ttb analytics predicts that restaurant operators in 2022 will bear increased costs from rising raw material prices by 9-12%, amounting to 21-27 billion baht, particularly impacting small operators who are most affected due to their lower income base. The government is advised to manage raw material prices and support consumer purchasing power.

            The TTB Economic Analysis Center (ttb analytics) assesses the impact of rising raw material prices, which affects the costs and revenues of all SMEs in the food sector, totaling 335,758 businesses. Most of these operators are financially vulnerable with low income levels, particularly small operators, who make up 90.4% of the total.

          Analyzing the cost structure using production factors and output tables, along with trends in product prices affected by supply shocks, it was found that the cost for SMEs in the restaurant sector is at 67.3% with a gross profit margin of 32.8%.

          Regarding the issue of rising raw material prices in the past two months, the cost of sales has increased to 76.0 - 78.6%, resulting in profits dropping to only 21.2% - 23.9%. Small operators with low income bases are beginning to feel the impact clearly and need to raise food prices to maintain profit levels close to those before the current cost crisis.

            Estimated revenue for SMEs in the restaurant sector in 2022 is around 235 billion baht, with ttb analytics estimating that the costs operators must bear will increase by about 21-27 billion baht per year, leading to reduced profits.

            According to data from the Office of Small and Medium Enterprises Promotion (OSMEP), there are as many as 303,490 small operators who are the most clearly affected due to their low income, averaging around 41,500 baht per month. Facing rising costs, their profits may not be sufficient to cover living expenses, leading small operators to gradually start adjusting product prices to accommodate the increased costs, adding further burden to the public who are still recovering from the COVID-19 crisis across multiple waves, including low-income consumers whose purchasing power is diminished due to rising living costs.

For strategies to cope with high costs, the government can assist SMEs

          Government assistance programs that address these issues can expedite aid to those directly affected, such as the Phase 4 co-payment policy, as the subsidies in this program not only help reduce the financial burden on the public but can also be directly passed on to operators.

          Policies to control raw material prices in line with market supply and demand may involve requesting cooperation from medium and large operators to temporarily freeze prices, as these two groups have higher income bases and can still generate sufficient net profits for their businesses. Additionally, the government should have policies to manage high cost issues to prepare for the situation after financial aid policies expire, such as freezing prices of other raw materials that do not have supply issues, like rice, eggs, or seasonings. Furthermore, promoting the consumption of short-rearing meat products could serve as substitutes during the rise in raw material prices.

          Managing personal expenses Consumers should start managing their expenses more effectively, such as larger families cooking at home to reduce costs, and choosing to use substitute ingredients that have not yet seen price increases to cut down on expenses. Operators can also reduce the proportion of expensive raw materials and increase the use of substitutes to lower average costs. If substitute ingredients are chosen, it may lead to a slower increase in prices of products that have rapidly risen recently or even a potential decrease in the near future.