Logo of Phnom Penh Post newspaper Phnom Penh Post - Growing in a hungry market

Growing in a hungry market

Content image - Phnom Penh Post
Heng Sengly, general manager of Park Cafe, speaks to The Post in Phnom Penh last week. Heng Chivoan

Growing in a hungry market

The food and beverage industry has seen explosive growth in recent years, with new brands entering the market and existing chains continue to expand. The Post’s Hor Kimsay sat down with Heng Sengly, general manager of Park Cafe, to discuss the F&B industry’s growth the company’s strategy to navigate an increasingly saturated market.

Who are the people behind Park Cafe?
Park Cafe was founded by a group of local businesspeople and now has investments from a foreign company. Local investors hold 70 percent of shares while the rest of the company belongs to Singapore-registered Emerging Market Investment (EMI).

How has Park Cafe grown since opening in 2004?
In 2004, we had just one branch, but today we have 10 branches throughout the city providing jobs to around 350 Cambodians. Our customer numbers have also been growing by 30 percent annually, going from 2,000 daily customers in 2014 to nearly 3,000 per day currently.

Last year we received a total of 1 million clients who spent $5 to $7 on average per visit. We already have several new outlets planned, and we will look to establish a few more this year.

The food and beverage sector has also grown rapidly since 2004, especially during the past two years. What are your thoughts on this growth?
The number of food outlets and coffeeshops has increased very rapidly, particularly in Aeon Mall, as well as Boeung Keng Kang 1 and Tuol Kork. The sector’s development has attracted international restaurant chains to enter the Cambodian market, which has also led to a rapid increase in franchising deals. However, I believe that some businesses are growing in an unsustainable way without taking into account the risks.

I think the growth of coffee and beverage outlets is becoming a bubble that could easily burst.

Many of these outlets target younger customers. What do you think of this strategy?
It is a high-risk business model because most teenagers follow the habits of others and they are always looking to try something new. This means it is a rapidly changing market that requires a lot of flexibility in order to be
successful.

How does the F&B sector’s rapid growth affect Park Cafe’s business?
It does not affect us significantly because we target a different segment of customers. Park Cafe targets middle-aged customers, such as businessmen, civil servants and private sector employees. However, the strong growth of foreign brands in Cambodia has impacted our plans to start selling franchises. It has forced us to be more cautious and to be more efficient in our operations.

Last year Park Cafe announced it would sell franchises. How is that going?
We have not sold any franchises yet because we are more focused on growing in terms of quality rather than quantity.

So far, we have more than 20 candidates that have applied to buy franchises, but with the current market conditions, we are creating tighter quality requirements for our franchisees.

We are adopting a slower growth strategy that we are sure will pay off going forward. We won’t open any more stores unless we are sure that they will be profitable and sustainable. When looking at potential franchisees, we are not only interested in their financial means, but we also look for experience and a strong commitment to our brand.

What are your thoughts on the rapid growth of franchise sales from other brands?
I’ve observed that some operators focus solely on quantity when they sell franchises.

For example, some companies will agree to a franchise even though the location does not have the potential for strong growth. A lot of franchise owners have sufficient capital, but don’t have enough experience in running a quality business. Already in the past two or three years we have seen some drink brands enjoy rapid growth and then disappear from the market. The current growth is showing signs of a bubble. Once it bursts, everyone in the market will be forced to operate with more vigilance.

This interview has been edited for length and clarity.

MOST VIEWED

  • Cambodia on the verge of national tragedy, WHO warns

    The World Health Organisation (WHO) in Cambodia warned that the country had reached another critical point amid a sudden, huge surge in community transmission cases and deaths. “We stand on the brink of a national tragedy because of Covid-19. Despite our best efforts, we are

  • Phnom Penh placed in two-week lockdown

    The government has decided to place Phnom Penh in lockdown for two weeks, effective April 14 midnight through April 28, as Cambodia continues to grapple with the ongoing community outbreak of Covid-19, which has seen no sign of subsiding. According to a directive signed by Prime Minister

  • Vaccination open to foreigners in Cambodia

    The Ministry of Health on April 8 issued an announcement on Covid-19 vaccination for foreigners residing and working in Cambodia, directing the Ministry of Labour and Vocational Training and local authorities to register them. Health minister Mam Bun Heng, who is also head of the inter-ministerial

  • Culture ministry: Take Tuol Sleng photos down, or else

    The Ministry of Culture and Fine Arts has told Irish photographer Matt Loughrey to take down the photos of Khmer Rouge victims at Tuol Sleng Genocidal Museum which he allegedly colourised and altered to show them smiling. The ministry said Loughrey's work is unacceptable, affecting

  • Cambodia gears up for muted New Year festival

    The recent curfew and restrictions imposed in the capital and other Covid-19 hotspots were intended to break the chain of transmission, Ministry of Health spokeswoman Or Vandine said as municipal and provincial authorities issued new directives banning certain activities during the upcoming Khmer New Year

  • Covid-19 vaccination now obligatory

    Prime Minister Hun Sen on April 11 issued a sub-decree making Covid-19 vaccination compulsory for individuals unless they have a medical certificate proving they have pre-existing health conditions that prevent them from doing so. «This applies to all members of the armed forces and civil servants