Fast food empires gear up for their plans to conquer Vietnamese market

VietNamNet Bridge – McDonald’s, the US fast food giant, is moving ahead with its plan to conquer the Vietnamese market through the franchised shop network. Its first stop would be HCM City.

Vietnam, fast food chains, McDonald's, retailers, HCM City, expansion

McDonald’s high ranking executives arrived in Vietnam in 2012, the move, which in the eyes of analysts, means that the giant is preparing its plan to conquer the Vietnamese market, which is expected to kick off in 2014, according to Insideretail Asia.

However, analysts believe that the plan may start sooner than previously scheduled, and this would depend on when McDonald’s can find suitable partners, input material suppliers and fulfill the training courses for Vietnamese staff.

Sources said McDonald’s plans to open two shops in HCM City before it reaches out to other localities in Vietnam. In its long run business plan, McDonald’s plans to open 100 shops in the market.

The giant now has 33,500 franchised agents in 119 countries around the globe. However, it seems to be slow to come to Vietnam, the promising market which has quickly accepted the western styled fast food.

The sources also said that McDonald’s still has not been present in Vietnam partially because it still has not found local fresh material suppliers. Amcham Vietnam’s website wrote that the "cheese quarter-pounder" burger which has been served since 1972 would not be perfect without McDonald’s French Fries.

Meanwhile, the import tariff on French frozen potatoes is overly high, while Vietnamese potatoes cannot meet the requirements in terms of length and humidity.

While McDonald’s is taking slow steps towards the Vietnamese market, its fellow countryman Burger King has made a big leap here. It has been moving ahead with the plan to expand its business in big cities, following the six-month pilot sale program at the sale points at Tan Son Nhat airport in HCM City and Noi Bai in Hanoi.

The boards and panels with the words “Burger King sap co mat” (Burger King is coming” were seen everywhere in the central area of HCM City a couple of weeks before its official debut in October 2012.

Burger King reportedly plans to set up shops in 11 districts in HCM City, six in Hanoi and some shops in the central area of Da Nang City and Hoi An ancient town in the central region of Vietnam.

While Starbucks is believed to be a redoubtable rival to the other coffee brands, the appearance of McDonald’s would be a “threat” to fast food brands, including the big guys such as KFC or Jollibee and Lotteria.

To date, Lotteria has been leading the Vietnamese fast food market in the number of shops opened (146). Meanwhile, KFC has 134 and Jollibee 30.

In an effort to target popular consumer, Lotteria has marketed surprisingly cheap ice cream at VND3,000, while the average market price is VND7,000.

However, KFC reportedly has the highest turnover and growth rate. The brand was believed to dominate the fast food market in Vietnam in 2011, according to a report of Euromonitor International.

Analysts believe that the initial fee to open a franchise shop is not lower than $45,000. Besides, franchisees would also have to pay some 20 other kinds of fees, including the pay to the brand owner, which accounts for 4 percent of total turnover, ad fees, also 4 percent of turnover.

It is estimated that the total investment capital, including the franchise fee, retail premises rent, equipments and interior decoration, would be between $214,999 and $2.1 million for each McDonald’s shop.


Vietnam, fast food chains, McDonald's, retailers, HCM City, expansion