International fast food chains are penetrating Vietnam, opening branches nationwide and dominating the market.
Two of the largest are KFC and Lotteria. One KFC representative commented, “This expansion is happening much faster than we expected.”
Rho Il Sik, general director of Lotteria in Southeast Asia, said that, initially his firm expected to launch 70-80 shops in Vietnam, but they have now reached 100.
Lotteria can be found all over the country, especially in cities such as Hai Phong, Hanoi, Danang, Vinh, as well as An Giang and Kien Giang provinces.
KFC products are also sold across the country. Their goal is to increase the number of shops to 116 by the end of 2012.
Jollibee, a company from the Philippines, has 25 branches in Vietnam.
Challenges for Vietnamese companies
There is no doubt that foreign firms own most of the market share in this area. According to a preliminary report, the fast food industry in Vietnam could be worth up to VND870 billion (USD41.4 million) this year.
Despite the money to be made in this market, many Vietnamese firms do not seem to be very interested.
Ly Quy Trung, owner of Pho24 brand, claimed that there is a difference between “fast food” and Vietnamese chains that serve traditional food, such as bowls of Pho, rice and cakes to customers who do not have more than five minutes to wait.
He added that Vietnamese fast food companies are at a disadvantage because of bad management and a lack of financial capacity and professionalism.
Kim Oanh, owner of Wrap & Roll restaurant network, said her restaurants specialise in selling rolled rice pancakes and Goi (a dish made of raw fish and vegetables). She also made a distinction between her business and “fast food”.
Vo Tran Anh Thy from K-Do Barkery, said that the fast food business is not the strong suit of Vietnamese companies. After two years in operation, K-Do shifted their business model and development strategy, focusing on fresh cakes and coffee instead of food.
According to Trung, fast food customers go, not only for the food, but for the novel service and the brands. This, he said, poses a big challenge to Vietnamese companies.