Kampuchea Food Corporation will add the first Pizza Hut franchise and five additional Kentucky Fried Chicken outlets in Cambodia this year, according to Jacob Montross, a Royal Group representative on the Kampuchea Food Corporation board of directors.
Mr Montross said yesterday the expansion of KFC to outlets outside Phnom Penh is part of a plan to reach a bigger market and will make a total of 12 of the fried chicken franchise restaurants in the country. Currently there are six KFC locations in Phnom Penh and one location in Siem Reap.
A joint-venture established in 2008 to market KFC and associated brands in Cambodia, Kampuchea Food Corp is owned by QSR Brands Bhd of Malaysia, the majority shareholder, Royal Group and Rightlink Corporation.
Malaysia’s The Star newspaper quoted QSR Chairman Tan Sri Muhammad Ali on Monday as saying the expansion was a response to the franchise’s strong showing here and a lack of international brands in Cambodia. Pizza Hut plans to open at a riverfront location in Phnom Penh, he added.
Mr Montross said the move was to gain access to a different slice of the Cambodian consumer market.
“The next phase is to target the domestic market. We have achieved the tourist market and we need to move to the next level,” Montross said.
Mr Montross said Battambang town has the second largest urban population behind Phnom Penh and the province of Kompong Cham is the nation’s most populous. He added that the move into Kompong Cham is in part due to Malaysia-based QSR’s focus on serving its Muslim population.
Mr Montross said the existing KFC branches in Phnom Penh have not yet broken even but that the industry standard is that franchises restaurants are not expected to make money in their first three years of operations.
“But as of September 2009, each existing branch in Phnom Penh turned a profit,” he said, adding the outlets were starting to pay for themselves. “Actually we are a year ahead of schedule for making a profit,” he continued.
Mr Montross said it costs $250,000 on average to set up a franchise location but the creation of Pizza Hut will cost a bit more.
The addition of Pizza Hut to Cambodia came from the belief that Pizza Hut could do well in Cambodia, Mr Montross said.
“The Pizza Company is very successful in Cambodia and we believe that we can compete in that market,” he said, adding the two restaurant chains already compete in Thailand.
A person answering the telephone at RM Asia, owner of The Pizza Company’s Cambodian operator, Express Food Group, said nobody was authorized to speak to the media.
Chy Sila, director of CBM Corporation, which owns the popular Cambodian fast food brands BBWorld and Pizza World, said he was concerned about future competitor Pizza Hut but his company has been aware of plans to bring the brand into Cambodia since last year.
“There is a little concern but we have loyal customers and we have a lot of activities coming up,” Mr Sila said yesterday, adding the company is working on interior design changes, minor changes to the logo and improvements in areas such as customer service and product.
“We are local and homegrown,” Mr Sila said of his company’s advantages over foreign franchise chains.
“We have a unique taste designed for local customers,” he added.
Mr Sila said that his Pizza World has faced international competition before in the form of The Pizza Company, which is headquartered in Thailand, but has managed to stay competitive.
Economic Institute of Cambodia Senior Researcher Neou Seiha said that international brands will attract Cambodian consumers because of brand recognition.
He added that in Phnom Penh the popularity of fast food has risen with the improvement in living conditions.
As for the plans to open KFC restaurants outside of Phnom Penh, Mr Seiha said he believed in larger towns, such as Siem Reap or Battambang, the recognition would transfer.
“As long as in it is in central towns, then I think it is a good plan,” he said.
(Additional reporting by Khuon Narim)