McDonald’s makes a move
A giant red "coming soon" banner advertising McDonald’s Vietnam can be seen in one of the city’s prime locations facing Hang Khay and Hang Bai streets. The banner has seized the attention and curiosity of local people for the past month now. The French-style building is undergoing renovation for the upcoming opening of the first McDonald’s outlet in Hanoi in the near future.
According to its plan, McDonald’s Vietnam is accelerating its preparations to launch the first restaurant in the capital city this month. Last month, the chain stepped up its hiring process after an announcement to employ approximately 100 people for various positions, as well as customer care and restaurant maintenance staff. The move is part of the corporation’s broad strategy to extend its reach to Hanoi and the northern market in the coming time.
At a recent seminar on human workforce, Nguyen Bao Hoang, chairman of Good Day Hospitality, the main franchisee of McDonald's in Vietnam, confirmed that the chain is seeking talents for the upcoming expansion.
McDonald’s Vietnam offers a compelling suite of benefits, flexible scheduling, and fun working environment, which is suitable for millennials who were born between 1986 and 2000.
“Millennials account for 35% of Vietnam’s population. They are extremely tech-savvy and highly connected on social networking sites, so we are looking to work with them to expand our chain in Hanoi and across the country,” Hoang noted.
McDonald’s Vietnam opened its first restaurant in Ho Chi Minh City in February 2014. Currently, the chain operates 16 outlets in the second city.
Market competition stiffening
The Vietnamese franchising market maintains double-digit growth with the growing prevalence of international chains. The expansion of international fast-food giants like McDonald's will heat up the market in the coming time.
KFC opened in Vietnam in 1997, two years after the country normalised relations with the United States. As of August 2017, the chain had 58 shops in Ho Chi Minh City, but they still trail Asian brands by a large margin.
American-style Asian fast-food chain Lotteria from the Republic of Korea entered Vietnam in 1998. The chain had 84 shops in Ho Chi Minh City as of August 2017. Meanwhile, Jollibee from the Philippines arrived to Vietnam in 1996 and started franchising at the end of 2015. It had 98 stores in Vietnam as of July this year.
The Filipino fast-food chain aims to expand to 300 stores in the country within the next three years. Jollibee and partner Viet Thai International plan to list JV Superfoods, which owns Highlands Coffee and Pho24, on Vietnam's stock exchanges by July 2019.
Starbucks Corporation, the world's largest coffeehouse company, made its first foray into Vietnam in 2013. As of May 2017, the chain had around 20 stores in Ho Chi Minh City and 8 stores in Hanoi.
In an effort to attract more customers, Starbucks has come out with a brand new concept for its store in Hanoi to improve customer experience.
According to the International Trade Administration (ITA) under the US Department of Commerce, the Vietnamese market will become more competitive with several popular brands appearing.
With the strong consumer awareness of American food and beverages, US franchise brands have become the key players on the market with brands like McDonald’s, KFC, Subway, Starbucks Coffee, Burger King, Carl’s Jr, Pizza Hut, Hard Rock Café, Domino’s Pizza, Popeye’s Chicken, Dunkin’ Donuts, Z Pizza, Baskin Robbins, Coffee Bean, and Tea Leaf.
The food and beverage industry has seen franchising develop strongly. Food consumption in the country is expected to grow by 61.6% between 2012 and 2017 and nearly 50% of household expenditure is food and beverage.
Franchising is a common strategy companies choose when expanding internationally. However, of the 10 leading food franchise brands, only two own more than 50% of their outlets. In 2008, Burger King owned 12% of its outlets, but the number fell to 0.4% by 2013, while Subway does not own any outlets, according to ITA.