This morning’s announcement has become a huge sensation as PTT Oil and Retail Business PCL. (SET: OR) decided to discontinue all Texas Chicken restaurants, which will take effect on Sep. 30, 2024, after more than nine years of operation in Thailand.
It was the fact that the nine years in the fried chicken restaurant business may not be smooth sailing, because the majority of the fried chicken restaurant market is still dominated by the international brand KFC, which has the likes of Central Restaurants Group Co., LTD., Restaurants Development Co., Ltd., and The QSR of Asia Co., Ltd a subsidiary of Thai Beverage, operating the business in Thailand, making KFC to take 90% of the market share, while the last 10% belong to other fried chicken restaurants including “Texas Chicken”.
The closure of “Texas Chicken” under OR’s Lifestyle business group is a part of the business circle of life, when the businesses are no longer profitable and start to affect the company’s finances, they have to be shut down for the sake of the company’s future.
Mr. Disathat Panyarachun, CEO of OR, stated that the company is ready to adapt for a change in the global economy, whether that would be geopolitics, a transition in energy, and a change in technology. Right now OR is under the process of altering their strategy by reinvesting in various businesses that OR have already invest in the past to reevaluate and make a necessary adjustment to account for current situation and future goal.
Suwat Sinsadok, Deputy CEO (Institutional Securities Business Division) of Beyond Securities PCL. (SET: BYD) commented that the closing of Texas Chicken should benefit OR, since they have trimmed out its unprofitable business and used those funds for a more profitable one. In addition, OR no longer have to bear the loss from this part further.
On the other hand, the stock prices that have gone down to THB13 previously have slowly come back, as a result of the new investment plan and a cut back on unprofitable business. The Deputy CEO reiterated a “Buy” recommendation at a target price of THB25 per share.
Suppata Srisuk, senior director of Bualuang Securities PCL. told “Kaohoon” that the analyst has two perspectives with the closure. In the short term, OR’s Q3/24 financial report will show extra spending on shutting down restaurants at around THB 500-700 million. Meanwhile, there is a positive outlook on the company’s finances next quarter.
