Efficiency analysis of risk management practices and their impact on income in small café businesses: The case of Battambang, Cambodia

Abstract

Cambodia's café market is rapidly growing due to increasing consumer demand across all age groups and a rising population. Influenced by Western culture, the younger generation is adopting new lifestyles and tastes, enhancing their quality of life. Improved economic conditions have also given people more disposable income for consuming coffee. However, small cafés, particularly in Battambang, face various management risks, especially in light of COVID-19 outbreak. This study aims to identify the primary risk factors impacting these businesses income and propose practical solutions. The study involved a sample of 80 cafés and in-depth interviews with 15 owners using statistical tools covering stepwise regression and Tobit models. Five risk areas were examined in the interviews: financial, market, operational, reputational, and economic. The results indicate a wide range of revenue, from $10 to $200. Even though some cafés have higher sales, their high costs and ineffective management frequently result in low profits. Additionally, according to the regression analysis, operational risks have the biggest impact on the income of small café businesses, followed by financial and economic risks. These results can provide benefits and wise decisions for all café owners in Battambang to enhance profitability and sustainability.