VF Franchise Consulting

Restaurant Trends 2019 – USA vs. Southeast Asia (SEA / ASEAN)

Dec 16, 2019

There are wonderful resources available to almost any industry coming out of the US.  When Google searches come up with millions of hits to almost any question, how can you not get whatever information you’re looking for?

For the food and beverage industry, commonly called F&B, memberships to restaurant.org or similar sites will keep you up to date on the latest trends in franchising, food, technology, competition, and challenges. But what if you live internationally? Unfortunately, information is much less available and less reliable.  It gets progressively worse as you move into developing regions like Southeast (SEA) Asia.

restaurant trends 2019

So as 2019 winds down, let’s have a look at some of the key trends and how they apply to the Asian region, specifically developing markets like Vietnam, Thailand, Myanmar, Indonesia, and similar.

Five key trends shaping the US restaurant industry in 2019 (based on The National Restaurant Association annual report)

  • A competitive business environment.
    While restaurant operators generally are optimistic about business conditions, they don’t expect a letdown in competitive pressures in 2019. In addition, rising labor costs and a complex legislative and regulatory landscape on federal, state and local levels add pressure on business performance and bottom lines.
    • Southeast Asia (ASEAN): While we don’t have to worry about legislative and regulatory issues, rising labor costs are having a significant impact.  Vietnam’s entry level restaurant wage has risen nearly 400% in the last 10 years.  More developed regional countries like Thailand only increase just over 200% in the same period, although are still higher overall.  Competition is fierce.  The region is known for good food.  It is hard to beat both the quality and price of a good local Vietnamese Pho or a Thai curry or Pad Thai.  New market entries have to be ready to offer a good and photo worthy product, at a great value, in a convenient location (in that order) to attract a following.
  • Staffing is a top challenge.
    The prolonged economic expansion has led to a tighter labor market for business in many industries, but the restaurant industry also continues to be impacted by longer-term structural changes in the labor force. As a result, recruiting and retaining employees will be among the top challenges faced by restaurant operators in 2019.
    •  Southeast Asia (ASEAN): Staffing overtook supply chain as the top challenge nearly 10 years ago in Vietnam and has stayed on top.  With Unemployment in Thailand averaging 1%, Vietnam 2%, and the region being only slightly higher, getting good staff is challenging.  Add in the limited tradesman education system and the general feeling in many countries that hospitality is only a career for the uneducated, getting and keeping decent employees is a real challenge.  Remember paying above market rate is cheaper than recruiting and retraining, and often the staff motivation in the region is to learn so eventually they qualify for higher salaries.  This can be capitalized on by ongoing training, whether on the job, English, or exposure to a variety of different positions within the organization.
  • Pent-up demand remains elevated.
    Consumer confidence is strong, their balance sheet is sound, and higher-income households represent a larger share of households than ever before. With consumers’ pent-up demand for restaurant services remaining elevated compared to historical levels, well-positioned operators can still boost traffic in a competitive environment.
    • Southeast Asia (ASEAN): I will pass four empty Korean restaurants and one restaurant that is full of customers.  It is the same with similar restaurant streets and zones in Thailand or Malaysia.  Making sure you know your competition intimately and being quick to make changes to compensate is critical.
  • Technology incorporation continues.
    Technology adoption will keep growing among restaurant operators in 2019, but the trends are not uniform across segments. Consumers would most like to see restaurants incorporate technology that focuses on improving customer service, making ordering and payment easier, and offering more convenient takeout and delivery options.
    • Southeast Asia (ASEAN): In many ways Asia has always been ahead in the technology race.  Brand apps, free Wi-Fi, mobile payment options, and social media operate at a much higher level here than in the west.  Many brands that I have managed in Asia have better websites, more active Facebook accounts, and used superior technology within the restaurant than the franchisors did in the US.  Evaluate what is the “norm” in your area and amongst your competitors, and look for ways to appeal to your customers by trendsetting instead of following.
  • Food preferences continue their rapid evolution.
    Contemporary consumer cravings are dovetailing with emerging societal dining trends. Among the trends for 2019: a more eco-friendly perspective, greater emphasis on global flavors/cuisines, enhanced availability of healthy items and healthy children’s meals, and the exploration of new food sourcing options.

Southeast Asia (ASEAN): As we are not yet saturated by global cuisine and flavors, we are behind in many of these types of trends.  Eco-friendly concepts have only recently been introduced to Vietnam and is slow to take hold as consumers are not yet ready to bear the additional costs that often accompany eco-friendly products and services.  For a population that averages around 20kg less than their counterparts in North America, healthy food options simply don’t have the same priority.  That said, the fast developing and growing middle class does care about what their children eat, understand the concept of “organic”, and are starting to seek out healthier and more exotic meals.

If you are living in the region, there are many advantages to looking at worldwide trends. While Southeast Asia is sometimes ahead and sometimes behind, many trends are truly global in nature.  Keep an eye out for things you can implement in your own business to stay ahead of your competitors.

If you are based outside the region and as a franchisor looking to enter Southeast Asia, realize that everything you already know is not always true, and that up-to-date local insights and research are important.  Localization and flexibility where possible is often more important in Asia than anywhere else.

Author: Robert has over 25 year of F&B and Franchise experience and has lived in ASEAN for more than 12 years.  He is currently the Director of Franchise Development & Operations at VF Franchise Consulting.

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