VF Franchise Consulting

Fast food market: bigger burgers to clamp smaller ones

Apr 27, 2013

VietNamNet Bridge – How will the fast food market will be after McDonald’s makes its presence in Vietnam?

The presence of the big guy McDonald would surely lead to the big changes in the fast food market, after it forces the rivals to re-divide the market.

Some people now feel curious about what will happen on the day the fast food giant McDonald’s makes debut in Vietnam. Prior to that, they witnessed young people in HCM City queuing up to wait for their turns to enjoy Starbucks coffee on the opening day February 1, 2013.

While some analysts think that the presence of McDonald’s in Vietnam would overpower its rivals, others think that it would not be an easy work for the fast food chain, even though it is a big one, to penetrate the Vietnamese market.

In fact, McDonald’s also has to overcome the barriers it meets in China when competing with the fellow-countryman Yum!Brand which owns KFC brand, or Jollibee in the Philippines.

A lot of foreign big fast food brands have been present in the Vietnamese market. However, three of them are believed to lead the market, namely KFC, Lotteria and Jollibee. All of them have been here in Vietnam since 1990, while two of them have been coming through the franchising way.

The three biggest giants in Vietnam might have been listening to the news to find out who would be the official partners of McDonald’s and where the first shop of McDonald’s would be set up. They understand well that McDonald’s would be a redoubtable rival, which would not only attract urban consumers, but tourists as well.

At present, Lotteria is believed to have the largest chain with 146 shops, while KFC has 156 and Jollibee 30. However, KFC is believed to have higher growth rates and turnover.

A report of Euromonitor showed that KFC led the fastfood industry in Vietnam in 2011.

Doan Dinh Hoang, a branding consultancy expert, said the joining of McDonald’s to the Vietnamese market would make the fast food brands’ struggle stiffer.

The three big guys in the market themselves have been competing fiercely with each other.

With 146 shops, Lotteria obtained the turnover of VND39 billion just within 10 days, from the first day of the Lunar New Year to the 11th day of the year. Meanwhile, it has reported the 30 percent increase in the turnover in 2012 over 2011.

The business performance of the chain is better in HCM City than in Hanoi. Meanwhile, Hanoi is not an easy market for Lotteria because of the culture factors, and partially because KFC is holding the upper hand in the capital city.

Truong Ham Liem, Head of the Marketing Division of Lotteria Vietnam, said the chain plans to open 50 more shops in 2013, while 30 percent of which would be not in HCM City, but in other localities such as the western part of the southern region and Da Lat City.

Not only striving to increase the coverage, Lotteria Vietnam has put a high hope on the development of hamburger, hoping that this would be a potential menu thanks to the reasonable price and good taste.

Not only Lotteria, KFC and Jollibee have also been pushing up the development of their chains in Vietnam. Graham Allen, President of Yum Restaurant International once said about the plan to develop 180 shops in Vietnam by 2014. Meanwhile, Jollibee Vietnam told the press it wants to have 500 shops in Vietnam.

To implement the plan to expand the networks, the big guys have been moving heaven and earth to look for retail premises. However, they need to find out the answer to the question: “where would the first McDonald’s shop be located?” first, before going ahead with their plans.

DNSG

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