Café society competition hots up

Café society competition hots up

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A woman walks by Brown Coffee in Boeung Keng Kang 1 district, Tuesday, Feb. 19, 2013. Photograph: Hong Menea/Phnom Penh Post

Local and foreign business owners seem to be jumping on the bandwagon in light of the success of the western-style cafes which seem to dot every street corner of Boeung Keng Kang 1 district.

However local real estate experts say not all of the air conditioned, latte-serving hangouts can survive in the area, despite the growth of the market.

Asia Real Estate Cambodia Vice President Kuek Narin said the area, which is known as Phnom Penh’s main expatriate area, has experienced rapid growth over the past seven years.

Buyers and business people saw the opportunity in setting up western-style cafes in an area where similar businesses have flourished, he said.

“They are not just selling coffee, but also an environment and prestige, with their air-conditioning, comfortable seats and hi-speed internet.”

However, the overload of practically identical cafes on streets 51 and 57, and nearly every side-street, meant not all of these establishments could continue to function as they do now if they wanted to survive, Narin said.

“Now there is a lot of competition in the area… some of them will have to merge, or move out, or they will not survive.”

While growth in the area showed no signs of slowing down, and all the right components were there in terms of location, infrastructure, and security, businesses need to take competition into consideration, he said.

“It is a good thing, but investors will see the opportunity, and they have to be careful… The coffee drinkers will make the decision.”

Cambodia Properties Limited assistant business development manager Nguon Chhay Leang said café owners had over-estimated BKK1’s capacity, and the consequences would soon arise.

“I think there is an over supply of coffee shops,” he said.

In order to profit, a lot of the businesses would need to move to different locations, such as the Russian Market area, or developing neighbourhoods on the outskirts of Phnom Penh.

“In BKK1 there is an oversupply, but it should spread to other areas. I think it will spread; it can’t just grow in one place. If it just grows in one place we will start to face traffic problems, and congestion.”

Well-known Cambodian ice-cream parlour and café The Blue Pumpkin opened a new branch in BKK1 two weeks ago.

A Blue Pumpkin spokeswoman said they opened a branch on street 57 because it was the “new, high-class area”.

The Blue Pumpkin had been planning to move into the area for the past six months, and was happy with how things were going so far.

The spokeswoman said approximately half of the customers were local people, and half were tourists, or expatriates.

She said The Blue Pumpkin was not worried about the array of cafes opening up in the neighbourhood.

“It’s a Cambodian brand that is growing.”

Though it was hard to speculate, she said she believed the bigger, recognised brands will survive, but it was unlikely all of BKK1’s cafes would continue to flourish.

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