AsiaLIFE

Last year few could afford to open a restaurant along Phnom Penh’s throbbing riverfront, this year shop-fronts stand vacant. The recent boom in the capital’s restaurant business has well and truly gone bust. Two-for-one specials and never-ending happy hours are de rigueur for those trying to lure in the lesser-spotted tourist. Despite this, some of the Penh’s restaurants are doing alright, Jack. Mark Jackson tries to discover the perfect recipe for success in a town lacking tourists.

Whether it is due to the global downturn, trouble in Thailand, the border dispute or even swine flu, 2009 has been bad for business. The tourists who flocked to Cambodia over the last few years have stayed at home – or at least avoided the region. At times over the last nine months Siem Reap has resembled a ghost town, and the contagion has spread to the capital.

“At Friends the Restaurant, business has dropped by 30 percent,” says Gustav Auer, Friends International’s Hospitality Business Coordinator. In many respects declining revenue hits the training restaurant harder than other purely commercial enterprises. “We are definitely making less profit,” he says. “This is a concern for us because we are not just a business – the income we earn from our restaurants is used to fund our projects for street children, so if the restaurants are making less money, we don’t have as much to contribute to our projects.”

Business is bad then, but not universally bad. Take Friends International for an example. In addition to Friends the Restaurant, the not-for-profit organisation has a Cambodian restaurant, Romdeng. This year it has seen an increase in trade, according to Gustav. In Phnom Penh, restaurant trade can be broadly divided into three categories – tourist, expat and local Khmer. Friends the Restaurant relies heavily on tourists, representing roughly 60 percent of customers. Romdeng on the other hand relies more heavily on Cambodian and expat trade. Taken together these constitute 60 percent of the restaurant’s turnover, with a heavy bias towards Cambodian customers.“Romdeng’s business is better because we are not so dependent on tourists there as we are at Friends the Restaurant,” explains Gustav.

Riel Customers

Whereas tourists may only come for Christmas, local expats and Cambodians are here to stay. In future Friends will focus on the Cambodia market, according to Gustav. This makes sound commercial sense. “The Cambodian customers are by far the biggest spenders in both of our restaurants,” he says. Meanwhile Alan Hare, owner of popular riverside Irish bar and restaurant, the Green Vespa is taking a different tack.

“Expats will be here tomorrow, the travellers will not,” says Alan. The Vespa saw a downturn in trade of 7 to 8 percent during the traditional high season (January to March). Since April, he has noticed an increase of 2 to 3 percent compared to the same period last year. “My 100 percent focus is on my highly loyal expat custom,” he says. Last year, the Green Vespa had roughly a 50/50 split of expats and tourists. Now, it is more like 90 percent expat.

If tourist trade has declined, it stands to reason that the Penh’s landmark restaurant will be among the hardest hit. “Times are hard,” admits Steve Hayward, one of the directors of the FCC, Phnom Penh, although nowhere near as hard as in Siem Reap, where he reports a 20 percent downturn. “The flashpack trade has dropped off,” he says before adding that the FCC is still on the Southeast Asian backpacker circuit. “Everyone comes to the F on their first day in Phnom Penh,” he says. Not that the FCC is totally reliant on the tourist trade. “There has been a gentle increase in business trade, which I think will continue,” he says. 

Like Gustav, Steve is targeting local Cambodian trade, introducing a VIP card he believes will appeal predominantly to a Khmer audience. Forget tourists and focus on local trade – that seems to be the message loud and clear. It’s simple, right? “If it was that easy, most of the restaurants in Phnom Penh would be crowded,” answers Marco Salvetti. Bucking the trend, the owner of Equinox bar and restaurant on Street 278 reports that trade has improved this year. This he puts down to “a combination of good luck and hard work.” Indeed he sees the downturn as having a positive effect. “It urged me to make my business better quickly so that I could still pay the bills,” he says.

Marco doesn’t feel he has done anything special to ensure the success of Equinox. “I did try to improve the atmosphere, offers and service as quickly as possible without raising the price for customers,” he says. You get the feeling that this soft-spoken Frenchman sees the secret to success as first putting your house in order.

The Price is Right

One thing on which all those interviewed seemed to agree, was the importance of offering customers good value for money. “Value for money, but not cheap,” stresses Alan. “It’s high quality at affordable prices.” Offering 50-cent beer and free food as a business strategy makes as much long-term sense as Real Madrid’s transfer policy. Cheap beer attracts ‘Cheap Charleys’, fair weather friends who walk out of the door as soon as happy hour is over. Alan believes that expatriate business is a far-better long-term bet.

“People are going out less, but being more discerning, buying where they see value for money,” he says. This may even mean they pay more money rather than less. Alan says that sales of dishes like rack of lamb and T-bone steak have been high. Though hardly cheap meals, they represent excellent value, according to him.

Giorgio agrees. The owner of Pop Café, possibly the Penh’s most popular riverside restaurant, says that profits are more or less the same as last year. “I am very lucky, I can rely on the expat community,” he says. With a typical eye-for-detail, Giorgio pinpoints the secret to his success. “I believe the quality of food is right for the price,” he says. “You can eat a good meal – three courses with wine – for US$20. Every day I have to turn people away.”

Despite this, Giorgio has noticed a change in spending patterns. “If before people took three glasses of wine now they take two,” he says. “If before they took a bottle of wine at US$30, now they take one at US$20.” He also notes a “dramatic” decrease in tourism compared to last year. Not that the soon father-to-be is complaining as he looks forward to the future. “In the long-term I will definitely open another restaurant in Phnom Penh, but we’re talking four to five years away.”

Herbert Ludwikowski is another Phnom Penh restaurateur due to become a father this year.  Having opened Ocean restaurant 15 months ago, he has seen steady growth. “I am satisfied,” he smiles. Perhaps becoming a father is the secret to success in the capital? His observations echo those of Alan and Giorgio. “I offer good food for a real price,” he says. He too targets the expatriate community. “Most of my customers are expats and they live here for two to three years,” he says. “Most are really satisfied and they bring friends.”

It is not just the quality of fresh food, with organic vegetables and some of the best seafood in town, which draws customers back to Ocean. “The concept is good,” explains Herbert. “They have a good atmosphere and good service.” At first, the latter proved difficult to achieve. Like so many restaurateurs in the capital, Herbert found it difficult to find good staff, but now everyone has been with him for at least six months. “The team is fantastic.”

Service with a Smile?

The recipe for success is becoming clearer – start with value for money, serve up quality food for your main course, and finish the meal off with efficient and friendly service. The problem is in attaining the level of consistency regular customers demand. Tourists don’t come back, so hit and miss can be good enough. Disappoint local customers and they won’t come back – and to cap things off they will tell their friends!  

Wendy Lucas is part of the husband and wife team that runs Talkin to A Stranger. She has a lifetime of experience in service and hospitality training, and a reputation for being difficult with staff. She admits that she demands the best. This year she closed the restaurant at Talkin and focussed on the bar. Customers were offered food ordered from One More Pub across the road instead. She accepts the decision was a mistake. Despite the high quality of the food provided by One More Pub, custom waned.

“Definitely the wrong decision,” she says. “It was made out of complete frustration because it was so difficult training people and then they leave.” Controversially, she blames the high level of staff turnover on the country’s nascent craving for education. “Their families push them to study, but it’s just a waste of time,” she claims. Noting that even with refreshed qualifications, former staff find it difficult to find employment. She pays staff bonuses and incentives. As soon as they see the extra money, they “invest” it on study. Working one, or sometimes two jobs, studying, doing homework, it is hardly surprising that they come to work tired and standards slip. “They don’t have the energy to work,” she says. Eventually they leave.

Wendy has noticed a discernable change in the market since they opened the first Talkin on Street 278 in July 2002. “Then there was only Rubies and us that were non-girlie bars,” she says. “It was a niche market. We were the first bar on Street 278.” Now, the bar scene has changed dramatically. Many more establishments are competing for the non “hello mister” trade. The country’s greater stability has led to a discernable shift in the profile of the Phnom Penh expat. “There’s more couples and families coming into Cambodia,” she says. “There are less single people.” This might seem to many as an opportunity, providing a larger custom-base. Not so, according to Wendy. “People are going out less and doing things at home. The whole scene is changing.”

Turning the Corner

So, how can those establishments that have struggled this year turn things around? “Give yourself a kick in the arse, again!” says Wendy’s husband Derek Mayes. Equally experienced in hospitality, Derek is familiar with the cyclical nature of the industry. He talks about re-energising – both themselves and the business. Accepting that both of them perhaps took their eyes off the ball for a while, the couple will now focus more on events. “Every time we do a party, people compliment us,” Wendy says. As we talked they were trying out a new band, with a view to offering them a slot every other Sunday.

The same criticism could be levelled at the FCC. Did it become too complacent? After all if every visitor really does visit the place on day one, who cares about the day after? Success breeds contempt, so they say.

“For a long time we haven’t done anywhere like enough,” admits Steve Hayward. A natural partygoer himself, it is not surprising that he is focussing on more events. After the success of Mamma Mia in May, the FCC will hold more film nights. Steve is also planning an international food festival at the FCC over two days in September. “We will turn the F into a United Nations of food,” he promises. Plans for Sunday afternoon jazz are also a foot. Steve wants his beloved F to become the throbbing heart of the capital’s community. “The F is a great place to have some entertainment,” says Steve. Having recently been forced to import bands from neighbouring Saigon, Steve’s main regret is the lack of live music options in Phnom Penh. “We desperately need to encourage some musicians locally.”

Half-full or Half-empty?

Few would deny the harmful effects the downturn in tourism numbers has had on trade. Most believe the trend will continue well into next year. However, while some see the glass as being half-empty others look to positives. “I see the downturn as a very good opportunity to improve our business,” says Gustav Auer. “We are creating new menus for both restaurants and have more time to provide training for our staff.” Unsurprisingly for an organisation that works towards building futures for children who lack hope, Gustav takes a long-term perspective to the current situation. “We strongly believe that if you provide quality to our customers they will return, even in these difficult economic times,” he says.

Ultimately, though in hard times, Darwinian principles apply. In addition to serving the right menu, there is no substitute for some elbow grease. Luu Meng of the Thalias group, that runs Malis and Topaz restaurants as well as other establishments in town, sums this up best. “In the good times you work five days a week, in the bad times you work eight days a week.” Meng believes it is the time for Cambodia to promote its cuisine more overseas. On a recent trade fair in South Korea, he was even asked, “Where is Cambodia?” Gustav agrees there is a need for more, high quality Cambodian restaurants in the capital.

At the moment, the country is neither associated internationally nor regionally with a strong cuisine. Until this perception changes, and while tourists stay away, the recipe for a successful restaurant seems to be to keep it local. Target those who were born here or those who have chosen to make Cambodia their home, don’t chase the elusive tourist buck.