Wednesday, July 26, 2017

Fast food invasion looms in Yangon

Debt clearances, exchange rate reform and the abolition of Foreign Exchange Certificates may have observers excited about Myanmar’s economic reforms but on the streets of Yangon it is the arrival of foreign brands that is drawing the most attention.

(Thiri/The Myanmar Times)(Thiri/The Myanmar Times)

Last month a picture of a supposed Kentucky Fried Chicken (KFC) outlet had social media buzzing with speculation that Colonel Sanders had found himself a new home on Nawaday Road in Dagon township.

In the March 22 issue of The Myanmar Times, Yum! Brands, which owns the KFC name as well as Taco Bell, Pizza Hut, and WingStreet, dispelled the rumour that it was building a restaurant already, but did say it was hiring staff in Myanmar for its “newest KFC Team”.

KFC did not respond to emails or calls seeking further comment.

Though the most recogniseable, KFC is not alone in the fast food world in its eagerness to enter Myanmar, a country where consumers have had to settle for cheap knockoffs like MacBurger or, for a lucky few, grabbing a taste of the real thing in neighbouring countries.

South Korean fast food restaurant Lotteria plans to open an outlet at Junction Centre in the second week of April, said general manager U Maung Maung Kyu.

Lotteria is a subsidiary of conglomerate Lotte Group and operates in South Korea, Japan, Vietnam, China and Indonesia. The restaurant entered Vietnam in 2004 and the Indonesian market in 2011.

The newly formed MYKO, short for Myanmar-Korea, will serve as the master franchise for the brand in Myanmar. U Maung Maung Kyu said the company plans to open 25 restaurants by 2016, expanding from Yangon to Nay Pyi Taw.

Along with the standard fare of chicken and burgers, Lotteria will also offer dishes tailored to Myanmar consumers, such as chicken rice.

Another South Korean chain, BBQ Chicken, is scheduled to open its first Myanmar outlet in May in downtown Yangon, said executive director U Chan Nyein Hock and managing director U Naing Win Aung.

Myanmar Culinary Holdings Company Limited, a new branch of the well established Myanmar restaurant chain YKKO, is serving as the master franchise.

U Chan Nyein Hock and U Naing Win Aung both admitted that BBQ Chicken’s prices will put it out of reach of many in Myanmar. The restaurant will be geared towards the city’s young middle-class population with a casual dining format.

“The restaurant will be decorated in a way that young people will appreciate,” said U Naing Win Aung. “Our target customers will be middle and upper middle income individuals.”

Malaysia-based Marrybrown has also started building a restaurant in Yangon. Malaysian news outlet Bernama has reported that the company plans to open more than 20 restaurants in Myanmar during the next five years but when contacted by The Myanmar Times representatives from the company said that they were not ready to comment on operations in Myanmar.

An illustration distributed by the company shows a restaurant with a touch of vintage Americana, including a sloping roofline and drive-through window.

Professor Nicholas Farrelly, a research fellow at Australian National University’s School of International, Political and Strategic Studies, said that the new operations are significant beyond the expanded culinary options they bring.

“The arrival of the global fast food heavyweights marks a turning point for supply chains, middle class waistlines and international perceptions. Many will resent the arrival of such unhealthy harbingers of Western ways. But there will still be a level of excitement as some of the most recognisable brands and recipes in history sweep across the country,” said Mr Farrelly.

It’s unclear what exactly this will mean for the thousands of restaurants that have appeared in the global chain-free environment since 1988. U Kyaw Swa Moe, manager of the popular downtown Yangon restaurant Y2T, said businesses like his will have to adapt to their new competitors to survive. But competing with similar offerings will be difficult, he said.

“We are concerned about them bringing in high-tech cooking tools,” said U Kyaw Swa Moe. “The other difficulty is our chefs and cooks. They want to use traditional methods of cooking, they can’t be asked to use more modern tools and machines. They don’t like that. To cope with the chefs is a real challenge of ours.”

Mr Farrelly said he believes tea shops and street vendors will be largely unaffected because they are in a different price range from the international chains but more up-market establishments may have reasons to worry.

“Most Myanmar diners will continue to patronise their old favourites,” said Mr Farrelly. “But for many the novelty of big foreign chains will be too hard to resist. Experience from elsewhere in Southeast Asia suggests some of the big international chains will do very well, and will quickly displace the local competition.”