Similar to the trends seen in other countries, the early foreign franchise entrants hail mainly from the food & beverage sector, as seen by the franchises from major companies from Asian countries such as Thailand, South Korea and Japan. They seem to be racing to open restaurants in this nation that is blessed with increasing wealth.
One example is Thailand’s conglomerate Minor Food Group that has opened Swensen’s in March 2013. (Minor has a 40-year license to develop and franchise Swensen’s in 34 countries across the Middle East and Asia—to be accurate, not all of Asia.) Although a scoop of ice cream costs as much as 1,600 kyat (US$1.66), the small shop of around 10 seats is constantly full, even during the daytime on weekdays. It is an extravagance in a country where the average annual income of an office worker is around US$3,878. But again, as observed in many other nations, consumers nowadays aspire for better and better things. (Minor’s franchisee has also opened The Pizza Company in Yangon.)
Following tightly behind is South Korean fast food restaurant Lotteria which opened an outlet at Junction Square in the second week of April, 2013. Lotteria is a subsidiary of conglomerate Lotte Group and operates in South Korea, Japan, Vietnam, China and Indonesia. Its master franchisee, the newly formed MYKO, short for Myanmar-Korea, plans to open 25 or more restaurants by 2016, expanding from Yangon to the capital Naypyidaw. So as to cultivate a strong following, and not to alienate less-adventurous locals, Lotteria, along with the standard fare of chicken and burgers, also offers dishes tailored to Myanmar consumers, such as chicken rice.
Another South Korean chain, BBQ Chicken, has also opened its first Myanmar outlet in downtown Yangon. The master franchisee is Myanmar Culinary Holdings Company Limited. Its Executive Director Zaw Lin Oo, who is now my friend runs many businesses. As BBQ Chicken’s prices are pricier than other chicken offerings, its strategy is to target the city’s young middle and middle-upper-class population with a casual dining format.
Hailing from Japan is Freshness Burger, which has its first outlet near the famous sacred landmark Shwedagon Pagoda. 3E is the joint operator of the chain in Myanmar. (Note: Beef is not as commonly eaten as in other nations; the nation’s favorite meat is chicken. It is therefore important to localize the menu some what – just like what McDonald’s did in India, so as to not alienate a big portion of the local consumers.)
Yet another fast-food entrant is Malaysian chain Marrybrown, known for its halal fried chicken, burgers and finger food. It opened its first restaurant in Myanmar on June 28, 2013. According to Joshua Liew, the eldest son of Lawrence and Nancy, old friends of mine, the Yangon store will kick off an expansion of Marrybrown in Myanmar to 16 outlets in 5 years. (Another Malaysian brand Manhattan Fish Market has also opened in Yangon.)
Not to be outdone, of course, is Singapore’s most-established local coffee chain Ya Kun. It has also opened in Yangon and according to the Chairman of Ya Kun, also another old friend, it plans to expand to as many outlets as the market can take (another Singapore brand is Chewy Junior that has opened a few outlets.)
In tandem with the European Union (EU)’s decision to permanently end sanctions against the country, the USA has also eliminated almost all the barriers for its businesses to do business in Myanmar. Case in point: KFC plans to open its doors in Myanmar this year 2015.(Yum! Brands’ franchisee is Singapore-listed, Myanmar-focused Yoma Strategic Holdings.) Another example: Starbucks’ CEO Howard Schultz said during a visit to Thailand last year to celebrate the 15th anniversary of its founding in the country that it has set its sight on tapping coffee lovers in Myanmar.
The plus: Myanmar is an extremely attractive opening market with over 50 million consumers, terrific location for trade and ample natural resources. Although the per-capita gross domestic product in Myanmar currently stands at around US$900, the middle class is steadily emerging in major cities across the country. The minus: the infrastructure for keeping foods frozen or refrigerated has yet to be fully developed. The road network necessary for food transport and the food processing industry are also in their early stages. In addition, the high property rents are also major issues. Another concern is the protection of intellectual property (IP). “In the past, people weren’t familiar with international trade. Our eyes were closed. They still don’t know IP should be a right,” said Thein Aung, a senior associate with the Myanmar Trademark and Patent Law Firm (Thein Aung counts KFC, Panasonic, Adidas and scores of other well-known corporations among his clients).