Superficially, Cabbages & Condoms is a successful small restaurant
chain operating in a dozen locations in Thailand. Each branch serves
traditional Thai cuisine with chemical- free vegetables and herbs, with
some food sourced from farms run by PDA and the rest purchased from
nearby farmers and local fresh markets. Several of the restaurants also include gift shops, with handicrafts sourced based on fair trade principles, and made by villagers throughout Thailand.
It’s the grand design of Cabbages & Condoms that is truly unique. Mechai calls his approach “BSP,” or Businesses for Social Progress, where a nonprofit like PDA sets up one or more for-profit subsidiaries to help underwrite its activities. In 2005 his Bangkok branch alone donated nearly $1 million to PDA, and by 2007 that amount had reached $1.7 million. “The establishment of a variety of BSPs, where profits are dedicated to social and economic development,” explains Mechai, “is a new strategy to mobilize and accumulate resources for income generation in Thailand’s poor and rural areas.”
The C&C restaurants are expensive for the average Thai but no more so than most middle-range restaurants. A plate of pad thai costs THB 120 (US $3.50) versus THB 40 (US $1.25) at a roadside stand or a local store. For foreigners, these prices are very reasonable, especially since the quality of the food is excellent.
The customers vary from location to location. The seaside resort and restaurant in Pattaya caters mainly to holiday goers and families, both Thai and foreigner. The majority of visitors to the Sap Tai Resort and Restaurant, in the vicinity of the Khao Yai National Park, are families; groups attending seminars and company retreats, including corporations and UN agencies; and retirees. The other northeastern branches, such as Nang Rong and Chakkarat, are used primarily for youth trainings and local guests, including local administrative officers who usually hold meetings and seminars.
The restaurants are legally registered as a separate private entity from PDA, bound by an internal regulation to only use their profits for three purposes: reserves, business expansion, or donations to a charitable cause (in this case, PDA). “For twenty-one years,” Mechai says, “the restaurants have been making profits. We reached break-even in the tenth month after the opening of the first restaurant in Bangkok, where the annual growth rate in terms of revenue is around eight to ten percent. The main reason for this growth rate is that we are careful about raw food material costs. We have opened twelve branches and not one has been closed down.”
Several factors have contributed to the profitability of the restaurants. First, all the restaurants operate without rent, either on PDA-owned or privately donated land. “Our major investments are just initial building construction,” says Boongit Gongthongluk, director of the office of PDA’s president. “We run the business the Chinese way, by starting small and growing as we can.”
Another key to keeping costs low is local sourcing. Much of the produce, for example, comes from PDA farms near each location. The farms are growing mint, chili, basil, lemongrass, fresh pepper, morning glory, Chinese kale, eggplant, papaya, and bananas. Cabbages, however, must be bought from the markets, where possible from local farmers.
Mechai pays very close attention to every detail in the businesses. He advises, for example, “Don’t make the bathroom an afterthought because it should be as beautiful as any other room.”
He is also a relentless marketer. “Doing business for social progress is fun,” he declares. “If you want to make money or lose money, go to the stock exchange. If you want excitement, join us.” Mechai’s connections from his work, both as a government official and in the business sector, and the visibility of the PDA also helped bring in business associates to the first C&C branch, which in turn made it a phenomenon for tourists and foreigners. The social mission has made marketing easier. According to Boongit, “We have conducted a survey and found that customers love the green environment, the fun in the decoration, the taste of the food and the mission of the restaurant: that the income goes to helping poor communities in the rural areas. And the latter is the main reason the customers come again and again.”
Location has also played a role in the model’s success. PDA only sites new locations in communities where they have already built relationships and have identified community needs. This generates support and a customer base for whatever business service they are offering. And they have strategically placed their most expensive restaurants and resorts, which provide a variety of amenities, in locations already receiving high traffic from vacationers and businessmen.
The Bangkok branch now employs 105 people, the Sap Tai resort provides jobs for 34 (7 PDA staff and 27 local contractors), and the other branches employ another 150 people. They all prioritize hiring women; the Bangkok restaurant staff is 60% women. In Sap Tai, they have also trained a group of young environmental guides who are now experts in local ecology. “Whenever our customers need a bush walking leader, we can arrange it for them, and the youngsters can have extra incomes,” says Tittaya Metha, manager of the Sap Tai Cabbages & Condoms resort.
In addition to restaurants and resorts, PDA has established other BSPs in construction, research and consulting, health clinic management, and trading in both agricultural produce and handicrafts. Two examples include manufacturing cooperatives in the northeastern province of Buriram, and a café setup with help from KPMG (Thailand) which, along with the Pattaya Birds & Bees Resort and Cabbages & Condom Restaurant, supports the Lamplaimat Pattana School in Buriram.
Cabbages & Condoms strives to integrate its social mission into its labor practices. It avoids hiring job-ready professionals from distant regions or countries. Instead, it actively recruits from the surrounding rural population and provides on-the-job training.
C&C also tries to hire HIV-positive employees. According to Boongit, “If there are two applicants for a position here and one is HIV-positive, we give the one who is HIV-positive a chance. For one HIV-positive employee who has been with us for a long time, but does not have the strength to work anymore because his condition has worsened, we have provided him with half of his latest salary every month.”
C&C pays its staff a living wage and provides benefits such as housing, health, and dental programs. At the Sap Tai resort, local contractors are paid THB 170 (US $5) a day plus three free meals (the average wage in the area is THB 120 or US $3.50).
Mechai is now working to franchise Cabbages & Condoms restaurants outside Thailand. In 2008, the first C&C franchise launched in Kumamoto, Japan. Rather than require all profits to come to PDA, Mechai is asking the franchisee to contribute just 3% of revenue. Another franchise is in the works in Bordeaux, France, with an owner who is HIV-positive and wants to deliver the sex education messages of the C&C restaurants.
“We want to beat McDonald’s,” declares Mechai. “And among the best strategies are to be active in finding new markets, and to have our staff trained in special skills to be professionals. Right now we are looking for new joint ventures in Singapore, Australia, the United States, and Europe. With an increasing demand for chemical-free vegetables, we plan to have local farmers provide for us in all these areas. We have also now launched Coffee & Condoms where you can get condoms with your coffee, so watch out Starbucks!”
It’s the grand design of Cabbages & Condoms that is truly unique. Mechai calls his approach “BSP,” or Businesses for Social Progress, where a nonprofit like PDA sets up one or more for-profit subsidiaries to help underwrite its activities. In 2005 his Bangkok branch alone donated nearly $1 million to PDA, and by 2007 that amount had reached $1.7 million. “The establishment of a variety of BSPs, where profits are dedicated to social and economic development,” explains Mechai, “is a new strategy to mobilize and accumulate resources for income generation in Thailand’s poor and rural areas.”
The C&C restaurants are expensive for the average Thai but no more so than most middle-range restaurants. A plate of pad thai costs THB 120 (US $3.50) versus THB 40 (US $1.25) at a roadside stand or a local store. For foreigners, these prices are very reasonable, especially since the quality of the food is excellent.
The customers vary from location to location. The seaside resort and restaurant in Pattaya caters mainly to holiday goers and families, both Thai and foreigner. The majority of visitors to the Sap Tai Resort and Restaurant, in the vicinity of the Khao Yai National Park, are families; groups attending seminars and company retreats, including corporations and UN agencies; and retirees. The other northeastern branches, such as Nang Rong and Chakkarat, are used primarily for youth trainings and local guests, including local administrative officers who usually hold meetings and seminars.
The restaurants are legally registered as a separate private entity from PDA, bound by an internal regulation to only use their profits for three purposes: reserves, business expansion, or donations to a charitable cause (in this case, PDA). “For twenty-one years,” Mechai says, “the restaurants have been making profits. We reached break-even in the tenth month after the opening of the first restaurant in Bangkok, where the annual growth rate in terms of revenue is around eight to ten percent. The main reason for this growth rate is that we are careful about raw food material costs. We have opened twelve branches and not one has been closed down.”
Several factors have contributed to the profitability of the restaurants. First, all the restaurants operate without rent, either on PDA-owned or privately donated land. “Our major investments are just initial building construction,” says Boongit Gongthongluk, director of the office of PDA’s president. “We run the business the Chinese way, by starting small and growing as we can.”
Another key to keeping costs low is local sourcing. Much of the produce, for example, comes from PDA farms near each location. The farms are growing mint, chili, basil, lemongrass, fresh pepper, morning glory, Chinese kale, eggplant, papaya, and bananas. Cabbages, however, must be bought from the markets, where possible from local farmers.
Mechai pays very close attention to every detail in the businesses. He advises, for example, “Don’t make the bathroom an afterthought because it should be as beautiful as any other room.”
He is also a relentless marketer. “Doing business for social progress is fun,” he declares. “If you want to make money or lose money, go to the stock exchange. If you want excitement, join us.” Mechai’s connections from his work, both as a government official and in the business sector, and the visibility of the PDA also helped bring in business associates to the first C&C branch, which in turn made it a phenomenon for tourists and foreigners. The social mission has made marketing easier. According to Boongit, “We have conducted a survey and found that customers love the green environment, the fun in the decoration, the taste of the food and the mission of the restaurant: that the income goes to helping poor communities in the rural areas. And the latter is the main reason the customers come again and again.”
Location has also played a role in the model’s success. PDA only sites new locations in communities where they have already built relationships and have identified community needs. This generates support and a customer base for whatever business service they are offering. And they have strategically placed their most expensive restaurants and resorts, which provide a variety of amenities, in locations already receiving high traffic from vacationers and businessmen.
The Bangkok branch now employs 105 people, the Sap Tai resort provides jobs for 34 (7 PDA staff and 27 local contractors), and the other branches employ another 150 people. They all prioritize hiring women; the Bangkok restaurant staff is 60% women. In Sap Tai, they have also trained a group of young environmental guides who are now experts in local ecology. “Whenever our customers need a bush walking leader, we can arrange it for them, and the youngsters can have extra incomes,” says Tittaya Metha, manager of the Sap Tai Cabbages & Condoms resort.
In addition to restaurants and resorts, PDA has established other BSPs in construction, research and consulting, health clinic management, and trading in both agricultural produce and handicrafts. Two examples include manufacturing cooperatives in the northeastern province of Buriram, and a café setup with help from KPMG (Thailand) which, along with the Pattaya Birds & Bees Resort and Cabbages & Condom Restaurant, supports the Lamplaimat Pattana School in Buriram.
Cabbages & Condoms strives to integrate its social mission into its labor practices. It avoids hiring job-ready professionals from distant regions or countries. Instead, it actively recruits from the surrounding rural population and provides on-the-job training.
C&C also tries to hire HIV-positive employees. According to Boongit, “If there are two applicants for a position here and one is HIV-positive, we give the one who is HIV-positive a chance. For one HIV-positive employee who has been with us for a long time, but does not have the strength to work anymore because his condition has worsened, we have provided him with half of his latest salary every month.”
C&C pays its staff a living wage and provides benefits such as housing, health, and dental programs. At the Sap Tai resort, local contractors are paid THB 170 (US $5) a day plus three free meals (the average wage in the area is THB 120 or US $3.50).
Mechai is now working to franchise Cabbages & Condoms restaurants outside Thailand. In 2008, the first C&C franchise launched in Kumamoto, Japan. Rather than require all profits to come to PDA, Mechai is asking the franchisee to contribute just 3% of revenue. Another franchise is in the works in Bordeaux, France, with an owner who is HIV-positive and wants to deliver the sex education messages of the C&C restaurants.
“We want to beat McDonald’s,” declares Mechai. “And among the best strategies are to be active in finding new markets, and to have our staff trained in special skills to be professionals. Right now we are looking for new joint ventures in Singapore, Australia, the United States, and Europe. With an increasing demand for chemical-free vegetables, we plan to have local farmers provide for us in all these areas. We have also now launched Coffee & Condoms where you can get condoms with your coffee, so watch out Starbucks!”
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