Thailand: Franchising The Golden Chili

2000

Tony Diller and Chintana Sandilands

Thai competition for international gold will not end with the Olympics. A 'Golden Chili' may be opening in your neighbourhood soon, its standard menu featuring a range of quality-controlled Thai meals.

A worldwide network of 'Golden Chili' restaurants is among the current projects of the Department of Export Promotion (DEP) of the Thai Ministry of Commerce, with full Cabinet backing. DEP's Deputy Director-General Mr Charin Hansuepsai outlined the program recently in media interviews.

DEP is promoting the franchise venture to stimulate export of Thai rice, cooking ingredients and restaurant equipment to targeted markets, including Australia-New Zealand, Europe, the USA and Canada. The plan is to cash in on the global boom in Thai restaurants by boosting the worldwide total, now 5000 by DEP's current (conservative) estimate, to 8000 by 2003. Of this increase, Australia-New Zealand would gain 700 new outlets.

In the Department's class-sensitive strategic planning, restaurants will come in three franchise grades. 'Golden Chili' is top class, targeting ‘business people and the rich’. Waiters/waitresses will greet you in period Thai dress, escort you through the elaborate traditional (but DEP-standardised) Thai decor, bring your selections from a DEP-designed menu and present your bill, which will be at least A$50 per head. On your way out, you may pause to spend yet more on Thai gifts at the handicraft counter, contributing even further to Thai economic recovery.

Upper-middle class clientele should head instead for the 'Cool Basil', with its 50-table layout, hybrid Thai/global furnishings and techy scheme of computerised ordering and billing. The Department estimates this franchise will need an investment of about a million dollars Australian to set up (23.4 million baht).

Bottom of the line is 'Elephant Jump' (DEP's English here). These more basic establishments will target the working class and students with inexpensive one-plate fast food and will do similar take-away business.

Only those with investment capital and 5 years' experience in running a Thai restaurant will be eligible for these franchises. Although DEP appears to have done some field research in Southern California into legalities of licensing, food quality control, insurance requirements, and so on, these matters are currently under review. So is DEP's exact role in establishing and overseeing a centralised distribution system to service the global network of franchises. The purpose here is of course to feature Thailand-sourced export items, such as Thai jasmine rice. This is currently served, DEP's research shows, by over 50% of Thai restaurants in the USA. More information may soon appear on DEP's websites: www.moc.go.th and www.thaitrade.com.

The IMF may be clicking on these sites too, especially if anything like a new state enterprise should seem to be looming, or if IMF bailout funding should find its way, either directly or circuitously, into the franchise business.

WATCHPOINT: : When your local McDonald's becomes an Elephant Jump, the DEP's credibility will grow by jumbo leaps; otherwise, this scheme may remain so much golden chili in the sky.

 

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AFG Venture Group is an Asia and Australia based corporate advisory and consulting firm with over 20 years experience in creating alliances, relationships and transactions in Australia, South East Asia and India; including a 15 year history of corporate and equities advisory in Australia, undertaking merger, acquisition, divestment, fund raising and consulting for private and public companies.

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