Fast food market is deflating

VietNamNet Bridge - Foreign investors, including the two giants McDonald's and Starbucks, have to face cultural and local issues when they enter Vietnam.

McDonald's, Starbucks, fast-food industry in vietnam, KFC, Loteria

A quiet Starbucks store.

Setting their feet in Vietnam, with a population of over 90 million, McDonald's and Starbucks decided to open their first fast-food restaurants in the two most dynamic and densely populated cities of Vietnam - Hanoi and Ho Chi Minh. Their advertising programs before and after the opening of these restaurants excited young customers.

In the first week after the first restaurant of McDonald's opened in HCM City, Vietnamese youth, including celebrities, queued from the early morning to buy American breads. They also posted photos taken at the restaurant on their personal Facebook pages to boast about being the first who enjoyed McDonald’s food in Vietnam.

This giant fast-food brand also warmed up their image by organizing free-food and gift programs.

Similarly, more than one year ago, Vietnamese only knew about Starbucks through images of nice restaurants posted on Facebook pages of overseas Vietnamese students or in movies. Now, young people can satisfy their curiosity for Starbucks at restaurants in Saigon or Hanoi.

Located on one of the best roads in Hanoi, on its day of opening, hundreds of people queued under the sun to purchase a cup of Starbucks coffee at prices of VND85,000 to VND150,000 ($4-$7).

However, the scene of long queues of customers did not happen again when McDonald's opened more restaurants in Ho Chi Minh City and Starbucks opened new shops in Hanoi.

Worse, the current customers are mostly foreign visitors and office staff. The reason is understandable: Vietnamese customers are not picky but the products of these two brands are not very suitable with the culture - culinary habits of Vietnamese people.

Bui Thi Anh Tuyet, a female student of the Hanoi University of Fine Arts, said: "I visited Starbucks only once to see how it is. Actually, the drinks there are not to my taste and the prices are high."

Tuyet’s thought is the same as other Starbucks customers. Many people said that it was unnecessary to have many branches of Starbucks because Vietnam is the world’s second largest coffee exporter. Vietnam has a rich coffee culture, with all kinds of coffee sold everywhere, from luxury cafes to sidewalk food stalls. It is an imbalance war between local coffee products and a foreign brand selling similar products at the four-time higher prices. It’s like Pizza Hut appearing in Italy.

For Vietnamese people, drinking a cup of coffee is an opportunity to share hopes, express concerns, share dreams and chat with friends. In Starbucks stores, it is very popular to see the trendy-dressed people who look fixedly at their smartphones in their hands. The conversation becomes more superficial in a boring space. And this is a big minus for Starbucks.

For McDonald's, do the Vietnamese prefer a breakfast with too much calories with bread, minced beef and french fries that is 3-4 times more costly than a bowl of pho?

Change or "die"?

According to marketing and brand experts, it is normal when international fastfood brands have signs of standstill after a breakthrough start. The core of fast food is affordable food available for everyone at a reasonable price, with fast service. The price and taste are the two most important factors.

A breakfast, a cup of coffee priced about VND100,000 is not the choice of the majority of Vietnamese people. The major product of McDonald's – burger – is not the favourite dish of Vietnamese in comparison with the Vietnamese banh mi, which is much cheaper than a burger.

To compete with the brands that have longer time in Vietnam as KFC, Lotteria, and Pizza Hut, Starbucks and McDonald's should gradually change to satisfy the market requirements.


McDonald's, Starbucks, fast-food industry in vietnam, KFC, Loteria