VF Franchise Consulting

Major obstacles restaurants must face in ASEAN Franchise

May 8, 2015



   Top 10 markets that Retailers are eager to invest in 2015. Source: CBRE

Food franchise business in ASEAN region has been growing continuously alongside the size expansion of middle income economy, which has been causing the purchasing power to rise. This turns out to be the force that attracts numerous renowned oversea Franchise brands that have high interests in expanding their business bases into ASEAN region. However, the unique characteristics of each ASEAN country will definitely create many challenges for those who aim to successfully penetrate the market.

Mr. Joey Reyes Garcia, General Manager at International Franchise SEA/MENA – Minor Food Group, once mentioned during the seminar, Insight ASEAN Franchise Forum 2015, that there would be tremendous challenges in terms of the needs of consumers in different regions. The reason of this is because consumer tastes can be varied in different ways. For instance, ‘flavor’ is the first and most common challenge that food business operators must encounter as people in different countries prefer individual tastes. At the same time, seeking suitable business partners and supply chains are additional objectives that Franchise business must be carefully considered before making an investment.

Furthermore, business operators must also find appropriate communication channels in order to reach out to most consumers in ASEAN. These are adolescents, or Generation Y, which are constantly and heavily involved with the use of device technologies

“Adaptation is considered as a key aspect for operating business in ASEAN region. Some characteristics can be optimized and modified to fit the local demand. Yet, it still needs to sustain the uniqueness of the original brand. In other words, the main products cannot be altered while some of them can be changed to fit the local’s taste” – said Mr. Garcia

Mean while, the keys to success in strategic franchise would be the joint agreement between the franchisers and franchisees, implementation of management, and teamwork. The business can achieve the maximum level of success by sharing the same vision and goals.

Mr. Davy Wee, CEO at Manhattan Fish Market which is the franchise that is currently operating 50 branches of American style seafood in Asia and Middle Eastern regions, said that “The organization had been running 2 different branches in Thailand and facing one major obstacle which is the different eating habits of the consumers within each country. Western people normally consume single dishes; whereas Thai people would prefer to have variety of dishes and share among each others. As an illustration, the restaurant’s recipes originally contained the tastes of Western style, but Thai consumers often make demands for a hotter flavor. According to this, our restaurant must learn and adapt to the local’s preference, but it still needs to keep the unique selling point of Manhattan Fish Market”

Additionally, laws and regulations are other factors that must be carefully studied. Questions such as ‘What types of raw materials can be imported?’ and ‘How much taxes need to be paid to affect the initial investment?’ must be answered accordingly.

Mr. Teck Kim Khoo, Director at VF franchise Consulting (Singapore), said that the challenges of operating franchise business in ASEAN are all about finding suitable alliance, setting up well-organized management systems, and having proper manpower planning.

It is compulsory for business operators to be involved with the use of technology to increase the efficiency of overall operating procedures. Applying electronic menu to reduce labor costs and enhance the possibility of pushing the business forward with a faster pace. Meanwhile, some franchisees often come up with innovative ideas to create brand new dishes and sell them to certain areas.

“Selling original products overseas do not always guarantee the business success. For example, fried chickens with spicy flavor tend to sell much better in Thailand compared to the original recipe. However, modifying the recipe must get approval from the franchisers first”

“As clearly as it can be seen, people in ASEAN region specifically choose to consume overseas dishes more frequent now than before. This could benefits the franchisees by giving them additional opportunities to penetrate the market, but it must come along with the use of technology, proper management to maintain quality assurance, and the reduction of operating costs” – said Mr. Teck Kim Khoo.

By ปรียนิจ กุลตั้งเจรีญ

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