Why Such A Huge Investment ?

[luckyluke]

Katesiree is opening in Soi Bukhao, in front of the health centre, a new Coffee/Beer/Hotel, the investment is huge, but apparently they will keep the prices as low as in their other establishments.

So why such an investment and what can be their R.O.I., as they, apparently focus on a certain public, called by some "Cheap Charlies".

Edited December 10, 2012 by luckyluke

[LennyW]

Steady trade, always a winner.

[OMGImInPattaya]

Pennies, nickles, and dimes...it all adds up. Small profit per item...large volume = big profit?

Edited December 10, 2012 by OMGImInPattaya

[robblok]

Pennies, nickles, and dimes...it all adds up. Small profit per item...large volume = big profit?

Correct IMHO its better to have many clients and take a small fee per client then wait for the big spenders that might not come. I built my business on the same principle. Also.if you have much volume you can get better discounts. Not to mention your stock wont get old (if that is important)

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[OMGImInPattaya]

Pennies, nickles, and dimes...it all adds up. Small profit per item...large volume = big profit?

Correct IMHO its better to have many clients and take a small fee per client then wait for the big spenders that might not come. I built my business on the same principle. Also.if you have much volume you can get better discounts. Not to mention your stock wont get old (if that is important)

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Maybe what they are running is basically a wholesale operation with a retail shop stuck on the front end...pretty smart when you think about it. Like all the small wholesale beer and soda shops around town but instead of selling to other small retailers/restos at razor thin margins, just sell the stuff yourself through a retail operation at higher margin resto prices.

Edited December 10, 2012 by OMGImInPattaya

[BlackPuddingBertha]

"Katesiree is opening in Soi Bukhao, in front of the health centre, a new Coffee/Beer/Hotel, the investment is huge, but apparently they will keep the prices as low as in their other establishments."

What are these prices, exactly?

The markup on tea and coffee is often huge so there is quite a lot of room for manipulation before they start selling at a loss.

[LennyW]

"Katesiree is opening in Soi Bukhao, in front of the health centre, a new Coffee/Beer/Hotel, the investment is huge, but apparently they will keep the prices as low as in their other establishments."

What are these prices, exactly?

The markup on tea and coffee is often huge so there is quite a lot of room for manipulation before they start selling at a loss.

Same with Coke, Pepsi, water, soda....... it soon mounts up!

[luckyluke]

What are these prices

San Miguel Light 49 ThB , the others I believe :39 ThB Leo , Leo Big 59 ThB

Coffee 39 ThB.

better to have many clients and take a small fee

I can understand this, but than again my question: why such a huge investment, with such prices it will take, according to me, ages before they have any Return On Investment.

There are more places which apply the principle of many clients and small fee but they don't make such investments and their customers don't ask for it, there are places which have only a few tables and chairs and they are usually packed.

Edited December 10, 2012 by luckyluke

[Hedghog]

It work in Europe Aldi,Netto,Poundland,pile it high sell it cheap.

Profit on volume sales

[LennyW]

What are these prices

San Miguel Light 49 ThB , the others I believe :39 ThB Leo , Leo Big 59 ThB

Coffee 39 ThB.

better to have many clients and take a small fee

I can understand this, but than again my question: why such a huge investment, with such prices it will take, according to me, ages before they have any Return On Investment.

There are more places which apply the principle of many clients and small fee but they don't make such investments and their customers don't ask for it, there are places which have only a few tables and chairs and they are usually packed.

Maybe they are not in a hurry - maybe a home as well as a business????

The prices you quote are already on the way to a good return, where i have a beer a small Leo is 30 Baht and a big one 50 Baht - and there is profit on that!! , but they have been there since they were born and will probably end their days there!!

Not everyone automatically assumes the "Pattaya mentality" (Charge high in case they don't come back!!)when it comes to setting up shop, thankfully!, just be thankful that a decent place with reasonable prices is opening near you, enjoy it, their investment is not your problem.

[Hedghog]

Thai buffet restaurants also use this strategy,low margin but high turnover,beats high margin low turnover

[robblok]

What are these prices

San Miguel Light 49 ThB , the others I believe :39 ThB Leo , Leo Big 59 ThB

Coffee 39 ThB.

better to have many clients and take a small fee

I can understand this, but than again my question: why such a huge investment, with such prices it will take, according to me, ages before they have any Return On Investment.

There are more places which apply the principle of many clients and small fee but they don't make such investments and their customers don't ask for it, there are places which have only a few tables and chairs and they are usually packed.

I know what ROI is im an accountant. But you fail to realize that many times a small fee can be the same as a few times a high fee. The end result is the same. Ut does not matter how the profit is generated just how much it is. Charging more does not mean more profit. There is a certain kind of bell curbe for this (Dutch guy here dont know the exact technical term.)

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[robblok]

Anyway its hard to judge as you dont have clear figures how much more the investment is as for a smaller setup. Resale value ect, without clear figures its hard to be certain. But high turnover with a small margin can outpreform a sliw turnover with a high margin.

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[luckyluke]

maybe a home as well as a business

They don't live there, they are a Sino-Thai family, they have in Pattaya

2 gold shops

5 Beer/Coffee some with hotel,

I am practically sure they have more than this.

They will know the reason why they do it this way, I am not, and therefore puzzled, and therefore my question, because without the huge investments they apparently have the same number of customers, they have 2 places they run without the big investment they do now but with the same kind and number of customers plus one they invest also big but don't attract customers and is now for sale.

[Psych01]

"Why such an investment?"

Maybe because it is Pattaya, tea money, who knows. Not sure you will get an answer to the size of the investment.

[Hedghog]

They will sell and make capital gain.

A developed site is better than undeveloped,if as you say they have multiple businesses in Pats I think they know what they are doing.(making it large.) Watch and learn these people aren't playing at it with a couple of million.

Why do you seem hung up on this so much its plain economics,as a prior poster accountant tried to explain.

[Hedghog]

The concept.

Sunglasses shop massive margin,few customers.

Beer bar medium margin medium customers.

Sea view restaurant low margin due to overheads,mainly staff,a boat load of customers.

The latter wins because of volume resulting in a better % ratio in easy terms give and take

[Hedghog]

Please don't open a business

[Hedghog]

This could go on forever I'm out

[marstons]

not sure why Katesiree opening has to turn into an accounting thread but an on topic post what is Katesiree.

[JSixpack]

not sure why Katesiree opening has to turn into an accounting thread but an on topic post what is Katesiree.

Perhaps because so few members have any understanding of business economics? It isn't taught any more in secondary school, let alone primary.

Edited December 10, 2012 by JSixpack

[Pattaya46]

Katesiree is opening in Soi Bukhao, in front of the health centre,...

Very unclear for me.

Katesiree is already in Soi Buakhao for years.

And "health center" is a very vague indication of the location.

So where and what exactly?

[luckyluke]

^

In front of the, still in construction, hospital and the health centre, they kept the same name, why? maybe they sold the old one or....?

[Potosi]

I can understand this, but than again my question: why such a huge investment, with such prices it will take, according to me, ages before they have any Return On Investment.

Some people don't care about becoming billionaires in a forthnight, but want to operate the business for all their lives, care more about customer satisfaction than quarterly statements, care for the stakeholders employed and in the community, and take pride in passing it down for generations. That's the European small-business culture. There are thousands of them centuries older than the Dow Jones corporations, and they will survive any of them for many more centuries.

[luckyluke]

Thanks to all for the input but still not satisfied, this is not about the way to doing business and to make profit on long or short times, it's about the reason why they invest so much money to focus on a certain kind of customers when other places invest practically nothing and have the same kind and number of customers, even one see the same customers here and there.

The only reason I see for the moment is, they are a very rich Sino-Thai family and they want to show off, face being very important for them.

Potosi, maybe you may approach the reason as well.

Edited December 10, 2012 by luckyluke

[robblok]

Thanks to all for the input but still not satisfied, this is not about the way to doing business and to make profit on long or short times, it's about the reason why they invest so much money to focus on a certain kind of customers when other places invest practically nothing and have the same kind and number of customers, even one see the same customers here and there.

The only reason I see for the moment is, they are a very rich Sino-Thai family and they want to show off, face being very important for them.

Potosi, maybe you may approach the reason as well.

The thing is you speculate you don't have any insight in their margin and how much a customer spends there. You have no insight in the same thing for other places.

You can't say a thing about this because you dont have any facts. Anyone with a bit of experience in accounting would not say anything definate about this. Too much variables.

Maybe the clients spend more per head there. Drink more because itd cheaper. Maybe it is busier al the time(did you teally study it).

There are loads of reasons why this might be more profitable.

It also depends on how many years you take for depreciation.

Im not saying it is, but its far from impossible. If they are so rich they probably have good business sense.

But without figures we can't say either way.

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[luckyluke]

^

You are completely right, it seems I will not have an answer on my question.

[smedly]

it's good to see as it throws a stake in the ground regarding prices much like family mart and 7/11

Witherspoons have a similar model in the the UK and in most cases forced overcharging pubs close by to adjust their prices accordingly - no complaints here

[JSixpack]

^

You are completely right, it seems I will not have an answer on my question.

Not so. You've had reasonable answers already but you can't understand them.

Best just to mind your own business and let the owners of Katesiree mind theirs.

[luckyluke]

^

Not my intention to mind other people's business, just curious, and trying to understand, but apparently this is not on my level.

Edited December 11, 2012 by luckyluke