In June 2024, the Cambodia Restaurant Association undertook a comprehensive survey to examine the myriad challenges facing the restaurant sector. Results of the survey were revealed to the press by Arnaud Darc, President of the association, this tuesday morning.
Two and a half years after the end of the COVID-19 pandemic safety measures and amid ongoing economic uncertainties, Cambodia’s restaurant industry still faces significant challenges. The survey, which will be conducted every year, aimed to provide a robust data base to understand the current state of the sector and lobby the government for more targeted support, highlighting critical areas where intervention could make a significant difference.
Cambodia’s Economic Outlook
Cambodia’s economy has shown resilience amid the global economic turmoil, with GDP growth projected to reach 5.4% in 2024. However, this recovery is uneven across sectors.
While manufacturing is recovering, the service sector, particularly restaurants, remains vulnerable. Inflationary pressures, supply chain disruptions and volatile consumer confidence are compounding the difficulties faced by restaurateurs.
The broader ASEAN region also reflects an uneven economic recovery. While countries such as Singapore and Thailand are experiencing a robust recovery in tourism and services, others are still struggling with the long-tail effects of the pandemic. The restoration of regional travel and tourism flows is crucial for ASEAN economies, including Cambodia, which rely heavily on these sectors for economic stability and growth.
Tourism recovery in Cambodia and ASEAN
Tourism, an important pillar of Cambodia’s economy, is gradually recovering. The Cambodian government has been proactive in promoting the country as a safe and attractive destination, implementing strict health protocols and marketing campaigns to rebuild tourist confidence. Known for its rich cultural heritage and diverse attractions, the Asean region is seeing a cautious but steady return of international visitors.
An analysis of international arrivals to Cambodia between 2019 and 2023 highlights the impact of the COVID-19 pandemic and subsequent recovery.
This represents a significant increase from the previous year (2.3 million), but remains below pre-pandemic levels. The ASEAN Travel Corridor Arrangement Framework (ATCAF), which aims to facilitate safer and smoother travel within the region, is expected to further boost tourism numbers. However, full recovery is expected to be gradual, depending on global travel trends and the management of new COVID-19 variants.
The survey results: A detailed look
The Cambodia Restaurant Association’s survey gathered responses from 118 companies representing over 400 restaurants in various segments of the industry, providing a detailed picture of the current state of the sector.
Restaurant profile
The survey revealed a diverse landscape of restaurant types:
Casual Dining and Fine Dining: Both segments accounted for 33.1% of respondents each, highlighting their significant presence in the Cambodian market
Fast Food: Represented 25.4% of respondents, reflecting the growing demand for quick-service options
Café/Bistro: Representing 13.6%, indicating a niche but stable market segment
Other types: Made up 14.4%, demonstrating the diversity and innovation within the sector
Cuisine types and locations
Western cuisine dominates, with 51.7% of respondents serving mainly Western dishes, followed by Asian (28.8%), Fusion (13.6%) and Cambodian (8.5%). Geographically,
Phnom Penh is the main hub, with 82.2% of restaurants located in the capital. Other major locations include Siem Reap (28%), Sihanoukville (25.4%) and Battambang (17.8%).
Operational challenges
A significant proportion of respondents (72.9%) have been in business for more than five years, suggesting that established businesses are facing unprecedented challenges. The survey results paint a stark picture:
Revenue trends: 44.1% reported a significant decline in revenues over the past year, reflecting wider economic pressures and reduced consumer spending
Monthly revenue: 41.5% experienced a steady decline in monthly revenue, with only 4.2% experienced a steady increase
Customer frequency: 42.4% have seen a significant reduction in customer frequency, adding to financial pressures
Operating costs have increased for many, with 34.7% reporting slight increases and 27.1% reporting significant increases. Rent (66.1%) and the cost of goods sold (64.4%) were the most commonly cited pressures
As a result, 41.5% of respondents have seen their profit margins shrink significantly, highlighting the critical financial strain on the sector
Financial health and market conditions
Debt levels have risen sharply, with 33.1% experiencing a slight increase and 27.1% experiencing a significant increase. Managing this debt has been very challenging for 42.4% of respondents, indicating a precarious financial situation.
Access to credit or loans remains difficult, with only 53.6% managing to secure financing on neutral or unfavourable terms.
Competition has intensified, with 37.3% reporting a significant increase in the number of competitors. This increased competition is linked to changes in consumer spending habits, with 83.1% of respondents reporting a reduction in customer spending. The mixed impact of tourism is also notable, with 31.4% seeing a positive impact and the same proportion (31.4%) seeing a negative impact, and 37.3% see no impact at all.
Outlook and support needs
The outlook for the future is cautious. Only 19.5% of respondents are very confident about their business growth over the next year. Investment plans are conservative, with 55.9% not planning any expansion. Innovations such as new menu items (67.8%) and promotions (64.4%) have been widely implemented, but their success remains moderate, and the survey highlights the need for government intervention, with tax relief (79.7%) and marketing support (69.5%) identified as the most beneficial forms of assistance.
A reduction in VAT from 10% to 5% is a common plea among respondents to ease financial burdens and stimulate consumer spending.
Environmental and social factors
There is a commendable commitment to sustainability, with 85.6% of respondents adopting environmentally friendly practices. However, cost and availability of materials remain significant barriers. Community involvement is strong, with 60.2% involved in local initiatives and 52.5% reporting a positive impact from community support.
A call to action
Arnaud Darc, President of the Cambodian Restaurant Association, emphasises the urgency of the situation: "The restaurant sector is at a critical juncture. Despite our resilience and adaptability, the current economic pressures are unsustainable without targeted government support. This survey highlights the urgent need for tax relief and financial support to ensure the survival and revitalisation of our industry.
Conclusion
The Cambodia Restaurant Association survey paints a clear and urgent picture of the challenges facing the restaurant sector. Despite the general resilience of the economy, the restaurant industry is facing severe financial and operational difficulties. There is a compelling case for targeted government support, particularly in the form of tax relief and financial assistance.
As Cambodia navigates its economic recovery, strengthening the restaurant sector will be critical to broader economic stability and growth.