MYANMAR — Following cola and beer, it’s now fast food's turn to enter Myanmar as KFC plans its first opening next year, part of a broad effort by global quick-serve brands to invest in the next wave of emerging markets in the Asia-Pacific region.
Yum! Brands announced plans to team with Singapore's Yoma Strategic Holdings to open a KFC restaurant in Myanmar in 2015, making it one of the first multinational fast-food chains to enter the market. Real estate company Yoma said the KFC franchise would initially focus on Yangon, but did not divulge further business plans.
Many international chains are attempting to diversify their presence in Asia in the wake of recent difficulty in China, and KFC in particular is looking to lessen its dependence on the mainland market.
Multinational players are also looking to invest in smaller markets in APAC, Latin America and Africa as growth rates in some of the largest markets start to slow. "These smaller markets have become a very important part of long-term strategy, prompting operators like Yum to invest years before they are likely to become a profitable part of the global portfolio," said Elizabeth Friend, a senior research analyst with Euromonitor.
Despite the easing of economic controls, Myanmar (formerly known as Burma) has a lot of barriers in place when it comes to the ease of doing business. For brands, it is the promise of a population of more than 50 million people, rising disposable incomes and a growing middle class that presents an attractive proposition.
"I am sure people will welcome KFC, and the youth would love to hang out at those international food places to be part of the trend," said Rose Swe, co-founder of Myanmar’s Mango Group.
That said, Yum will have to take into account economic distribution and consider the locations of its outlets, the positioning of its chain and the mix of products it sells at various price points, Friend pointed out.
Just as in all international markets, localization will play a role in brand strategy. Consumers in Myanmar may not incorporate KFC into their daily routine, but they are eager to try a familiar branded experience, especially due to its presence in neighboring Thailand, where Yum is the third-largest brand.
"They will likely be looking for that Western dining experience, not necessarily one that perfectly meshes with their local flavors and culinary traditions. That said, some level of localization will be necessary in order to maximize appeal in the market and avoid consumer confusion," Friend said.
In Myanmar, KFC will be joining regional fast-food companies including Thai restaurant company Minor Food Group, which opened Swensen's, Malaysia-based Marry Brown, Lotteria from Korea and another fried chicken chain company, BBQ Chicken, also from South Korea. According to a survey by Japan's Daiwa Institute of Research, Myanmar’s restaurant market is estimated to be worth almost $3 billion.
For Yum, KFC is a smart choice as an initial launch. Chicken is popular in Myanmar, and the brand is the operator’s most popular mark in Asia. According to Friend, there’s a risk that consumers in the country will be affected by KFC’s food-safety debacle in China, in which the chain served customers tainted and expired meat, but the company is working to improve its public image.
This article first appeared on campaignasia.com.