Yum moves to Myanmar in hopes of early advantage

Yum! Brands announced plans to tie up with Singapore-listed 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 that 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 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, localisation 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 neighbouring 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 flavours and culinary traditions. That said, some level of localisation will be necessary in order to maximize appeal in the market and avoid consumer confusion,” Friend added.

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 marque 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, but the company is working tirelessly to improve its public image.