Incurring big losses, fast food giants open fewer shops

The heyday of fast food chains seems to be over in Vietnam. The number of fast food shops has been decreasing in an era when people are trying to ‘live slowly’.

Ten years ago, Hanoians and Saigonese could easily find fried chicken shops along main streets. At that time, eating fried chicken at fast food shops was in fashion. More and more fast food shops opened, not only in large cities, but also in small cities and provinces.

In 2012, Burger King, encouraged by the fast growing market of Vietnam, announced a plan to spend $40 million to develop a chain with shops located in advantageous positions in many cities and provinces throughout Vietnam.

A representative of Burger King once stated that Vietnam was one of its key markets.

Nguyen Bao Hoang, who brought McDonald’s to Vietnam, said he would open about 100 shops in Vietnam within one decade, and employ hundreds of workers. Lotteria and KFC are believed to be the brands with the highest number of fast food shops in Vietnam.

Analysts once believed that the potential of the Vietnamese market was great with the Vietnamese income on a rapid rise. Fast food chains targeted the Vietnamese middle class with average household income of $500-1,000.

MOIT has granted licenses to 148 foreign brands to enter the Vietnamese market in the last eight years.

This includes 42 fast food, bakery, coffee, beverage and restaurant brands, accounting for 43.7 percent of the total.

Some fast food shops have shut down quietly after the boom. The number of shops of each fast food chain is on the decrease.

In mid-February 2016, a Burger King shop at No 1B-1B1 on Cong Hoa street in HCMC announced its closure. One month before, another shop at the Dien Bien Phu – Cao Thang crossroads in district 3 also shut down.

In 2015, two Burger King shops at No 26-28 Pham Hong Thai street in HCMC and 125 Lo Duc street in Hanoi stopped operation. In mid-2014, a shop closed in Da Nang.

McDonald’s, a well known brand from the US, has set up several shops in HCMC but still hasn’t opened a restaurant in Hanoi.

A branding expert commented that food chains can develop only if their products fit locals’ taste.

This explains why fast food chain development has slowed down, while banh my (Vietnamese sandwich) chains have been prospering.