Coffee company needs room to expand

Major retail operators look less likely to build more large shopping complexes, forcing the operators of restaurant chains to look elsewhere to expand their businesses, according to a coffee company.

Next year Black Canyon plans to look into spaces in petrol stations, hospitals and stand-alone locations in shopping districts, according to Kannika Chinprasithchai, marketing manager of Black Canyon (Thailand) Co.

”It’s not only Black Canyon that is moving this way, other restaurant chains are doing the same thing,” said Ms Kannika.

In the past, operators of lifestyle restaurant chains have expanded their businesses in line with the expansion of department stores and hypermarkets. But major retailers seem to be more reluctant to open new department stores and hypermarkets in the future, said Ms Kannika.

Therefore, restaurant chain operators have started to look for new space in the vicinity of the government’s megaprojects; in the new airport or along the new transport systems, for example.

However, the number of megaprojects planned is limited, and therefore so is space, she said, adding that petrol stations, hospitals, and stand-alone locations give operators more room to expand freely.

Black Canyon will be among 40 food and beverage operators securing operation space at the forthcoming Suvarnabhumi Airport, said Pravit Chitnarapong, the company’s managing director.

Mr Pravit said he does not know how many Black Canyon outlets he will open at the new airport. This is because the authorities and King Power, which is the concessionaire of the retail space, have not yet confirmed the rental rates.

Higher rent is another factor that has convinced restaurant chain operators to opt for smaller store formats.

Black Canyon currently has three formats: Black Canyon Coffee House and Restaurant, a full-service format, serving mainly coffee and Thai food; Black Canyon Coffee House and Bakery; and Black Canyon Kitchen, which offers coffee and a fast, Thai food, a service for people on the go.

Of the total 130 Black Canyon outlets in Thailand, 65% are Black Canyon Coffee House and Restaurant, 26% are Coffee House and Bakery, and 9% are Black Canyon Kitchen.

Of the three concepts, the expansion rate is highest in the Coffee House and Bakery format as it requires a smaller space of between 15 and 40 square metres. Management is also less complicated than for a restaurant, and, accordingly, it yields higher profit, said Ms Kannika.

The full restaurant concept requires more than 90 square metres of space, and the Black Canyon Kitchen needs more than 70 square metres, she added.

The Black Canyon Kitchen concept has good opportunity to expand, she said. This format offers fast-food service with prices up to 15% cheaper than at Black Canyon Coffee House and Restaurant.

This concept is also designed to fit its chosen locations, which are mainly petrol stations, said Ms Kannika. Customers who are travelling only want simple dishes, so food presentation at the Black Canyon Kitchen is not as decorative as in the company’s full-concept restaurants, she added.

Black Canyon runs 10 Black Canyon Kitchens in 10 Jet petrol stations in Bangkok suburbs and adjacent provinces. Five additional outlets are opening next year, said Ms Kannika.

Black Canyon’s total revenue this year is expected to be higher than 900 million baht, a 12% growth from last year. Next year’s growth is expected to be 15%, according to Mr Pravit.

Citing a study by Kasikorn Research Centre, Ms Kannika said Thailand’s coffee market this year is worth 21 billion baht in total. Of the total, 9.3 billion baht comes from sales generated by instant coffee, seven billion baht is generated from ready-to-drink coffee, and 4.3 billion baht is from premium coffee or coffee served in coffee houses.