Nepali Times
Slow interest in fast food


DOUBLE ARCH ON DURBAR MARG? International fast food chains have so far shunned Nepal, but that may be changing.
Nepal's unique status as one of the last countries in the world without international fast food chains may be coming to an end, ironically at a time when the Maoists are about to lead the government.

Many have wondered why there isn't a McDonalds in Durbar Marg, a Pizza Hut in Pokhara or a Starbucks in Namche, while others count it as a blessing that Nepal is one last unspolit corner of Asia where the golden double arch hasn't yet made its appearance.

We asked Nepali businessmen why multinational fast food wallahs have kept away from Nepal. "It has a lot to do with low purchasing power here," suggests Binod Tuladhar, managing director of Bluebird Mall which has a popular food court. "Although the demand for fast food is rising, the taste preference of Nepali consumers is inclined towards Chinese and Indian rather than western food."

However, the success of the Bakery Caf? chain that serves sandwiches, fries and burgers shows that fast food may not just be a fad. Bakery was started by Shyam Kakshapati with his first outlet in Tindhara in 1991. Since then he has opened nine Bakery Caf?s all over Kathmandu, and even one in his native Tansen in 1998 and in Butwal in 2001.

Kakshapati told Nepali Times he feels there is great potential for international chains to set up business franchises in Nepal. "They are simply waiting for the right time to enter the market. The consumers here are already exposed to their brand name. Once they set up, the market will follow," he explains.

Asked if he is nervous about competition, Kakshapati adds: "No, it will keep local restaurateurs on their toes, force us to improve our standards too."

The lifestyles of the young in the cities are changing and so are their eating habits. Nuclear families in which both spouses are working are becoming the norm. Eating out has become convenient, and not just on special occasions.
"Nepalis have become more experimental in their taste, they are eager to try new items in the menu," explains Chandan Kayasta, owner of Roadhouse Caf?, "we see real potential for the food industry to grow."

Given this, what seems to be keeping The Colonel and Big Macs out is the high franchise cost. For example, the annual fee for a McDonalds franchise is said to be in the $ 1 million range in this part of the world. Even if the novelty effect may bring in customers initially, businessmen doubt if there will be a good return on investments, especially because of the high franchise cost.

"Independent businessmen do not have the resource or infrastructure to sustain such a risk," says Gagan Pradhan, owner of Himalayan Java, the trendy coffee joint in Thamel.

Most locally owned restaurants themselves are working under tight margins. There is an acute shortage of even the basic supplies like fuel, gas, electricity and water. Raw materials are of inconsistent quality, prices fluctuate wildly and there is always the threat of labour problems. All this has kept businessmen as well as potential international investors away from Nepal.

But one factor that could change all that would be a tourism boom and a trickle down of income to young Nepalis exposed to western brands. Several international chains are now reportedly exploring the Nepali market and trying to cash in on the first player advantage.

Varun Beverages, bottlers of Pepsi in Nepal is hoping to open a Pizza Hut outlet this year and KFC is expected to follow soon after. R J Corp, the parent company, appears to be interested in setting up a franchise network starting next year. Although political stability is still an issue, there is optimism that things will settle down once the new government is formed.

Publicity is not expected to be a problem since most young urban Nepalis are already exposed to the brand. The franchises would be a new 'cool' place for urban youngsters to hang out, provide office-goers a new option to grab a quick bite and also for trekkers sick of eating dal-bhat nonstop for three weeks in the mountains.

(11 JAN 2013 - 17 JAN 2013)