World fast-food revenues slow in Vietnam, struggling to lure local consumers
The downward trend in the growth rate of the leading fast-food chain stemmed from market changes, consumer’s mindset as well as the emergence of alternative segments.
A KFC restaurant in Hanoi. Photo: Bloomberg
According to Vietnam Industry Research and Consultancy (VIRAC), a market research firm, the revenues of five leading fast-food chains in Vietnam including KFC, Lotteria, Jollibee, Pizza Hut and The Pizza Company totaled VND5 trillion (US$214 million) in 2018, up 13% compared to the previous year, but significantly lower than 24% of the 2016-2017 period.
KFC and Lotteria, which hold the largest share in the market, have earned trillions of dongs, but started to see contraction in revenue growth, according to VnExpress.
KFC Vietnam Joint Venture Company’s 2018 financial report showed that the chain gained VND1.48 trillion (US$63 million) in revenue, an increase of 7.5% over 2017, slowing from an 18.3% expansion a year earlier.
Lotteria, KFC’s rival, also endures a similar situation as its growth rate in 2018 was just 2%, a dormant rise compared to 17% of the previous year.
Jollibee’s revenue was just half of the two aforementioned fast-food giants, however, its performance seems to be more positive. In 2018, Jollibee Vietnam collected nearly VND800 billion (US$34.2 million) in revenue, up 33% year-on-year, and retaining a stable growth rate.
Compared to the fried chicken segment dominated by KFC and Lotteria, the pizza segment has smaller scale of sales.
The revenues of Pizza Hut and The Pizza Company were VND617 billion (US$26.3 million) and VND496 billion (US$21.2 million), respectively in 2018. While Pizza Hut, the leading pizza chain in Vietnam, saw its growth rate up only 6% compared to 2017’s, the smaller The Pizza Company “sprinted” with the growth rate of nearly 72%.
According to some market analysis firms, the downward trend in the growth rate of the leading fast-food chain stemmed from market changes, consumer’s mindset as well as the emergence of alternative segments.
A Euromonitor report showed that KFC and Lotteria still retain their lead, however their growth rates remain dulled over the past two years partly due to the expansion of the convenience stores which also serve fast-food, customers changing their preference from time-saving or convenience to healthy foods.
CNBC recently pointed out it’s the rather pricey menu compared to local fast dining which makes fast-food chains in the world namely McDonald’s and Burger King flop in Vietnam.
In addition, Vietnamese food is shareable which suits the local dining habit while hamburgers of McDonald’s and Burger King are not easy to be shared.
Those world fast food chains are holding a rather small share of the fast dining market. While McDonald’s and Burger King have more than 36,000 and 16,000 locations across the globe, respectively, there are only 17 McDonald’s stores and 13 Burger King’s in Vietnam. Hanoitimes
Foreign fast food companies are lagging behind their own expansion plans in Vietnam due to the fierce competition with major rivals in the same segment and local competitors.
KFC, Lotteria and McDonald’s are the three biggest players in the fast food market.
Burger King has come under fire for an advertisement that many deemed racist against Asians.