Cambodia’s steadily growing economy and a desire for new brands, particularly among young people, are making the country a profitable market for the franchise business, according to industry insiders. The first franchise in Cambodia arrived in 2005: now there are scores. In the past 12 months Phnom Penh has seen the opening of a raft of franchise operations, many of which are proving to be extremely popular. Management Insider talked to some of the people behind the new trend.
Trendy café chain Artease opened in Singapore in 2011, serving coffee and varieties of flavoured tea; its first Cambodian store on Street 310 opened its doors in March 2014, and has been a huge success. They are shortly to open another branch on Monivong Boulevard.
General Manager Penhbo Phan says despite being a franchise, the Cambodian operation is a little different. “In Singapore the stores are small, but here we’re a bigger scale, more dining restaurant style than kiosk style, and customers often stay for more than an hour.”
Penhbo says on the whole, the franchise business for Artease in Cambodia has been adapted to the market needs. “The only constraint in doing franchise business is a slight lack of freedom; we can’t be independent. Coming to Cambodia for Artease is like running in a big park, not a little playground. Cambodian people like to eat, so we’ve had to put more food, and more pastries on the menu. But our master franchisor is also pretty flexible.”
Penhbo says that, while business is strong, staff training has been the company’s biggest problem. “I think that at the management level, it’s not that bad in Cambodia – the owners are highly educated and are passionate about the industry. But at the lower levels it can be a bit challenging, because many young people don’t drink coffee or tea so much, so they lack a frame of reference to appreciate what we offer.”
TOUS LES JOURS
Described as a “French-Asian” bakery chain, Tous les Jours is actually from South Korea, and opened its first branch in Cambodia in late 2012. Operated here by F&B group CBM, which started some familiar Cambodian brands including BB World burgers and Pizza World, there are now five outlets in Phnom Penh, and another to open soon in Siem Reap.
Managing Director Kouch Sokly says CBM chose to operate a franchise in order to gain insight into the world of F&B outside Cambodia. “We started our home-grown brands from scratch, but we decided that our knowledge is still limited, so we wanted to learn more about running restaurants and cafes, and bringing in a well-known regional or international brand would allow us to do that. We can learn about best practises in different countries.”
Sokly says the company has benefitted from both having its own brands, and operating a franchise. She says that while the local enterprises are crucial, franchising allows her to experiment by bringing different tastes to Cambodia. “There are so many young people in this country, and they want to experience international brands, which are different from the home-grown ones.”
CBM has big plans for Tous les Jours, and for Cambodia. “We are thinking of maybe 30 stores across the country in 10 years time. And we are actively looking at other brands to franchise here, but I can’t tell you anything about them yet.”
Operated by the same group that is responsible for one of Cambodia’s best-loved brands, Brown Coffee, Gong Cha is a Taiwanese import specialising in bubble tea. With five branches in Phnom Penh, and more set for Siem Reap and Sihanoukville, Gong Cha is using Brown Coffee’s formidable marketing muscle to establish itself.
Marketing executive Thay Chheangmeng says it was a simple decision to opt for a franchise rather than building a new brand. “We needed ingredients, and we needed customers, and Gong Cha has a lot of international customers: There are a lot of South Koreans, Chinese, Singaporeans [in Cambodia]; they know us well because there are many branches of Gong Cha around Asia – in South Korea there are over 200 stores – so we get many foreign Asian customers.”
Chheangmeng says that the Cambodian franchise is doing brilliantly. “Because we have our own research and development team, we come up with new things. Gong Cha come over every month to check on what we’re doing. I think they’re very surprised by us: In other countries they’re not as advanced as Cambodia.”
And the company’s drive to innovate has taken the attention of Gong Cha in Korea, as well as helping them win a following here. “We have a mobile app for smart phones, and their other franchisees want to get hold of that. Currently we’re considering: Will we give this to Gong Cha Korea? I don’t know what they do over there, but here in Cambodia we’re thinking about a lot of things, and come up with ideas.”
Taiwanese bubble tea company Chatime seems to be everywhere: in two years, they have opened 24 branches in Phnom Penh, two in Siem Reap and one in Sihanoukville.
Lim Tech Koung, senior marketing executive with operator Brands Management, says the decision to franchise Chatime was a simple one given its ready-built reputation. “One of our directors really liked Chatime. He’s Malaysian, and Chatime in Malaysia is a big brand compared to other bubble tea companies, and is very successful in Malaysia – there are over 100 outlets there. He thinks Chatime is delicious as well. He thought that the brand image and the business model were better than other brands’.”
Brands Management is currently working on bringing two more franchise operations to Cambodia, but Chatime is the company’s current focus. Lim says that despite Chatime’s global scope – it operates 1,000 outlets in 25 countries – the basics are the same no matter the location. And as the brand’s recognition grows in Cambodia, so too does its ability to target more potential customers. “When we started here we really focused on teenagers, but now gradually as the brand gets better known, we’ve started to target everyone.”
Lim says having a lot of small outlets spread across one city works well for Chatime. “We want to increase accessibility for our customers, so having a lot of branches will help us a lot. We want to take the biggest market share in Cambodia. We’re looking at opening another five or 10 branches in the country.”
Originally from Singapore, where there are 45 branches, bakery chain BreadTalk opened its first outlet in Cambodia in September, in Toul Kork’s TK Avenue shopping centre, under the SOMA Group.
CEO Ly Daline says BreadTalk has big plans for Cambodia, with two more locations set to open in the near future, and more on the horizon.
Daline says with a brand as strong as BreadTalk, it has been a relatively simple process to set up the franchise in Cambodia, but that one problem persists. “It’s not that difficult running a franchise here, but one thing is tricky: sending our staff to Singapore for training. There are a lot of documents and a lot of paperwork, and there are language difficulties. They can’t speak Malay or Chinese, they don’t have much English, so that can be difficult.”
Daline says BreadTalk are easy to work with, giving the local outlet freedom to modify its recipes. “Our menu here is exactly the same as in Singapore, but we don’t have to take everything they offer there. And we can create our own products to add local flavours. They advised us to customise their dishes.”
Daline says that the maturing taste of consumers makes Cambodia an exciting market to enter. “The population is growing, people like new brands and new styles, so that works well for us.”
YA KUN COFFEE & TOAST
From its humble beginnings as a coffee stall in Singapore in the 1940s, Ya Kun Coffee & Toast has grown into a giant, with operations in 10 Asian countries. Its first branch in Cambodia opened in August, with another in the Aeon Mall following shortly after.
General Manager Chea Chenda says that familiarity with the brand was the key to bringing the franchise to Cambodia. “My boss grew up in Singapore, although he’s Cambodian, so it was a familiar brand for him. And most Cambodians like Singapore, they like going there, they’re interested in it, so it’s popular.”
Chenda says the company plans to capitalise on its success here. “We’re still looking for more locations at the moment, but we’d like to open at least one more branch by June next year. And Siem Reap maybe the year after that.”
While business is flowing, Chenda says operating as a franchisee can be a little restricting for him at times, especially when trying to cater to traditional Cambodian tastes. “There are lots of rules, and there are a lot of things that we’d like to change here, but we cannot. We have to keep the original tastes and recipes, but for Cambodians, most of them prefer Cambodian tastes, but we can’t change that. The menu is exactly the same as in Singapore; all the ingredients come from there, for every branch around the world.”
And as with many of the enterprises entering the market in Cambodia, Ya Kun Coffee and Toast is keen to branch out. “Once this franchise is going well, I think we’ll start considering another one. But it’s early days yet.”
Text by Rupert Winchester | All photographs supplied