High poultry prices peck at KFC bottom line

via Khmer NZ

Thursday, 26 August 2010 15:02 Catherine James

HIGH poultry prices have cut into the bottom line of Cambodia’s KFC fast-food restaurants, according to Malaysia-based franchise majority owner QSR Brands Bhd.

With seven stores presently selling the Colonel’s chicken in Cambodia, QSR said sales were “encouraging”, but that profitability was affected by high cost of poultry and imports. “Management is actively taking steps to source for cheaper alternatives,” it said in a release yesterday.

KFC Cambodia general manager Benjamin Jerome said the company was ramping up plans for Cambodian poultry farms, and securing a local processing plant that could meet KFC’s regulations and ease the cost burden.

“The poultry industry in Cambodia is big, but the volume cannot sustain the demand of KFC,” he said yesterday.

He said the planned poultry farms were still up to two years away from turning out chickens.

KFC in Cambodia – which is 55 percent owned by QSR, 35 percent by Cambodia’s Royal Group, and 10 percent by Hong Kong-registered Rightlink Corp – plans to open three more restaurants in Cambodia this year after opening its eighth in July, bringing its total to 10 restaurants in Phnom Penh and one in Siem Reap at the end of the year.

QSR saw an annualised 20.6 percent increase in its first-half profits to 124.1 million ringgit (US$39.5 million), compared with 102.9 million ringgit for the same period last year, according to yesterday’s results. Revenues increased at most of its businesses, but profits fell at its foreign KFC markets, comprising Cambodia, Singapore and Brunei.

Foreign market revenue for QSR increased almost 14 million ringgit to 188.4 million ringgit for the half year, but foreign market profits fell 27.3 percent to 4 million ringgit.