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Published on April 29, 2008

Achara Pongvutitham

The Nation

The company has shouldered an average increased cost of 15 per cent with seafood surging by 20 per cent and chicken 15 per cent. In addition, skyrocketing rice prices will also directly affect production costs as its core menus are served with rice.

Increasing costs have caused the company to face lower margins. However, it has no policy to reduce portion sizes or ingredients. Instead, it will undertake a marketing strategy of launching new products to attract more customers as increasing sales will offset lower profits.

Vice president Suwat Songphatanayothin said yesterday that six new menu items will be introduced this year, or two items every two months. So far, the company offers a total of 20 menu items, of which 15 core dishes are served with rice.

"We have to increase the number of customers and create new menus by focusing on non-peak items (eaten throughout the day) for higher transactions to offset our rising costs," Suwat said.

Although an affiliate company of Charoen Pokphand Foods (CPF), the company has to shoulder costs on its own. However, its can guarantee customers high quality raw materials.

The company plans to increase total sales by 20 per cent this year from Bt1 billion last year. To achieve this goal, 17 to 25 new branches will be opened this year with a total investment of Bt200 million. The investment will also include the renovation for some existing shops. There are 150 restaurants nation-wide, 40 per cent of which are under franchise management.

Under the company's five-year business plan, a total of 300 shops will be established by 2011. In addition, the company also plans to export the brand next year as there are many requests from neighbouring countries: Malaysia, Singapore, Vietnam as well as the Middle East.

"Our export strategy is to focus on countries where CPF has already set up farms or businesses to ensure our high quality raw materials," Suwat said.

To facilitate the plan, the company has set up a team to conduct a feasibility study for export opportunities. Moreover, the team will also be looking for a master franchise in the targeted countries.

Assistant vice president Amnat Kunlayakunawut said price cutting practices in the fast food business are lessening as operators now are focused more on service, convenience and ambient environment.

In the last two years, prices were cut and operators suffered from a very low margin. This year the company will spend 7 per cent of its total sales on marketing campaigns.