What are your thoughts on the operations of foreign fast-food chains in Vietnam?
Vietnam’s fast-food industry has attracted many foreign brands, with over 180 franchises granted to foreign fast-food restaurants. However, despite the promise the market holds, foreign fast-food chains have faced challenges such as high competition from local restaurants, differing consumer tastes, and cultural differences in business practices.
To succeed in Vietnam, foreign fast-food chains must customize their business strategies to fit the local culture and consumer preferences while also maintaining standardized operations to ensure quality and consistency. This requires a thorough understanding of the Vietnamese market and consumer behavior, as well as adapting to local business practices and regulations.
Since entering Vietnam, brands such as McDonald’s, KFC, and Lotteria have set major goals in terms of market share. Have these goals been achieved?
These brands all set high goals to expand their market share but their success has varied.
According to a recent report, KFC, as the first US fast-food brand to enter the Vietnamese market, has been the most popular fast-food chain in Vietnam, with 45 per cent of respondents visiting its outlets often. Lotteria, the South Korean chain, follows KFC, with 17 per cent of respondents, while Pizza Hut and McDonald’s are in joint third place with 6 per cent each. McDonald’s has faced challenges in the crowded fast-food market in Vietnam since its entry in 2014, including strong competition from existing players such as KFC, Lotteria, and Burger King.
According to an article analyzing McDonald’s entry strategy into the Vietnamese market, the company planned to open 100 restaurants within a decade, with an average of ten new restaurants each year. However, as of 2023, McDonald’s is seen as growing slowly in Vietnam, with a limited number of restaurants opened in the country. In comparison to early market entrants such as KFC and Lotteria, McDonald’s has struggled to gain a foothold in the Vietnamese fast-food market.
In conclusion, while fast-food brands such as KFC and Lotteria have been successful in Vietnam, McDonald’s has faced challenges in expanding its market share in the country, despite setting high goals for expansion since its entry in 2014.
What are the advantages in Vietnam for foreign fast-food chains?
As consumer tastes evolve in Vietnam and the globalization of businesses, cultures, and international travel increases, consumers will have ample opportunities to experience new food and beverage offerings that they may have experienced while traveling or studying overseas. A large population of over 100 million people and rapidly rising incomes in Vietnam makes the franchising sector promising over the next five to ten years.
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