VietNamNet Bridge – A lot of the US brands have appeared on the Vietnamese
market recently. Meanwhile, experts believe that the US franchised food chains
would be much bigger than now.
Nguyen Thanh Nam, General Director of Blue Star Food, said that he plans to develop 50 Baskin Robbins in the next five years.
KFC of Yum Brands is still leading the fast food franchising chains in Vietnam. IN 1997, the first shop of the chain was opened. After that KFC operated in Vietnam with just one shop in HCM City. Meanwhile, by the end of 2011, the number of KFC in Vietnam had reached 1000. It expects to double the number of shops by 2015. The fast food chain now holds 60 percent of the fast food market in Vietnam with many shops located on advantageous positions.
Pizza Hut of Yum Brands also arrived in Vietnam in 2007, while the franchised chain has developed rapidly with 20 shops which also provide Pizza Hut Delivery service as well.
Subway in 2011 also announced the plan to develop sandwich shop chain with the two first franchised shops located in HCM City. Mark Mc Grath, Managing Director of Subway Vietnam, said that Subway plans to open 10 shops this year and 50 in the next five years. Besides the shops which Subway would keep direct management, it would also push up the franchising.
According to the Ministry of Industry and Trade, up to 70 foreign brands have registered franchising business in Vietnam. Most of them are consumer brands which target the youth and the middle class consumers.
KFC, Pizza Hut, Lotteria, Jollibee, the pioneers in the markets have successfully “changed waste lands into cultivated areas,” which has made the market ready to receive other brands.
The Vietnamese market is waiting other well known fast food brands from the US, such as McDonald’s, Starbucks, while other names such as Round Table Pizza, Applebee’s, Focus Brands, Which Wich, Melting Pot... are reportedly seeking the way to Vietnam or looking for suitable Vietnamese partners.
Market conditions now more favorable
Franchising brands all say that the Vietnamese market has become more favorable than many years ago. Especially, the purchasing power has increased rapidly, while Vietnamese consumers have also got used to US fast food brands. Especially, franchising chains said it is now much easier to look for Vietnamese partners because they have become more professional.
Analysts also said that in the past, seeking retail premises was a big obstacle, because there were not many trade centers, while the retail premises rents were sky high. Meanwhile, franchising chains now have many more choices.
Vietnam has become a target market for franchising chains also because of the rapid increase of the number of medium class consumers which is expected to double by 2015. Fast food shops now also target the youth and put high hopes on the growth of tourists.
Beth Solomon, Deputy Chair of the US Franchising Association, has also noted that it is now the right time for US companies to join the franchising market in Vietnam.
In the current economic period, the owners of franchising chains are under the pressure of pushing up the growth, and they tend to seek new markets. Therefore, Vietnam has emerged as one of the most attractive points in Asia.