industry's key problem," said Ms Natalie.

"Demand for workers has sharply risen as the country's reopening reignited business activities. Meanwhile, the mentality and working culture of younger people has changed as they now prefer doing part-time or freelance jobs and working from home."

She feels optimistic about the prospects of the 400-billion-baht food business following the country's reopening to fully vaccinated foreign tourists.

Teerapat Lertsiriprapa, chief executive of Kouen Group, the operator of Kouen Japanese restaurants, said the company is very concerned about the exchange rate, pointing out the cost of imported raw materials will increase if the baht becomes weaker.

According to Mr Teerapat, the company has yet to receive much impact from the increasing cost of raw materials because it already gathered a large stock of inventory as soon as the government announced it would reopen the country.

He expects current stocks will be adequate to support its operation over the next 2-3 months.

Given rising pork prices, Kouen Group has tried to increase the variety of menu options for chicken and fish in addition to creating new menus every quarter.

Boonyong Tansakul, chief executive of Zen Corporation Plc, the operator of Zen Japanese restaurants, said rising oil prices is a key challenge for the company.

But he insists the company is maintaining the prices of menu items.

"Raising food prices is not our priority," said Mr Boonyong.

"We don't want to pass the burden onto consumers whose spending power has just started improving. We adapted our strategies to reduce costs, such as ordering raw materials in advance with a longer contract agreement or launching new menus to balance cost."

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