MK RESTAURANT Group Plc has entered into a joint venture with its Japanese strategic partner, logistics operator Senko Group Holdings Co Ltd, to offer full-service logistics for the food service industry that it says will be the first of its kind in Thailand.
MK Restaurant yesterday said the joint venture, known as M-Senko Logistics, will cash in on the projected high growth potential of the food service industry in Thailand.
The new firm will primarily target companies engaged in business to business (B-to-B) activities in the food and food-related business sector, including operators of restaurant franchises of all sizes, large food producers, and food retailers such as convenience stores, supermarkets and mini-marts.
The company has set aside Bt1.3 billion to Bt1.5 billion for investment in the first phase of the operation, which covers fully integrated logistics services including warehousing, transport, forwarding, and trading. But the main focus is on full-service cold chain logistics complete with reefer trucks that provide high-quality transpiration services with nationwide origin-to-destination capabilities. The company’s central logistics facility, including a cold and dry warehouse, will be on Bangna-Trad Road km.21, covering 53,000 square metres.
Somchai Hanjitkasem, executive vice president of MK Restaurant Group Plc, said MK saw an opportunity for business expansion with a logistics spinoff. At present, Thailand has no operator of a full-service cold chain logistics of considerable size.
“Thailand's food chain segment is now valued at about Bt230 billion but, together with restaurants, the market will be between Bt410 billion and Bt420 billion in total, with an estimated growth rate of 3 per cent per year,” said Somchai.
He said that the key driver of the food industry is the increasing number of e-commerce activities in the market.
“The e-commerce drive witnessed in Thailand and overseas has been extraordinarily intensified,” Somchai said. “Consumers have changed their behaviour and a larger number have frequently used e-commerce. More online orders have been filed as this sparks higher demand for home delivery services. This is a growth opportunity for MK Group. Having been in the restaurant market for years, we have extensive experience and capability in nationwide home delivery services for restaurant chains.
“We consider ourselves the No.1 player in this business. Our strength can be extended. We can initiate a cold chain logistics service to serve other food businesses. They just propose to us their business ideas and plans and we will complete a logistics plan for them.
“The logistics business, which is valued at about Bt100 million, has shown continuous growth.”
Somchai said that Thailand can comfortably become a logistics hub with the right infrastructure. “Senko's plan is to turn Thailand into our regional hub, probably in the next three years,” he said.
Somchai said that in the first phase, the company plans to achieve Bt800 million in annual revenue in 2019, and to reach at least Bt1.8 billion within three years when the company provides full-service logistics at full capacity. This will be achieved through four new services.
“We will kick off the transport service in July. We also plan to launch trading and forwarding services next year and our warehouse will be opened in 14 months,” Somchai said.
“All the four services are expected to be fully operational next August.”
He added that MK Restaurant Group has extensive experience in production and delivery as its business involves a wide range of raw materials which must be delivered to 600 outlets across the nation.
“Senko will complement our business by finding us new customers as well as advanced logistics know-how,” said Somchai, adding that the joint venture will provide M-Senko with solid foundations for taking the market’s leadership mantle in full-service cold chain logistics.
“Each partner of the joint venture, Senko and MK, would hold 50 per cent stake each. The joint venture marks an important milestone for MK’s business expansion for future growth.”
Hiroshi Yamamoto, managing director of M-Senko Logistics Co Ltd, said that Senko Group Holdings Co Ltd. is Japan’s second-largest logistics company. “Its strength lies in its specialisation in cold chain logistics. The company has been engaged in transport and distribution services for over 100 years, with operations in the US, South Korea, China, Central Asia and Asean (Thailand and Myanmar),” Yamamoto said.
Senko earlier reported full-year operating revenue of Bt103 billion.
In the next three to five years, M-Senko plans expansion in the Asean market – particularly Cambodia, Laos, Myanmar and Vietnam - by developing new types of logistics services to meet the demands of consumers (B2C) in the future.