Profitable Pattaya

[eddy-ham]

Having read this fourum for the last year or so the general opinion on Pattaya seems that any business opening here is bound to fail. Having been in Pattaya on and off for 5 years I have seen it grow and grow, now to excuse the pun but money is being pumped in by the tourists at a great rate.

So where's it going?Up country, families?

I look at the area and see a big market just need 100Baht off of every one..

Seriously though the money spent in Pattaya is massive and yet most business are non-profitalbe.....open for your views.........

[monty]

Fierce competition!!!

Tourist arrivals have been growing non-stop, but the tourist orientated businesses have been growing at a much faster pace!

Add to that the fact that the biggest growth in tourist arrivals has been in Asian tourists, and to a lesser extend families / Russian groups...

The majority of the ventures started over here are not exactly aimed at the two groups mentioned above...

So thats how we arrive at my mention of fierce competition. Only the very good tought out businesses, which are managed extremely good by experienced operators will survive, even make a pretty good amount of dosh!

What line of business is less important, if you are good, it'll work and I'm convinced the thousands of would be, unexperienced, dreaming business owners can only help the experienced ones, by keeping the standard they have to improve on very low...

It's just a simple fact of life, that a person with all his lifes' experiences in assembling cars at the the local GM factory in shiftwork, has a very slim chance to survive as a self employed business owner in Thailand (or anywhere else in the world for that matter).

It's even a daunting challenge for the most experienced under us, in the Thai way of doing things. You need to be extremely good in people management to have any chance in surviving...

[Kerryd]

Having read this fourum for the last year or so the general opinion on Pattaya seems that any business opening here is bound to fail. Having been in Pattaya on and off for 5 years I have seen it grow and grow, now to excuse the pun but money is being pumped in by the tourists at a great rate.

So where's it going?Up country, families?

I look at the area and see a big market just need 100Baht off of every one..

Seriously though the money spent in Pattaya is massive and yet most business are non-profitalbe.....open for your views.........

An old adage about Pattaya (and Thailand in general)

If you want to make a small fortune here,

Start with a large one !

(In other words, if you start with a large fortune, you may be lucky and escape with a small one by the time you realise that you aren't making money, but are losing it instead.)

Some people do make money. Some don't. Often, the ones that don't shouldn't have been in the business in the first place, what ever the business was.

For example. Saw a post on one board. Guy asking board members for advice on investing in a business with a Thai woman. Obviously has no idea if this is a good idea or not, apparently doesn't know squat about running a business in Thailand, and is asking complete strangers for advice.

What do you think his chances are of running a successful business here ?

[britmaveric]

Key is to not expect much, then if you do manage to do well then expectations are exceeded.

[eddy-ham]

I agree with what the two members above have said and having read some of the other tails of business set ups I look on in despair since these people will only lose money.

Having said all this, I have been involved in small business a long time and the market, people traffic is definatly in Pattaya but can you name a company/business that has developed over the last 5 years inline with the growth of tourism. Its very strange, anywhere else in the world and mulit

nationals would be in......Boots ( Iknow there is a small one already).Condominium (condo shop)

[Phil Conners]

The money goes into the handful of Thais who own most of the land in the area. Any business here will have rent costs that are close to or higher than the profit. Shophouses selling for 5M Baht and up, how are they going to be paid for by anything but a gogo bar?

[fxm88]

I know that a lot of Thai people would be happy if the could earn 100 baht a day, but it's just not possible without the one thing most of these businesses lack: customers!

How about the bar areas that get opened up? I can think of 5 to 10 of them that have opened in the last year (minus the 2 or 3 areas that have closed down) where each area has 10 to 20 bars in it. There's always some number of bars that get outfitted with a sound system and decorated in that same boring tile/bamboo/wicker style and then immediately put up for sale at some crazy price. Who buys these places!

Oh, here's one that actually made me laugh out loud. You know those couple of candle shops in Royal Garden and Big C? The ones with the 1000 baht candles? Anyways, together they are for sale -- at 2.2 million! The thing is, I've never, ever seen anyone buy a candle. I've never seen anyone even browse the selection! (For better or worse I spend a lot of time in the malls, how do you say mall-rat in Thai?) So that's 1.1 million each for: a card table, a tablecloth, a chair, an assortment of candles, and the rental contract on the floor space. Maybe they've got a few thousand extra candles stashed under the table! (This is actually listed with one of the business brokers. For more details Google search "EI0510017" or pick up a copy of their latestet businesses-for-sale magazine.)

Edited August 2, 2006 by fxm88

[Kerryd]

Its very strange, anywhere else in the world and mulit

nationals would be in......Boots ( Iknow there is a small one already).Condominium (condo shop)

There is traffic, a lot of it actually. In another thread, there was mention that the Tourism Authority of Thailand (TaT) estimated around 5 million visitors to Pattaya last year ?

I do find it surprising that a lot of Internationals aren't here, or aren't here in large numbers. Go to a place like Vancouver and it seems there's a McDonalds every 5 blocks. Here, there are 3 (that I know of. 1 by Mini-Siam, 1 in Royal Garden and the small one on Beach Road by soi Lido).

Sheesh, Subway sandwiches has as many franchises running here as McDonalds does.

1 Burger King ? No Wendy's ? Only a few Starbucks. 2 Dairy Queen's (both are pretty much limited to serving ice cream cones, drinks and hot dogs.)

The only International that seems to be here in force is 7-11 (is Family Mart an International chain ?).

One thing I've noticed here to, is people have a bad habit of starting up a business (bar, restaurant, what ever) and seem to expect it to become profitable from Opening Night onwards (with little or no advertising even). Even with an excellent location in high season, you can't rely on turning a profit immediately. People may not want what you are selling. Maybe there's already too much of it around the area. Maybe you are trying to sell pork in a Muslim area (for example, trying to sell something that the people in that area don't want).

In my neighbourhood, I've seen 2 restaurants open, then close withing 3 months due to a lack of business. 1 did no advertising at all (paid big $$$ for a 5 year lease, and was paying 20,000 baht/month rent as well. Never saw a single customer in there. Now it's up for rent at 30,000 a month).

You've got to be able to weather slow periods, especially at start-up. You have to factor in that this is a tourist-driven economy, that has a fairly distinctive high and low season. You have to make arrangements to avoid going bust during low season, just before high season kicks in again.

If you sink everything you have into a business and are relying on it to make money so you can pay your bills at the end of the first month, you are going to be sorry.

If you are lucky, you may be able to pawn off your business to some starry-eyed, fresh off the plane newbie.

That is where the "start with a big fortune, finish with a small one" saying comes in.

[unforgiven]

I know that a lot of Thai people would be happy if the could earn 100 baht a day, but it's just not possible without the one thing most of these businesses lack: customers!

How about the bar areas that get opened up? I can think of 5 to 10 of them that have opened in the last year (minus the 2 or 3 areas that have closed down) where each area has 10 to 20 bars in it. There's always some number of bars that get outfitted with a sound system and decorated in that same boring tile/bamboo/wicker style and then immediately put up for sale at some crazy price. Who buys these places!

Oh, here's one that actually made me laugh out loud. You know those couple of candle shops in Royal Garden and Big C? The ones with the 1000 baht candles? Anyways, together they are for sale -- at 2.2 million! The thing is, I've never, ever seen anyone buy a candle. I've never seen anyone even browse the selection! (For better or worse I spend a lot of time in the malls, how do you say mall-rat in Thai?) So that's 1.1 million each for: a card table, a tablecloth, a chair, an assortment of candles, and the rental contract on the floor space. Maybe they've got a few thousand extra candles stashed under the table! (This is actually listed with one of the business brokers. For more details Google search "EI0510017" or pick up a copy of their latestet businesses-for-sale magazine.)

ya very true a vast majority of thai business for sale are trying to catch the newbie who has fallen in love with thailand and want to stay, he's easily tricked

[Charma]

I know that a lot of Thai people would be happy if the could earn 100 baht a day, but it's just not possible without the one thing most of these businesses lack: customers!

How about the bar areas that get opened up? I can think of 5 to 10 of them that have opened in the last year (minus the 2 or 3 areas that have closed down) where each area has 10 to 20 bars in it. There's always some number of bars that get outfitted with a sound system and decorated in that same boring tile/bamboo/wicker style and then immediately put up for sale at some crazy price. Who buys these places!

Oh, here's one that actually made me laugh out loud. You know those couple of candle shops in Royal Garden and Big C? The ones with the 1000 baht candles? Anyways, together they are for sale -- at 2.2 million! The thing is, I've never, ever seen anyone buy a candle. I've never seen anyone even browse the selection! (For better or worse I spend a lot of time in the malls, how do you say mall-rat in Thai?) So that's 1.1 million each for: a card table, a tablecloth, a chair, an assortment of candles, and the rental contract on the floor space. Maybe they've got a few thousand extra candles stashed under the table! (This is actually listed with one of the business brokers. For more details Google search "EI0510017" or pick up a copy of their latestet businesses-for-sale magazine.)

ya very true a vast majority of thai business for sale are trying to catch the newbie who has fallen in love with thailand and want to stay, he's easily tricked

I think that is at the heart of the problem. Any popular tourist destination attracts the "dreamer" "escape from it all" wannabe business owners. With a constant supply of these, money is being pumped into small nsuinesses that run for a while and then close. The effect these have is to create a massive amount of competition and keep profits very low. Great for the tourists, but not so good for the businesses. Only the fittest will survive and even they have to accept lower returns.

The other factor that Phil Conners mentioned is the squeeze at the other end from local landlords who control much of the business properties.

It's all good for a hobby, but not a way to make serious cash.

[davethailand]

It's all good for a hobby, but not a way to make serious cash.

There are many owners that would'nt agree with that.

[johnh101]

Kerry,

Why the <deleted> would we want more MacDonalds ?

[Totster]

Kerry,

Why the <deleted> would we want more MacDonalds ?

American tourists have to eat something...

totster

[Mobi]

7/11 is owned by the CP chicken guy. I've no idea if he pays an international franchise, but if he does, I bet it aint much.

Pizza Hut, Burger King etc are all locally owned - same as 7/11 - I bet the money going overseas is minimal. Macdonalds too, probably.

The internationals find it just as hard to do business here as individual farangs. The rich Chinese/Thai mafia let them in to get their ideas and their brand names and then force them out. It even happens with international hotel chains. Even Thaksin did it and is currently being sued.

Thais have absolutely no business ethics whatsoever; a contract is meaningless and all farangs, big or small, are fair game.

A few have made it like Tescos, Carrefour and Boots, but they hit lucky during the financial crisis.

As others have said, in the smalll to medium retail businesses sector, the money is made by the Thais in renting land to would be farang entrepeneurs - and not a few Thais, I hasten to add.

One golden rule to all budding "farang millionaires". If at all possible, don't rent your land - own it. Because if a miracle happens and you make a go of your shop, resaturant, bar or whatever, the landlord will kick you out and take it over himself - happened thousands of times, even though they usually screw the business up after they get it.

Edited August 3, 2006 by Mobi D'Ark

[rak sa_ngop]

7/11 is owned by the CP chicken guy. I've no idea if he pays an international franchise, but if he does, I bet it aint much.

I had heard before that 7-Eleven was Japanese owned but the Japanese fellow students I asked recently knew nothing about this. Anyway these are some extracts from their website.

"7-Eleven pioneered the convenience store concept way back in 1927 at the Southland Ice Company in Dallas, Texas. In addition to selling blocks of ice to refrigerate food, an enterprising ice dock employee began offering milk, bread and eggs on Sundays and evenings when grocery stores were closed. This new business idea produced satisfied customers and increased sales, and convenience retailing was born!"

"Approximately 3,200 of the company's 5,300 stores in the United States are operated by franchisees, and an additional 485 are operated by licensees. 7-Eleven, Inc., its licensees and affiliates operate more than 27,900 7-Eleven and other convenience stores in Japan, Australia, Mexico, Taiwan, Singapore, Canada, the Philippines, Sweden, Denmark, South Korea, Thailand, Norway, Turkey, Malaysia, China and the U.S. territories of Puerto Rico and Guam.

7-Eleven in Japan IYG Holding Company, a wholly owned subsidiary of Ito-Yokado Co., Ltd. and Seven-Eleven Japan Co., Ltd., has owned a majority interest in 7-Eleven since 1991. Seven-Eleven Japan operates more than 10,000 7-Eleven stores in Japan and Hawaii under an area license agreement with 7-Eleven, Inc. "

... so it is majority owned by the Japanese. The Thai "CP chicken guy" I suppose must be a licencee?

[hiromj]

7 Eleven (now called 7 Holdings in Japan) and Family Mart corporations are Japanese owned. Family Mart has stated that they intend to open a few thousand new stores in Thailand. 7 Eleven is a publically traded conpany, not sure about Family Mart.

Edited August 3, 2006 by hiromj

[monty]

All these wholly owned Japanese or Thai companies running the local 7/11's are licensed franchise holders in their respective countries. They do pay big bucks to the American parent company for that right...

Remember not too long ago the Major group(who had the franchise right on Pizzahut's in Thailand) ran into conflict with PepsiCo, the owner of Pizzahut (along with kfc etc) about exactly how high these franchise fees had to be to extend their franchise right...

Negotiations went wrong, Major lost the pizzahut rights and simply went along renaming all existing pizzahut restaurants to "the Pizza Company".....

[Mobi]

All these wholly owned Japanese or Thai companies running the local 7/11's are licensed franchise holders in their respective countries. They do pay big bucks to the American parent company for that right...

Remember not too long ago the Major group(who had the franchise right on Pizzahut's in Thailand) ran into conflict with PepsiCo, the owner of Pizzahut (along with kfc etc) about exactly how high these franchise fees had to be to extend their franchise right...

Negotiations went wrong, Major lost the pizzahut rights and simply went along renaming all existing pizzahut restaurants to "the Pizza Company".....

Precisely

I bet CP chicken has struck a good deal with his 7/11 franchise. If not, one day it might turn into 8/11

[Samui Coconut]

Remember not too long ago the Major group(who had the franchise right on Pizzahut's in Thailand) ran into conflict with PepsiCo, the owner of Pizzahut (along with kfc etc) about exactly how high these franchise fees had to be to extend their franchise right...

Negotiations went wrong, Major lost the pizzahut rights and simply went along renaming all existing pizzahut restaurants to "the Pizza Company".....

wasn't that the Minor Group (i.e. Bill Heinecke), but sure, Major Ggroup sounds better

[thaihome]

..A few have made it like Tescos, Carrefour and Boots, but they hit lucky during the financial crisis.

..

How about Toyota, BMW, General Motors, Bayer Chemical, Conoco (owns Jet SErvice Stations), Caltex, Chevron, Seimans, the list goes on and on. They just don't have offices on Beach Road.

TH

[Mobi]

..A few have made it like Tescos, Carrefour and Boots, but they hit lucky during the financial crisis.

..

How about Toyota, BMW, General Motors, Bayer Chemical, Conoco (owns Jet SErvice Stations), Caltex, Chevron, Seimans, the list goes on and on. They just don't have offices on Beach Road.

TH

Nor are they small time, would be farang entrepeneurs.

In fact they all have big time Thai partners and are world-wide multi nationals.

Beach road is totally irrelevant - sounds like you just want to use this thread to resurrect the bash Pattaya brigade.

Edited August 3, 2006 by Mobi D'Ark

[eddy-ham]

..A few have made it like Tescos, Carrefour and Boots, but they hit lucky during the financial crisis.

..

How about Toyota, BMW, General Motors, Bayer Chemical, Conoco (owns Jet SErvice Stations), Caltex, Chevron, Seimans, the list goes on and on. They just don't have offices on Beach Road.

Sorry, but these business above are not the type of business I ment when I started this thread.

I am more on the single business started by locals and developed .The landlord and owner view is most likley correct from my experience most of these people are well healed and if the lease is doing well put the price up.

The other area is most likely the quality of trade that is there ( this is not a slap its just a realistic assesment) there are no Gucci,Channel,ect shops for passing trade since the trade/market is different.

If you have ever been to Great Yarmouth(never again) the streets are lined with hotels and bars selling full English breakfeast and dinners at silly low prices---aimed at the passing trade.

Having said that the traffic of tourist is 4 mill and rising, they are not all in the centre,they are not all buying property, they are not all on the golf course(thank goodness) but they all come and spend.

On what and where I don't know but its not all on beer, women ect.

[monty]

Oops,

Samui coconut is of course correct, Bill Heinnecke with his Minor group is the one...

Bit confusing though with all the majors and minors

The major group does movie theaters (major cineplex), and the pest control company we use is called Major-Minor

[Phil Conners]

I do find it surprising that a lot of Internationals aren't here, or aren't here in large numbers. Go to a place like Vancouver and it seems there's a McDonalds every 5 blocks. Here, there are 3 (that I know of. 1 by Mini-Siam, 1 in Royal Garden and the small one on Beach Road by soi Lido).

Sheesh, Subway sandwiches has as many franchises running here as McDonalds does.

1 Burger King ? No Wendy's ? Only a few Starbucks. 2 Dairy Queen's (both are pretty much limited to serving ice cream cones, drinks and hot dogs.)

You might actually be onto a good idea there, a Wendy's, Jack-in-the-box or that Tex-mex chain (name escapes me ATM) would probably not be the worst business idea you could get.

Even another BK with more competitive prices might do well. Have you noticed while BK and McD in the west charge very similar prices, here BK are almost twice the price of McD. Many others have, just see how full McD in Royal Garden is while BK is virtually empty.

Hey Sunbelt, how much would it cost to open a Wendy's here?

Edited August 3, 2006 by Phil Conners

[banchang]

Just take a look at the buisinesses for sale on sites like sun belt asia , Hundreds of them in Pattaya alone.

It allways makes me chuckle when I have a read through all the reasons for sale. "no time to develope this buissines due to other comitments" "For sale due to ill health" "this buisiness is only three months old but the owner feels its time to move on"

Why not just say "must sell ran out of cash " or "must sell Bar befor liver packs up"

[hiromj]

You might actually be onto a good idea there, a Wendy's, Jack-in-the-box or that Tex-mex chain (name escapes me ATM) would probably not be the worst business idea you could get.

Even another BK with more competitive prices might do well. Have you noticed while BK and McD in the west charge very similar prices, here BK are almost twice the price of McD. Many others have, just see how full McD in Royal Garden is while BK is virtually empty.

Hey Sunbelt, how much would it cost to open a Wendy's here?

Maybe you are thinking Taco Bell. Is Jack-in-the-box still around?

Edited August 3, 2006 by hiromj

[Kerryd]

Maybe you are thinking Taco Bell. Is Jack-in-the-box still around?

Not here

Only in America you say. Pity.

I used to like those Jack-in-the-Box commercials.

Yeah, I guess there is a lot of "behind the scenes" stuff that we never see or hear about, regarding franchises here.

And as was mentioned previously, make sure your company owns the property. It is all too common that a successful business owner will be driven out by skyrocketing rents, only to see his business handed over to a local for much less.

Watching the business crumble doesn't bring a lot of satisfaction apparently.

[Phil Conners]

Yep, Taco Bell it was

[fxm88]

Maybe you are thinking Taco Bell. Is Jack-in-the-box still around?

There's a bit of Taco Bell in Singapore, and I remember hearing plans about opening some up in China. As of October 2, 2005, there were 2,049 Jack in the Box restaurants, all of them in the U.S. I believe.

Does the California gold rush (1840's) have anything to teach every would-be Pattaya entrepreneur? It is "estimated that fewer than one out of twenty California gold seekers returned home richer than when they left" and that "many of the most successful Californians during the gold rush were enterprising merchants who sold supplies to the miners", a great example being Levi Strauss who originated his "Levi's" brand of pants during this time.

There are thousands of farang-owned bars and restaurants. Where are the farang-owned beverage wholesalers and kitchen equipment suppliers?

Edited August 3, 2006 by fxm88

[hiromj]

Maybe you are thinking Taco Bell. Is Jack-in-the-box still around?

Not here

Only in America you say. Pity.

I used to like those Jack-in-the-Box commercials.

Yeah, I guess there is a lot of "behind the scenes" stuff that we never see or hear about, regarding franchises here.

And as was mentioned previously, make sure your company owns the property. It is all too common that a successful business owner will be driven out by skyrocketing rents, only to see his business handed over to a local for much less.

Watching the business crumble doesn't bring a lot of satisfaction apparently.

I haven't seen a Jack-in-the-Box in America since I was a small child. As I recall, they had some food poisoning incident and I think someone died. After that, they were all gone (in Michigan anyways). I definately remember my mother talking to a clown to place an order at the drive thru. A Taco Bell or a Wendy's here would be great.

Edited August 4, 2006 by hiromj