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ECONOMYTRADE - SERVICE

International fast food brands to compete with street foods in Vietnam

Updated at Tuesday, 05 Dec 2017, 14:02
The Hanoitimes - After 3 years of operating in Ho Chi Minh city, McDonald’s has finally opened its first restaurant in Hanoi on December 02.
Covering an area of 400 square metres in the centre of Hanoi, with the two fronts at Hang Bai and Hang Khay streets, the restaurant has a panoramic view of Sword Lake to customers. McDonald’s recruited more than 100 employees to provide up to 200 Hanoi customers with the highest quality service. This location is expected to be an attractive spot for business with numerous tourist attractions in the surroundings. 
 
McDonald's is increasing pressure against competitors with its first restaurant in Hanoi.
McDonald's is increasing pressure against competitors with its first restaurant in Hanoi.
In Ho Chi Minh city, McDonald’s currently has 16 restaurants, while in the first year coming to this city, the fast food chain has opened three restaurants, and the company is expected to have similar moves in Hanoi. In the global scale, for over 60 years, McDonald’s has been the pioneer with big influence to the strategies of competitors in fast food industry. Among them, Burger King is the main competitor of McDonald’s. At Vietnam, as the fast food market is growing in two-digit number with significant contribution from McDonald’s. With the new restaurant in Hanoi, it is expected to have certain impact to other competitors, and Burger King is no exception. 

When first coming to the Vietnam’s market in 2012, BKV, the franchisee which brought Burger King to Vietnam originally planned for the quick expansion with the opening of multiple restaurants in golden location for customers’ easy access and identification. However, after 5 years, Burger King has now been more cautious. Instead of focusing on the increase of number of restaurants, the company has adjusted its business strategy to efficiency. Burger King now has 13 restaurants, (5 in Hanoi and 8 in Ho Chi Minh city) compared to 18 restaurants in 2012. In Hanoi, Burger King also infiltrated the Hanoi market with restaurants opened in golden locations. 
 
Advantage of street food in Vietnam is cheap, tasty and quick preparation.
Advantage of street food in Vietnam is cheap, tasty and quick preparation.
A change in Burger King’s strategy partially came from Restaurant Brands International (RBI, owner of Burger King), which is undergoing the restructuring process when acquiring other fast food brands, notably the 1.8 billion deals with Popeyes Louisiana Kitchen and 12.5 billion USD with Tim Hortons 3 years ago. After completing this process, RBI has become the third largest fast food restaurant chain in the world. 

In parallel with more fast food brands coming to Vietnam, more and more brands are facing difficulties in maintaining market shares or closing down restaurants, due to the fierce competition from street food, which is plentiful and diversified. Advantage of street food in Vietnam is cheap, tasty and quick preparation. So people can easily grasp a few street food dish in just few minutes. Moreover, with the introduction of food review websites such as Foody or Lozi, street food is more and more popular.

According to representative of Burger King, previously, the market shares for fast food has been narrowed due to the eating habits of local customers. As such, brands like Lotteria and KFC still dominate the market thanks to offering menu suitable with tastes of local customers. Meanwhile for Burger King or McDonald’s, it is difficult and time consuming to diversify the menu in accordance with local taste, as they still have to ensure the international standard. Especially, it is very hard for them to search for suitable ingredients suppliers. 

Despite these difficulties, with carefully planned strategies to infiltrate Vietnam’s market, Burger King and McDonald’s have shown confidences in their own market shares, as the Vietnam’s food market is still growing with young population and stable economy. 
Nguyen Tung
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