Popularity of Foreign Restaurant Consumer Attitude and 'Literature Review' chapter

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Excerpt from 'Literature Review' chapter :

popularity of foreign restaurant: consumer attitude and behavior toward foreign cuisines in Bangkok

Thailand as a tourist destination

Thailand has become a tourist destination hotspot for its scenic beauty, the humble nature of their people, and the relative value of foreign currencies relative to the baht. According to EIU ViewsWire (2003), "Growth in the tourism industry in recent years was the result of the depreciation of the baht against non-Asian currencies (which improved competitiveness relative to destinations outside the region), aggressive marketing campaigns and an increase in the number of airlines offering flights to Thailand." (EIU ViewsWire, 2003)

Additionally, according to EIU ViewsWire (2003), "Tourist arrivals rose by 5.8% to just over 10m in 2001, despote the global economic downturn and the September 11 terrorist attacks in the U.S., bringing in Bt 295bn (U.S. $6.6 bn) in revenue. Thailand benefited from its reputation as a safe and stable society and also its efforts to step up security for visitors." (EIU ViewsWire, 2003)

However, tourism did suffer due to the bird flu outbreak that afflicted the region in the early 2000s. According to EIU ViewsWire (2003), "In early 2003, however, the tourism sector suffered from a downturn in international arrivals owing to the regional outbreak of Severe Acute Respiratory Syndrome (SARS). Although Thailand had avoided the worst of the outbreak of SARS in terms of suspected cases and deaths, the threat of contracting SARS, in addition to the U.S.-led war in Iraq, resulted in a massive increase I travel cancellations in the second quarter of 2003. By late April, the decline in tourist arrivals had resulted in industry losses amounting to around Bt 30 nn-40 bn." (EIU ViewsWire, 2003)

According to Thailand (2003), "Thailand, a nation of more than 55 million people, is one of the developing world's most dynamic economies. A favorable economic climate in the 1980s propelled the Thai economy into achieving one of the highest growth rates in the world with an average annual gross domestic product (GDP) of 10% from 1986 to 1990." (Thailand, 2003)

In fact, much of the Thai economy is a function of the level of not only tourism in raw visits per year, but also in the number of purchases and the amount of those purchases that generate jobs and broaden the broad economy in Thailand. "Tourism plays an increasing and crucial role in the growth of the Thai economy as the country shifts from an agricultural base to a more industrialized and service-based economy. Tourism is Thailand's largest source of foreign-exchange earnings, with receipts accounting for about 5% of the country's GDP. A rapid growth of tourism in conjunction with strong international demand yielded high economic returns, stimulated the nation's economy, created jobs, encouraged investments, and raised the country's standard of living." (Thailand's tourism and hotel industry 1993)

Additionally, according to Thailand's tourism and hotel industry (1993), "Through strong marketing efforts by both the public and private sectors, the number of international visitors increased from 1.85 million in 1980 to 5.3 million in 1990, an average annual growth rate of 15%. Likewise, tourism receipts jumped by over 70% annually: from $12 billion in 1985 to $4.3 billion in 1990." (Thailand's tourism and hotel industry, 1993)

Overview of the Restaurant Industry

According to the PR Newswire (2011) "The countdown is on, once again, for Thailand's grandest food extravaganza of the year, the THAIFEX -- World of food ASIA 2011. The event aims to further underscore Thailand's capabilities as a major food-manufacturing and food-exporting hub of the region, and the world. This year's event is set to feature over 1,200 leading food-related companies, occupying 2,600 booths, and is poised to welcome an influx of international visitors from around the world." (PR Newswire, 2011)

As Thailand restaurants also rely on the distribution of frozen foods, the ability to deliver these goods to market becomes increasingly critical. "According to Salin, Nayaga (2003), "Costly inter-island fright is the major challenge for distributing frozen foods in the Philippines. In Thailand, substantial distances must be crossed between the capital and secondary cities. Because of high gasoline costs, the expense of trucking distribution to secondary cities is significant." (Salin, Nayaga, 2003)

The major restaurant chains, such as Yum, do not plan on slowing down restaurant growth in Thailand. According to Pitsinee (2008), "Despite the economic downturn in its home country, the U.S. restaurant chain Yum Restaurants will continue to invest heavily in Thailand with a planned budget of 1.7 billion baht next year, more than double this year's total, to expand its Pizza Hut and KFC restaurants." (Pitsinee, 2008)

Additionally, according to Pitsinee (2008), "Mr. Sran said new KFC openings next year would double to 100, bringing total outlets in shophouses and seeking new business opportunities upcountry, reducing reliance on leasing space in retail outlets and shopping malls. Mr. Sran said there was a huge opportunity for both KFC and Pizza Hut. The company has identified 600 to 700 districts as candidates to grow by 15% to over one billion baht this year and by 20% next year, mainly from gains at existing outlets." (Pitsinee, 2008)

Restaurant Industry Trend

Growth of the Thai restaurant and foreign restaurant in Thailand

According to Martin (1996), "Another striking measure of the region's appetite for American fare can be seen in the growth of Pizza Hut in Thailand. When an American named William Heinecke, who grew up in Thailand, proposed opening the country's first Pizza Hut in the Thai capital, Bangkok, in 1982, prospective investors and the franchisor itself expressed skepticism, citing Asians' well-known aversion to cheese." (Martin, 1996)

Additionally, Martin states the following, "Thailand is not so dissimilar" from the crowding taking place in markets like Singapore and Jakarta. "Everybody thinks fast food is fast money," he says, confident that his own 16-year head start in the Bangkok market will help his company maintain a momentum that has yielded 35-percent annual earnings growth." (Martin, 1996)

Thailand Food Industry SWOT (Business Monitor, 2010)

Strengths

The domestic food-processing industry is expanding rapidly, with Thailand the largest food exporter in South East Asia

Government policies actively support the development of value-added production and domestically produced goods

The country benefits from high tourism levels, which fuel sales of processed foods especially

Sustained economic growth and steady urbanization has fuelled demand for higher value processed food products

Weaknesses

The Thai food processing sector remains fairly fragmented, dominated by a large number of small companies and cottage industries, which hinders output potential, due to inefficiency and overlap of resource usage

The Thai agricultural industry suffers from some structural short-comings that restrict its potential, particularly on the export market

Food consumption remains low in global terms, inhibiting premiumisation of industries which is usually a sure-fire path to growth

The woes of the trade-dependent Thai economy have adversely affected consumer confidence and demand for non-essential food and drink products

Opportunities

There is strong interest in added-value products among middle -- and upper-income groups, particularly products that address current trends, such as health consciousness, hygiene and a preference for local flavourings

Thailand's location makes it an attractive investment choice for companies seeking a regional hub but deterred by the high costs of traditional hub markets such as Hong Kong and Singapore

Increased concern over standards in China could see a shift in investment in food processing facilities to Thailand in coming years where food security and safety standards are higher

Threats

Further outbreaks of avian flu will harm the country's poultry export sector

Climate change also jeopardies its all-important fisheries industry

Rising input costs could restrict investment in both primary and secondary food production, with costs difficult to pass on to consumers in this price sensitive environment

Volatile prices for many of Thailand's key export commodities (rice, rubber and sugar) is likely to damage the livelihoods of many farmers, and force the government to continue to offer burdensome subsidies

Weakening consumer spending and consumption levels may pose a threat to the country's export sector

Source: Business Monitor (Q1, 2010)

The Notion of Eating Out

The notion of eating out in Thailand is synonymous with luxury. "According to Sheridan (1997), "To attract wider audiences, ethnic -- themed restaurants will become more gentrified or Western yet still retain elements of foreign flair. A prototype of that "tour-bus" trip is the recently opened E&O Trading Company in San Francisco, a combination microbrewery and Asian bistro. It's been described as "approachable ethnic," a mix of the theatrical, exotic and familiar. Consulting chef Joyce Goldstein, formerly the owner of Square One, San Francisco, created a menu that spans a number of Asian and south Asian countries, including Thailand." (Sheridan, 1997)

According to Cooke (1999), "Yet it seems the British are happy to put up with all the inconvenience for a spot of tropical sun. Last year the UK surpassed Germany as Thailand's biggest source of European tourists. The Tourism Authority of Thailand says there were more than 400,000 British visitors last year, an increase of 38 per cent over 1997. While Phuket, in the south…

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