Food Franchises in Asia

20 July, 2020

As the economies in Asia (with a number of them having vast populations of young people) continue to grow vis-à-vis the matured economies in the Western hemisphere, it is quite natural to say that Asian brands, food and beverage (F&B) brands in particular, are becoming more and more popular in many parts of the world. ‘Credit’ ought to be given to the internet, social media and cheap airline tickets as people eat out and travel frequently and they get to know popular (and many are exotic) eateries from these media.

According to Allied Market Research, the global fast-food market size was valued at $647.7 Billion in 2019 and is estimated to reach $931.7 Billion by 2027, growing at a CAGR of 4.6% during the forecast period. Another market report, this time by Reportlinker, says that the global ethnic foods market was valued at 36.4 Billion in 2018, and it is projected to a CAGR of 11.8% over the forecast period (2019-2024).

Regular visitors to many Asian nations will find out that many Asians claim “eating” as one of their favorite pastimes. This may be one of the many driving forces for restauranteurs and their chefs constantly innovating and improving on their food offerings. Bigger and more cash-rich companies still continue to go abroad (to the West) to seek out new concepts or those that seem to have a huge potential in Asia. Of course, the other driving force is the stiff competition within the restaurant sector that compels many to innovate and find more differential features to set themselves apart.

Nevertheless, Asia is a huge puzzle made up of many different pieces. Consumer expectations and preferences, the way business is conducted, even the differences in the quality of the water and weather can vary significantly. For example, within China alone, the northerners and the southerners differ in the amount of saltiness preferred; and people in the Western part can take spiciness more than those in the South. Also, many are at different stages of economic development. This means that for rich countries like Japan and Korea, versus less developed nations like Bangladesh and Laos, the game plan (pricing, marketing, operations, etc.) cannot be the same.

The writer participates in almost every franchise event in Asia since 1990. Other than Brunei and Laos, there’s a franchise exhibition in every of the remaining 8 ASEAN nations. In South Asia, other than India and Pakistan, the rest (mainly Sri Lanka, Bangladesh, Maldives) have not yet organized any so far. Yet, one of the first franchise development projects the writer has in Sri Lanka is a popular seafood restaurant that has received franchise enquiries from overseas. In Brunei, the writer has the privilege to assist a local bakery to begin to embark on franchising.

Not surprisingly, there are more food shows than franchise shows in Asia. Big ones like FHA Horeca (Singapore), ThaiFex-Anuga (Thailand), MIFB (Malaysia), SIAL China (Shanghai), FI Vietnam, etc. are just some examples. Clearly the demand is there, reflecting on the huge potential in the food & beverage industry.

It is heartening to see many governments in Asia supporting franchising in many aspects. In Singapore and Malaysia, the governments actually provide generous grants for local companies to embark on franchising so that these local companies can internationalize. Thailand, Indonesia, the Philippines, too, have support for their local franchise companies to participate in overseas exhibitions and other related activities. Again, as seen in many nations around the world, the majority of the franchising companies are in the food & beverage arena.

Franchising has therefore become the preferred route in Asia for entry and expansion in the F&B sector. Over the years, an increasing number of Asian brands have evolved into franchised chains across the region. Examples (food companies) include Singapore brands such as BreadTalk, Old Chang Kee and YaKun; Malaysian brands like MarryBrown and OldTown White Coffee; Philippine brands such as Jollibee and Potato Corner; Thai brands such as Coca and The Pizza Company; Vietnamese brands like Phuc Long and Highlands Coffee; Japanese brands such as Mos Burger and Yoshinoya; Korean brands such as Paris Baguette and Bonchon

To be accurate, as at the date of this writing (Oct 13th, 2020), there are chains within Asia that are doing well, but have yet to franchise. One example is Pizza 4P’s in Vietnam. Another example is Singapore’s Cedele. Of course, there are good reasons for not doing so. Some might have had seen too many brands fail. Some might be concerned about the sustainability of their high standards. Some might be just contented with what they have and not want to take on more responsibilities, etc. Inevitably, they will be approached eventually by prospective franchisees, investors (private equity funds) and other savvy businesspersons or companies who can ‘see the diamond in the rough.’

There are many Chinese sayings concerning food. One that I like is “Eating is more important than any other matter.”   千事万事,吃饭大事. Not just the Chinese, other races and cultures, too, have sayings related to food.

In closing, I want to emphasize that the food & beverage industry is an extremely competitive one. Chefs vie for recognitions (Michelin stars); operators strive to be different (e.g. HaiDiLao Hotpot that became famous for its high-quality service– this ranges from free watermelon if a customer mentions that their food tasted good to getting offered hot ginger tea if they have a touch of the sniffles. Other perks include manicures, pet care and mobile phone care services), and they use all sorts of media and influencers to lure the customer to frequent their eateries…

All the more now, no thanks to technology, millennials want to ‘trace’ the source of the supply of ingredients (blockchain technology), the farm that grew the vegetable or reared the cow, etc. The savvy young consumer wants to support companies that are friendly to the earth (so cut down on plastic disposables), and they want to support companies that are transparent and seen to be truthful…

May our many food & beverage franchises continue to thrive and do good.

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