Established in 2010, The Cambodian Restaurant Association promotes best practice in Cambodia’s food and beverage industry. As newly elected president, Kouch Sokly – managing director of CBM Corporation, which represents such brands as T&C coffee, Tous Les Jours bakery, The Asian Kitchen, Lotteria and Domino’s Pizza – is charged with presiding over a fast-growing industry and steering it toward full professionalism as Cambodia becomes evermore exposed. Kali Kotoski spoke with Sokly about the changes in the industry, emerging trends, dining habits and the challenges of a fast-paced, competitive market.
“FOR A BUSINESS THAT WANTS TO BRING A FRANCHISE IN AND DOESN’T WANT TO BE TREATED LIKE A PARTNER, I SAY RUN AWAY.”
Kouch Sokly, Managing Director, CBM Corporation
How important is location in terms of launching a new restaurant?
You have to be in BKK1 for branding purposes. In terms of visibility you can cut down on marketing costs. But for making money, it is not really a good place because the rent is too high. However, once established in BKK1 you can easily expand.
What are the difficulties associated with opening a restaurant?
Logistics are always a challenge when it comes to getting the right supplies. The opening of a restaurant is usually very painful, but that is part of your investment. By the time you open your fifth restaurant, it is easy because you have more power. But running a chain is different because, unlike an individual restaurant, it allows you to spread out your profits and losses.
How much does it cost to purchase a franchise?
For Cambodia it can be $100,000 to $250,000 to get brand rights. The ones that are less expensive and smaller don’t provide enough support. When you buy a franchise, you want to buy the support and experience of the brand. For a business that wants to bring a franchise in and doesn’t want to be treated like a partner, I say run away. Do not invest in those.
When should a business owner decide to call it quits?
If you don’t even break even in the first nine months you need to close down and let it go. Even if you have a large investment it will eat away at your company. It is important that restaurants set a timeline for success.
How has the restaurant and hospitality market changed recently?
Over the last three years, the restaurant business has been adapting to customer expectations. For example, my company targets almost 95% locals, while foreign- owned restaurants target tourists and expats. For the local market, because of changing expectations, we try to bring in different brands. When you are talking about the expectations of the younger generation, you are talking about brands.
Has competition intensified?
Competition is strong. The differentiation in the market depends on who you are targeting. But what market insiders cannot account for is the figures on street food. On every corner, on every street you can see that street food is growing. But just look at BKK1 to measure the growth. In the last three years, there are no less than 50 restaurants that have opened, from local to Japanese to Korean, casual dining and fine dining, to Western and Indian.
What about dining costs?
Restaurants that average $7 to $10 a meal are still growing slowly, but below $5 it is growing very fast. The good thing is that you can see the buying power of the younger generation is rising. Now people can afford to eat out once or twice a week. Lunch is growing by 25%. For dinner, you just have to look at operating hours. Restaurants used to be open until 8pm only, now they are open till 10pm or later. But for fine dining, not much has changed in terms of price. It has been very stable at about $20 to $25 per meal.
How does the Cambodian Restaurant Association help businesses?
The main purpose of the restaurant association is to work with the government so that we can protect and benefit our restaurant owners and bring them to the next level. But also, what Cambodia lacks as a whole is hygiene and cleanliness. A lot of individual and family-owned restaurants do not have proper standards and we want to help them. And these restaurants also need to understand that as we integrate into ASEAN, we will have to compete with ASEAN standards.
Words by Kali Kotoski