Thanks to our on-going love affair with food, changing dining habits and pandemic-induced lock-downs, Thailand’s food delivery service market is turning into something of a battleground. Although business is booming in the sector, with established firms reaping the benefits and new players enjoying lucrative incentives, it’s interesting to consider whether such demand is likely to continue.
Thailand has an incredibly strong food culture, with Thais taking great pride in their strong connection to food. It is this interest in food, combined with evolving dining habits and the closure of restaurants and takeaways during the pandemic, which are intensifying the demand for food delivery services in Thailand.
Although demand for food delivery services is rising rapidly in Thailand, the country still lags behind in comparison to other countries in the Asia Pacific region such as Hong Kong or Singapore. So much so that established players Foodpanda, Uber Eats and Line Man see Thailand’s current food delivery sector as underdeveloped. Bangkok in particular is being seen has having some of the best potential in the region for meal apps; probably because of the city’s countless street stalls and fantastic restaurants.
However, it is perhaps the Covid-19 pandemic which has been the biggest and most significant trigger for the dramatic rise in food delivery services in Thailand. The pandemic has demonstrated just how adaptive consumer habits can be, with the uncertainty caused by periods of lock-down driving considerable changes in lifestyle and behaviour. Restaurant closures, social distancing and working from home have all played their part, whilst consumers are spending less money on travel and clothing, for example; leading to an increase in spending on ‘treats’ such as takeaway meals and luxury homewares.Despite the fact that restrictions are gradually being eased, competition in Thailand’s increasingly lucrative food delivery sector shows no sign of decreasing.
Which companies are involved?
Foodpanda already has a strong foothold in Thailand but is facing increasing competition thanks to huge increases in demand.GrabFood is hoping to double its customers in Thailand with a new campaign: ‘Free Your Hunger’ which is intended to increase sales by restaurant partners and customer numbers by 100%. Grab clearly see the potential food ordering has in Thailand; the market is continuing to grow despite the fact that restrictions brought in by the pandemic are now being eased.
Go-Jek is a relatively new kid on the block and the successful Indonesian ride-hailing business has joined forces with the already established Get (another ride-hailing specialist) to help facilitate their move into Thailand. Get released a motorbike hailing app in 2018 which has proved incredibly popular with those living in Bangkok as traffic congestion becomes worse. Since then Get has significantly increased recruitment in Thailand; accumulating a staggering 20,000 merchants and 10,000 drivers. It is this success which has given them a springboard into food delivery services in Thailand, operating under the new brand name of Get Thailand. This latest move represents the company’s third entry into foreign markets after Vietnam and Singapore for ride-hailing services.
Japan’s Line Corp is preparing for a long battle with other players in Thailand’s food delivery market, via its fast-growing delivery business Line Man. Line Man is hoping that its recent merger with Wongnai, Thailand’s leading restaurant listings site, will give it the edge. The company currently has a presence in 15 Thai cities but is aiming to increase this to 20 by the year-end, by relying upon the Hong Kong-based logistics company Lalamove to enable rapid expansion.
The challenges ahead for Thailand’s fledgling food delivery services
All four players – Foodpanda, Grab, Go-jek and Line Man - registered losses totalling 4.2 billion baht in 2019 and the former head of Grab Thailand, Tarin Thaniyavarn, has warned that delivery services are still unprofitable despite increasing demands. To start reaping the rewards, delivery services will need to get to the point where they are no longer have to subsidise delivery costs and offer promotions to attract customers. In addition, the four main food delivery players will have to begin the expansion of their footprint as far as possible, particularly to areas outside Bangkok.
Cloud kitchens, also known as ghost kitchens, are commercial facilities which are purpose-built in order to produce food for delivery. These so-called cloud kitchens could be thought of as virtual restaurants and are another potential area for expansion.Offering a way to keep delivery costs as low as possible whilst accommodating different types of restaurant under one roof, the growing number of cloud kitchens in Thailand is yet another glimpse into the country’s changing food landscape.
Last and by no means least, Thailand’s food delivery market is expected to grow by up to 20% over the next year. This is food for thought indeed and it will be interesting to watch how it evolves.
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