Thai Beverage Thinks Beer and Fried Chicken Is A Good Match

Thai Beverage plans to acquire 240 KFC branches for 11.3 billion baht via its subsidiary QSR of Asia (QSA). This makes them the third KFC franchisee in Thailand. The other two franchisee are Central Restaurant Group and Restaurant Development Co Ltd.

The brand KFC (“Kentucky Fried Chicken”) is owned by the Yum! Brands Inc, based in Louisville. Drilling into the 4th quarter 2016 results for Yum! Brands Inc, Thailand is considered as an emerging market and contributes 2% of KFC sales. For the full year, KFC sales in Thailand grew 6%. The highest sales contributor for emerging market is China with 27% contribution.

Central Restaurant Group opened their first KFC store in Central Ladprao in 1984 and currently has up to 224 KFC branches. Central Restaurants Group has the right to open KFC branches across the country and some locations in the South.

It took me a while to dig into the 2016 full year financial report for Central Plaza Hotel to find the sales revenue contributed by KFC for Central Restaurant Group. You may wonder what is the relationship between Central Plaza Hotel and Central Restaurant Group. I cannot make it out as well but after translating Central Restaurant Group’s website which is in Thai language to English, I figured that Central Restaurant Group is 100% owned by Central Plaza Hotel and thus try my luck to download the financial report for Central Plaza Hotel to see if I can find anything related to KFC.

The following sales revenue was found in the financial report for Central Plaza Hotel. KFC contributes a total sales revenue of 5,823.4 million baht and it is the top revenue contributor for Central Plaza Hotel in the food segment business.

Restaurant Development Co Ltd has a total of 128 KFC branches and they held the rights to open KFC in the South and Bangkok. I was not able to find any information on Restaurant Development Co Ltd except that it is a joint venture among several Thai and Asian investors that has appointed a management team led by the ASEAN Industrial Growth Fund PTE LTD (AIGF), whose sponsors include Mitsubishi Corporation and the Development Bank of Japan.

My thoughts for Thai Beverage venture into the fried chicken business is that it should be accretive. The risk here will be having to compete with the other two existing franchisees who has already set a strong foothold in Thailand.

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