American food chains investing in Cambodia

Dec. 19, 2010

It seems Cambodians are adopting a bit of an American palate. Pizza Hut and Burger King, specifically, are currently grappling over a position in the country's growing quick-service sector, according to the Phnom Pheh Post.

The quick-service industry in the Cambodian capital of Phnom Pehn is worth about $40 million a year, or 5.3 percent of the city's annual food expenditure. Local, more traditional operators are concerned about the increasing competition from these new, Western entities that continue to grow rapidly.

Street vendor Chan Thouen told the Phnom Pheh Post that the growth of quick-service brands has contributed to a dramatic decline in sales at her establishment, from 80 to 90 chickens sold per day to 40. A decline in local restaurants also has occurred in recent years.

A Burger King franchise is currently in negotiations, and the country's first Pizza Hut is expected to open in early 2011. Yum! Brands, Pizza Hut's parent company, first planted a seed in Cambodia in 2007 when it opened a KFC unit.

A joint venture between Kith Meng's Royal Group, Malaysian company QSR and Hong Kong firm Rightlink, has invested $10 million into its KFC franchises since the first outlet opened, and plans to build three new stores next year, bringing the total to 13.

The company is also dedicating $3 million for its Pizza Hut franchise, with an objective of opening 10 units throughout the next five years.

Cambodia's food landscape is quickly changing with the addition of other QSR brands, as well. Dairy Queen announced a plan in July to launch franchised units in the country.

Additionally, Express Food Group, a subsidiary of Thai company RMA Group, is expanding Swensen's and Pizza Company in 2011, as well as the Korean brand BBQ Chicken.

Topics: Business Strategy and Profitability , Franchising & Growth , International

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