Starbucks has not launched in Cambodia yet. But Chang Bunleang, co-founder of Phnom Penh-based Brown Coffee, is ready if it does.
“I think [we could] give Starbucks a hard time, if they come in,” says the 29-year-old entrepreneur, stressing the need for Brown to be ready. “We’ll educate customers a lot on coffee — what is good, what is not good.”
It is a confident response from a young man with big plans and a record of relentless expansion that could be modelled on Starbucks’ own. Since its launch in 2009, Brown has morphed from five cousins’ post-graduation dream into a wildly popular hang-out for wealthier locals and expatriates, in one of the region’s more laid-back capitals. It has also pioneered a gastronomic innovation in Cambodia, where coffee has traditionally meant iced, loaded with sweetened milk and filtered through a sock-like cloth sieve.
“Young Cambodians are drinking espressos, cappuccinos and lattes mainly because Brown taught them how to do it,” says Kevin Doyle, a longtime foreign resident in the country. “It was a huge gamble, but people took to it because the company was Cambodian — and there are no end of imitators now.”
Mr Chang Bunleang is speaking in the branch that was eighth of its 10 outlets to open, a spare foundry-like space with high ceilings and metal rails running above the counter. “Now the very trendy café style is more of the post-industrial kind of look — vintage, old,” says Brown’s managing director.
If it all feels a bit Lower Manhattan or gentrified east London, that is because Brown’s inspiration is the café culture of big western cities such as Sydney, where Mr Chang Bunleang studied communications. His co-founders comprise two engineers, an architect and an interior designer, a useful combination when it came to creating the melange of styles Brown uses in its branches. These range from Zen minimalist to an old French colonial house set back from the Mekong river. Foreign rivals in Phnom Penh include Costa Coffee, The Coffee Bean & Tea Leaf, and Caffebene of South Korea.
Fresh-faced and lean, Mr Chang Bunleang grew up in Phnom Penh and originally wanted to work in law or development. That all changed when he and his cousins returned from overseas study and plotted, appropriately in a café in the capital now named Secret Recipe, how they would remould the coffee market.
Brown’s founding quintet had a big — arguably, crucial — helping hand in the form of a $150,000 interest free loan from their families. The company’s good cash flow also allows it to take out bank loans at about 6.5 per cent interest, significantly cheaper than the norm of 8 per cent-plus. The founders have ploughed their dividends into the company and plan to do so for some time.
“We are lucky to have parents investing in our business,” he says. “But if we were not working very hard, we wouldn’t have what we do today.”
While Brown does not disclose full details of its financial performance, Mr Chang Bunleang says sales reached about $500,000 a month last year, with a profit margin of 15 to 20 per cent.
The company, which also runs two bistros and a franchise for a Taiwanese bubble tea (milky drink) company, may yet become the third to list on Cambodia’s fledgling stock market — the first two are a Taiwanese clothing company and the Phnom Penh Water Supply Authority. Mr Chang Bunleang says Brown has attracted interest from venture capital companies in Singapore and Thailand and from potential partners in Japan, but he is wary of investors who just want to “make us big and then sell us out”.
About 70 per cent of Brown’s customers are Cambodian— it had soon realised that its projected 50-50 local-expat split was not viable — but it is still a work in progress to persuade some local clients that the Brown experience is worth it. “The Cambodian customer will say, ‘Oh, we are paying $2 for this amount, 30ml of drink? Are you sure this is the right coffee?’” he says.
Brown has also faced some criticism for having its menus in English and prices in dollars, despite official efforts to promote the use of the Cambodian riel. Chea Serey, director-general of central banking at the National Bank of Cambodia, says she has told Mr Chang Bunleang she likes his operation but would “like it even better if you list your prices in Cambodian local currency”.
Mr Chang Bunleang says Brown is considering making greater use of the riel. The menus have pictures to help those who do not speak good English, and he adds that making the stores multilingual would be fiddly: “How do you translate ‘cappuccino’ into Khmer?”
He is certainly keen to project the company’s Cambodian authenticity. He points to its entirely local workforce of 380, many of them students who go to college in the morning before putting in a shift as a barista or waiter.
Mr Chang Bunleang also shows a hint of irritation at Cambodia’s poor image in the west, where it is still remembered mostly for the Khmer Rouge genocide four decades ago. Instead, he highlights the strong economic growth and rising foreign investment over the past decade, with companies such as Aeon of Japan and Asia’s biggest retailer coming in to tap the new wealth in what is still one of the region’s poorest countries. But overseas, people “hear about landmines in Cambodia, human rights issues, land grabbing, corruption”.
There is, nevertheless, symbolism in a Cambodian company succeeding on its merits in a country where large sections of business are dominated by politically connected crony capitalism. Brown plans soon to launch a branch in Siem Reap, gateway town to the Angkor temple complex. Mr Chang Bunleang says this will give it a good idea of the feasibility of its strategy to expand to 30 branches nationwide. This will be a big step, since its Phnom Penh focus to date has allowed it to benefit from centralised facilities such as food kitchens.
The next leap would be to neighbouring countries, such as Thailand, Indonesia, Vietnam and Myanmar — all many times larger than Cambodia, with its 15m people. Mr Chang Bunleang thinks the single market expected to be launched at the end of the year by the 10-member Association of Southeast Asian Nations could help in various ways, including by cutting tariffs such as the import taxes of 20 to 25 per cent levied on the Thai coffee beans Brown imports.
As for the potential threat from Starbucks, already in Vietnam, Mr Chang Bunleang — perhaps optimistically — sees such a battle as a matter of taste, which Brown would win. He thinks the new Brown-cappuccino class will be loyal to its flavour, which he says is lighter than the multinational’s signature, and undeniably popular, dark roasts. “Coffee lovers . . . wouldn’t want that smoky taste,” he insists.
Tips: Chang Bunleang on coffee in Cambodia
Tune your service to all clients’ tastes: Some foreign companies have made the cultural misstep of forcing customers to come to the counter, rather than serving them at the table wherever possible, Mr Chang Bunleang says. The flipside is that Brown had to train new and inexperienced staff to not crowd customers by standing too close.
Cap the WiFi: Brown cafés are popular as an online hang-out for young Cambodians and expat freelancers, who may not have home internet or unlimited smartphone data packages. Brown limits every user’s bandwidth to stop the service seizing up.
Self-criticism: Brown takes instant feedback where it can, especially from Cambodian customers: “We’ll have our customer service approach them to see how do they like it, is it too strong, is it too milky?”
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