Restaurant industry starts 2017 on sour note
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The restaurant industry in the three largest cities of Vietnam struggled with weak sales and traffic throughout the first quarter of 2017, according to a report by Decision Lab, a marketing research company based out of Ho Chi Minh City.
The number of customer visits to restaurants in Hanoi, Ho Chi Minh City and Danang for the three month period dropped 9% with average spending per visit plummeting 12% when compared against the previous quarter’s figures, said Decision Lab.
The quarter closed with 20% lower total sales for the three cities than reported for the fourth quarter of 2016.
The data collected from the Decision Lab Foodservice Monitor indicates that both full-service restaurants and quick service restaurants experienced a decline in sales and visits in the three month period.
Meanwhile, street food and convenience store sales managed to maintain their market size.
Decision Lab didn’t have a solid explanation as to what caused the substantial drop. However, the company rationalized that it was due to a variety of seasonal factors, mostly involving the Lunar New Year holiday.
During the Lunar New Year, said Decision Lab, consumers have a higher tendency to travel out of the cities to their homeland. They also spend more time with family and eating at home during the country’s biggest holiday.
As Vietnamese consumers began saving for the biggest celebration of the year, they cut down on going to restaurants for Breakfast, Lunch, and Dinner, both in terms of visits and spending.
As the quarterly Foodservice Monitor report from Decision Lab shows, Delivery is the only type of consumption that enjoys stability in its market size in quarter 1. Vietnamese still highly value the convenience of placing a delivery order, having their meal cooked by professional chefs and delivered to their doorstep. Especially before, during and after Lunar New Year when everyone is swamped with work, holiday preparation, and traditional rituals, the comfort a delivery can bring is even more appreciated.
Although not cutting down on delivery per se, consumers did spend less per order as they stayed committed to their saving plan. To tackle this lower spending per order, restaurants can offer promotions that encourage more frequent orders from consumers. Operators should also consider offering snacks/drinks at lower price point, and cooperate with third party order platforms that take care of the delivery to save themselves on delivery cost.
Questions & Answers
Q.Which types of food service outlets were impacted by the decline in sales and visits?
Which types of food service outlets were impacted by the decline in sales and visits?
Both full-service restaurants and quick service restaurants experienced reduced sales and customer visits during the three-month period. However, street food and convenience store sales managed to maintain their market size within the industry.
Q.What is the primary explanation for the downturn in the restaurant industry?
What is the primary explanation for the downturn in the restaurant industry?
Decision Lab suggested that the substantial drop was primarily due to various seasonal factors. These largely involved the Lunar New Year holiday, when consumers often travel, spend time with family, and eat at home.
Q.What was the only segment of the food consumption market that remained stable?
What was the only segment of the food consumption market that remained stable?
Delivery services were the only part of the food consumption market to maintain a stable market size in the first quarter. Consumers continued to value the convenience of ordering meals for home delivery, especially around the holiday.
Q.What strategies are suggested for restaurants to address lower spending per delivery order?
What strategies are suggested for restaurants to address lower spending per delivery order?
Restaurants could offer promotions to encourage more frequent orders from consumers. Operators should also consider providing snacks or drinks at a lower price point and collaborating with third-party delivery platforms.
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