Fast food chains in the slow lane amid focus on health

South Korea’s Lotteria reported the highest revenues last year of VND1.56 trillion ($66.6 million) followed by American chain KFC with VND1.48 trillion ($63.2 million).

But both fast food chains experienced slower growth. Lotteria’s revenues grew by just 2 percent last year compared to 17 percent in 2017, and KFC’s by 7.5 percent compared to 18.3 percent in 2017.

Market research firm Euromonitor said in a recent report that international players dominate the limited-service restaurant market in Vietnam since local independent chains are mostly small family-based businesses with insufficient resources to take on the big players.

But, as a whole, fast food chains are experiencing slower growth. Market observers said one of the factors could be that the eating habits of Vietnamese are changing, with health being prioritized over convenience. 

KFC, Lotteria, Jollibee, Pizza Hut and The Pizza Company reported combined revenues of VND5 trillion ($213.5 million), up 13 percent from 2017 compared to 24 percent growth the previous year, according to research firm Vietnam Industry Research and Consultancy JSC.

Market research firm Nielsen said in a recent report that a large proportion of Vietnamese consumers identify good health as a sign of success over monetary wealth.

The increasing pollution and food scandals have prompted consumers to care more about their health and that of their loved ones, it said.

Meanwhile, industry insiders said Vietnam’s fast food market is a daunting place because local vendors offer food faster and cheaper than fast food chains.

American channel CNBC said last year that McDonald’s and Burger King were failing to find a mass following in Vietnam. McDonald’s only had 17 stores as of last year, while Burger King had 13, a fraction of the number they have in other Asian countries like China and Japan. 

KFC, in Vietnam since 1997, took seven years to open 10 stores and has had to update its menu several times to match local tastes.

According to the European Commission's report The Food and Beverage Market Entry Handbook: Vietnam 2018, issued in May 2018, Vietnamese consumers spend 78 percent of their eating out cash on local vendors, and just one percent on fast food chains.

Last year there were 7,000 fast food outlets in Vietnam, a relatively insignificant number considering there are around 540,000 food and beverage businesses comprised of 430,000 street vendors, 80,000 restaurants and 22,000 cafes and bars, according to Dcorp R- Keeper, a global company which provides technological solutions to food and beverage businesses.

Source: VnExpress