Japanese restaurants in Thailand amid rising Chinese competition

With low-price strategies and rapid expansion, Chinese restaurant chains are intensifying competition, forcing Japanese restaurant operators to adapt swiftly to maintain their market share.

According to Yoshinari Suda, Director of the Agriculture and Food Department at JETRO Bangkok, Japanese restaurants in Thailand will face fiercer competition in the coming years—not only from within their own segment but also from the fast-growing Chinese restaurant sector. Establishing a strong brand identity and aligning with evolving consumer preferences will be crucial for survival in this dynamic market.

A Kasikorn Research Center report estimates that Thailand’s restaurant industry reached THB545 billion in 2024, reflecting 8.9% growth. Full-service restaurants, including Japanese dining establishments, generated THB207 billion, marking a 6.9% increase. In 2025, the industry is expected to expand to THB572 billion (4.8% growth), while full-service restaurants are projected to reach THB213 billion, growing by 2.9%.

With rising competition, Japanese restaurants are adjusting their strategies, from launching promotions and price cuts to enhancing menu value. While the number of Japanese restaurants in Thailand continues to grow, the sushi restaurant segment has declined by 6.8%, primarily due to oversupply and heightened competition.

Consumers continue to prioritize quality and value, leading to a surge in the popularity of affordable yet high-quality ramen and sushi restaurants. Additionally, the increasing number of Thai travellers to Japan has heightened the demand for authentic Japanese flavours, further shaping market trends.

To remain competitive, Japanese restaurants must focus on food quality, customer experience, and cost control. Key strategies include sourcing premium ingredients, bulk ordering to manage import costs, and enhancing authenticity through traditional Japanese ambiance. Additionally, adapting marketing strategies, leveraging online channels, and creating added value are crucial to counter the aggressive expansion and price-cutting tactics of Chinese-backed restaurant chains.

As competition intensifies, adaptation is key. Waruntorn Dangyai, Executive Director and Co-founder of Nigiwai Group Co., Ltd., emphasized that the Japanese restaurant market is no longer as easy to navigate due to new entrants, particularly fast-growing Chinese investors.

Rising ingredient costs also pose a challenge. Notably, during the height of the Russia-Ukraine war, salmon prices surged to THB750 per kilogram, significantly impacting restaurant operations.

Japanese restaurants in Thailand are undergoing significant adaptation as sourcing strategies evolve. Many ingredients that were once exclusively imported from Japan, such as eel, scallops, shrimp, and frozen seafood, are now increasingly sourced from China. Even specialty Japanese sauces, once considered unique, now face competition from Chinese supply chains offering alternative products.

Despite China's aggressive market entry, the expansion of Chinese-funded restaurants in Thailand has started to slow. Notably, the once-popular conveyor belt sushi chains have seen a wave of closures, with only large-scale Chinese-backed brands with strong capital and prime locations, such as Haidilao and CQK, managing to maintain their foothold.

"The hype around Chinese cuisine, especially conveyor belt sushi, has faded from its peak. Additionally, the Thai government's crackdown on illegal Chinese capital has caused many Chinese businesses to pause expansion, allowing Japanese restaurants to regain popularity," said Waruntorn.

However, the Japanese restaurant scene is also evolving. The once-booming Omakase segment is now experiencing a slowdown, with many trend-driven restaurants closing. Only well-established brands with strong reputations and a focus on quality continue to thrive in this competitive landscape.

While some segments of the Japanese restaurant industry face setbacks, hand-roll sushi has emerged as a growing trend. This format is more accessible, requires lower operational costs, and doesn’t rely on highly skilled chefs, allowing for affordable pricing.

This makes hand roll sushi bars an attractive model for entrepreneurs looking to expand with streamlined menus and efficient operations. However, small independent Japanese restaurants are under increasing pressure, especially in Thailand’s highly competitive Red Ocean market, where large, well-funded chains dominate. As a result, many small Japanese restaurants have been forced to shut down.

"Japanese menus in mainstream restaurants have evolved significantly over the past 7-8 years. Thai-owned Japanese restaurants looking to survive must embrace fusion-style offerings that cater to local tastes," said Waruntorn.

Meanwhile, traditional Japanese restaurants continue to focus on Japanese expatriates and business professionals in Thailand. Prime locations for authentic Japanese dining remain Sukhumvit and select shopping malls, where demand remains steady.

"Despite the continued popularity of Japanese cuisine in Thailand, restaurant operators must adapt to shifting consumer behaviour. To survive, businesses must control costs, leverage technology to reduce expenses, and differentiate their brand—or risk being overtaken by intensifying competition," he added.

Suphanat Sajjaratanakul, CEO of The Food Selection Group, stated that premium Japanese restaurants still prioritize imported ingredients from Japan rather than relying on Chinese alternatives. Additionally, he noted that the Japanese and Chinese restaurant markets cater to distinct customer bases, meaning direct competition between the two remains limited.

However, rising ingredient costs pose a significant challenge, especially salmon prices, which have surged by 40% due to high demand and limited supply. The Russia-Ukraine war has further disrupted shipping routes from Norway, increasing import costs. Meanwhile, local ingredients such as chilies, garlic, and limes experience seasonal price fluctuations, particularly during the rainy season when supply declines.

Looking ahead to 2025, competition in the food industry is expected to intensify, with brands fighting for market share amid slow economic recovery. Consumers are increasingly value-conscious, giving an advantage to brands that offer high-quality food at reasonable prices.