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American ambience, including eats, is big, profitable hit all around Asia

THE BALTIMORE SUN

HONG KONG -- The restaurant seemed strangely familiar: A Los Angeles Times news rack was nestled next to the front door, the L.A. Raiders were playing on the large-screen televisions overhead and yuppies at the bar munched buffalo wings and "Dodger Dogs."

The menu offered Rodeo Drive nachos, Santa Monica clam chowder and a vegetarian club sandwich. The ambience seemed straight out of Hollywood; the blond furniture suggested a tony bistro.

But barely visible, past the neon signs in the polished plate glass, loomed the Bank of China building -- an unmistakable Hong Kong landmark. Welcome to L.A. Cafe, a new restaurant chain, which is doing booming business by selling a slice of California to Asia.

"This wouldn't work in L.A., where it's old hat," said J.R. Robertson, an expatriate American insurance executive who founded the restaurant a year ago. "We're selling the L.A. lifestyle, which seems exotic here. Asians are throwing away the values of older generations and this kind of place is different from anything they are used to."

While American gourmets increasingly experiment with the foods of Thailand, Vietnam, Indonesia and even Myanmar, Asian diners have been falling head over heels in love with American food -- from Big Macs to Haagen-Dazs.

In fact, when fast-food franchiser McDonald's opened its first restaurant in Singapore in 1982, it quickly became the biggest selling McDonald's in the world. Now, eight of the world's top 10 selling McDonald's are in Asia -- seven in Hong Kong and one in Beijing.

Take a stroll down Bangkok's Silom Road and you might think you had been transported to a suburban American shopping mall: McDonald's, Pizza Hut, Swensen's Ice Cream and a Sizzler Steak House anchor one side of the avenue, facing Arby's and Burger King on the other.

Tony Roma's, a Dallas-based franchise chain that specializes in ribs, opened its doors in Singapore a year ago and has a line around the block every night. With only 130 seats, it sells 800 meals a day. Franchised by Indonesian entrepreneurs, Tony Roma's has expanded to Hong Kong and Jakarta, where every month it manages to sell a 20-foot container-load of pork ribs in the world's largest Muslim country; 15 more branches are to open in the region in the next three years.

"Business is just terrific, it's unreal," said Karl Faux, an Austrian hotelier who oversees Tony Roma's operations in Southeast Asia for franchise owner Mas Millenium. "Anything that is American is really hot right now."

Another company that is advancing in Asia is Kentucky Fried Chicken, now a subsidiary of PepsiCo Inc. and renamed simply KFC with "the colonel" demoted to a peripheral role. Tim Lane, KFC's president for Asia, said that in the last four years, the number of its chicken restaurants in Southeast Asia has shot from 250 to 600; the Japanese market has grown from 600 to 1,000. Thailand, where there were none as recently as 1989, has 50 KFC outlets.

"Chicken is a great concept for Asia because it's familiar and there are no health or religious issues," Mr. Lane said. "We're selling Americana. We're concentrated in areas with folks with rising incomes."

While rents are often higher in Asia's congested cities than in the United States, increased business more than compensates. Mr. Lane said that while the typical KFC restaurant in America does $200,000 a month business, the average outlet in Asia rakes in $750,000.

Daniel Ng, a chemical engineer who became a millionaire as the Hong Kong franchise owner for McDonald's, recalled that in the early 1980s, many people warned him against entering the fast-food business. "Chinese won't eat hamburgers," he recalled being told by friends. "How can you do market research with food nobody had ever heard of in an ambience no one knew?"

Mr. Ng now owns 72 McDonald's in Hong Kong, three in China and has a one-third interest of the franchise in Singapore.

One thing that sets Asia apart from other regions is the relative strength of its families. Food outlets with the strongest appeal to families with children seem to have the most success.

Some restaurant operators have found, however, that Asian tastes differ: In Thailand, Pizza Hut puts pineapple on some of its pizzas and hot sauce on the tables; KFC offers a "hot and spicy" version of the old standby for Asians accustomed to piquant food. Burger King found that Thais, most of whom are Buddhist, weren't snapping up beef burgers and found a niche by promoting chicken sandwiches. McDonald's countered by offering fried chicken.

American marketers also had to rethink strategies to accommodate cultural differences.

The Hard Rock Cafe, for example, was a big success in Singapore and Jakarta, but stumbled in Thailand. For one thing, Thai customers were offended by the Hard Rock's legendary friendly waiters, who were encouraged to sit with the customers to take their orders, said James Choong, financial director of the restaurant. Thais were not used to sitting with servants. Another complication was the name -- many Thais considered a "cafe" a euphemism for a brothel. The company stuck with its name, but got its waiters to take orders standing up; business is slowly improving.

The invasion by American food also has not been universally welcomed in Asian countries, many of which view with suspicion any hint that American values are being imported to their relatively conservative countries.

"We should not be swayed by the trend toward eating non-rice food, including Western food," Indonesia's vice president Try Sutrisno warned in a speech last September.

But, so far, there have been few local efforts to repulse the American onslaught. One Thai restaurant chain, S&P;, has started offering Thai food in a Western fast-food type setting. A number of local fast-food efforts in the region have failed, however, because American brands are so well-known and the chains achieve tremendous economies of scale by buying in bulk.

l,.5l As for the future of the industry, almost all of the restaurant executives interviewed believed that they have only scratched the surface of fast food in Asia. "If anything, the growth will be accelerated," said Mike Gordon, director of communications for McDonald's Inc., who noted the chain is adding 1,000 restaurants a year outside the United States and doubling its presence in China next year. "There's a lot of opportunity and potential in the Asian market."

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