The Fast Food Story

As we all know, KFC and Pizza Hut launched their first stores in Nepal not so long ago. Rumors are that McDonalds is lined up too. Though this is exciting news for most of us, the costs of importing expensive foreign foodstuffs, technologies and the revenues especially in a country like Nepal raises questions especially because this is not exactly a necessary component like automobiles and other technologies(which can't be produced locally). Also I had read a while ago a beautiful review of a westerner's travel to Nepal and he had explained Kathmandu as one of the few capitals in the world without international fast food chain restaurants(123 countries have McDonalds outlets already). Not only opening of these restaurant redefines Kathmandu from its original definition of an escape from the fast living and the hectic west, it means a loss of thousands of dollars for Nepal. KFC and Pizza Hut are already spending millions every year. Here’s what usually costs for a McDonalds Franchise.

Total Investment: $118,375-$1,900,000
Initial Franchise Fee: $45,000
Royalty Fee: 12.5%+
Advertising Fee: N/A
Term of Agreement: 20 years
Renewal Fee: $45K

So the minimum investment is closer to 31.5 lakhs in rupees. It is an astounding amount of money. Here’s what KFC and Pizza Hut approximately pay already. All the figures given are in US dollars and they are more or less standard all around the world depending on the size of the store, location, etc. Hence the expensive cost of food in Pizza Hut and KFCs since also the food prices are pretty much standard around the world.

KFC	Pizza Hut
Total Investment: $1,200,000-$1,800,000 Initial Franchise Fee: $25,000 Royalty Fee: 4% Advertising Fee: N/A Term of Agreement: 20 years Renewal Fee: $4.9K	Total Investment: $317,000-$2,970,000 Initial Franchise Fee: $25,000 Royalty Fee: 6.5%

On the top of the fees and the investments, there are substantial amounts of cost for purchasing/updating technologies and the raw materials most of which are imported. For example, even the chicken used in KFC on Durbarmarg comes from Brazil! During the global recession of 2009, McDonalds had to pull out of Iceland. They closed a lot of international fast food chains and even converted them to local restaurants.

sorry about this photo! :P

Though it is not all bad(jobs and community investment), I wonder how much regulated they will be in Nepal so they end up not ripping off the country for personal benefits. A lot of international companies invest the earned money from their outlets in that country back to open more outlets which is a good thing. But in a turmoil of Nepal, it is doubtful and even just the minimum investments are substantial in terms of money. As much as the western living is tempting for us Nepalese, what is the price we’re willing to pay? Momos and chowmein all the way for me!