It's hard to know for certain how much money the restaurants raise, but in a recent report, the South Korean daily Chosun Ilbo estimated that around 120,000 South Koreans visit the two restaurants in Siem Reap, Cambodia, each year, contributing an estimated 200 to 300 million won ($179,000 to $269,000) to the coffers in Pyongyang. The report concluded that each of the restaurants probably earns $100,000 to $300,000 per year for the regime. As a result, Lankov said the eateries -- which probably number in the "low hundreds" across Asia - are likely one of Pyongyang's major earners. "It's a small, poor country. For them a few million U.S. dollars is a sufficient amount of money."
Reports from defectors suggest that the businesses are operated through a network of local middlemen, who send a certain amount of cash to North Korea each year as remittances. According to one report, the Cambodian eateries were opened by Ho Dae-sik, the local representative of the DPRK-aligned International Taekwondo Federation. (His son, Ho Si-ryong, is listed as the email contact for the Pyongyang Café in Phnom Penh, though he did not respond to queries). Like North Korean embassies, which are meant to be financially self-sufficient, the eateries have to cover their costs without cash from the central government.
Kim Myung-ho, a North Korean defector who ran a restaurant in northern China, reported in 2007 that each establishment, affiliated with "trading companies" operated by the government, was required to meet a fixed benchmark payment. "Every year, the sum total is counted at the business headquarters in Pyongyang, but if there's even a small default or lack of results, then the threat of evacuation is given," Kim told the Daily NK, a North Korea-focused online publication. Evacuation -- going back to North Korea -- is a serious threat for someone who is allowed a few years in the relative prosperity of, say, Cambodia.
Kwon Eun-Kyoung, English editor of the Daily NK, said the eateries are part of trading companies controlled by Bureau 39, the revenue-raising arm of Kim Jong-Il's Korean Workers Party. "Every business belongs to the party and is affiliated with the party systematically," she said. "Even though it is maybe run by brokers, the whole system we presume is controlled by the center of North Korea."
The establishments, highly political both in purpose and in the bizarre décor, have at times acted as political lightning rods for Korean expatriates. After the South Korean frigate Cheonan was sunk in March of last year, presumably by a North Korean submarine, South Korean residents in Cambodia launched a campaign to dissuade their compatriots from patronizing the DPRK-run restaurants. The Korean Association in Cambodia distributed stickers proclaiming, "We, Korean residents, don't go to North Korean restaurants." Posters condemning the sinking of the Cheonan were displayed on the windows at South Korean-run eateries.
One restaurant manager told the Phnom Penh Post that, in mid-2010, three men came to his restaurant and started taking photographs. The men tore the stickers from the toilets and removed an anti-DPRK poster from a board outside the restaurant. "They said they were taking orders from the North Korean Embassy. The North Korean Embassy told them to take pictures and take the [sign]," the paper quoted him as saying. The Chosun Ilbo reported a similar stand-off at a South Korean restaurant in Siem Reap.
With no real end in sight to tensions on the Korean peninsula, the main draw of these pricey eateries -- the thrill they give to southerners eager for a glimpse of life inside the estranged north -- could well be their undoing. When I took a trip to the Pyongyang Restaurant in Phnom Penh last year following the North's shelling of Yeonpyeong Island in November, the flood-lit establishment was empty save for a single table of South Korean businessmen. The turnout was so low that the usual bevy of pale-faced waitresses didn't even bother to perform their famous floor show.
Lankov said that, as competitive businesses, the restaurants rely on their novelty value to South Koreans. Without that, there may be little to keep them afloat. "The restaurants [offer] a bit of political exoticism, so people come," said Lankov. "Otherwise, I don't think they can be competitive."