VF Franchise Consulting

Fast-food franchise market rages on

Aug 13, 2013

HCMC – The local market is witnessing the fast expansion of many global big fast-food brands and accordingly the tougher competition among them to gain good locations and to win customers via franchise deals.

A lot of big brands in the fast-food industry are seen racing to open new stores for business expansion at home.

Burger King last Tuesday opened its 15th store in Bien Hoa City in the southern province of Dong Nai just one day after Starbucks Coffee had marked its six-month entry to Vietnam with the second store in HCMC. Domino’s Pizza also put into operation its latest store in HCMC’s Tan Binh District on Sunday.

Similarly, Baskin-Robbins on July 26 inaugurated its first store in Hanoi, which is the 15th store in Vietnam after one and a half years entering the country. The store opening in Hanoi is to prepare for the launch of a many others in Danang, Haiphong, Can Tho or Nha Trang in a bid to have 50 stores in operation in 2015 as planned.

Specially, the world’s biggest fast-food store chain McDonalds plans to open its first store in Vietnam early next year, which is expected to make the local market more bustling then.

To lure customers, industry insiders now are launching a vast array of discounts, which is seen clearly at fast-food stores selling hamburger, fried chicken or pizza.

Burger King has constantly introduced long-running sales promotions with the prices ranging between VND10,000 and VND25,000 a portion compared to the normal price ten times higher. Pizza store chains also compete fiercely, with Pizza Hut, Domino’s Pizza, The Pizza Company or Al Frescos taking turns to launch “buy one-get one free” promotions a day every week.

The local franchise market can be seen as the most potential in Southeast Asia, said Harish Babla, international development partner of Nhuongquyenvietnam.com, who added that there is much room for growth in Vietnam given the small number of fast-food stores in the country.

He cited related figures saying franchised retail stores in Vietnam remain inconsiderable, at less than 100. The number of retail stores under franchise contracts amount to over 9,000 in Thailand and 14,000 in Indonesia while Singapore with only a population of five million people has more than 4,000 stores, he compared.

According to Babla, high pressure of sales growth of big brands due to saturated demand in traditional markets will make Vietnam and other Asian countries become their crucial destinations.

A slew of giants like Starbucks Coffee, Burger King and newcomer McDonalds alongside others will accelerate the competition in the local market.

Nguyen Thanh Nam, general director of Blue Star Corporation, which is the franchising partner of Baskin-Robbins, said the pace of opening 50 stores in 2015 mainly depends on the time the firm needs to seek good business locations. Baskin-Robbins is one of two well-known brands of the U.S.-based Dunkin Group, with the other known as Dunkin Donuts.

Nigel Travis, president and chief executive officer of Dunkin, informed the Dunkin Donuts brand would come to Vietnam at the end of the year under a franchising agreement with Vietnam Food and Beverage Services Company.

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