Mr. Sean T Ngo, CEO of VF Franchising Consulting, tells VET how franchises can work well in Vietnam.
What international food and beverage (F&B) brands have successfully attracted Vietnamese customers by launching dishes that meet Vietnamese tastes?
Brands such as KFC, Lotteria, and Pizza Hut have been in Vietnam the longest and have been able to localize successfully. At KFC you can find not only fried chicken but also roasted chicken, shrimp burgers, steamed rice, Vietnamese soup, Vietnamese salad, and Nestle Milo drinks. At Pizza Hut you can find pizzas with a heavy focus on seafood, which is very popular in Vietnam, spicy prawn fried rice, and regular steamed rice. Asian-inspired pizza flavors and fried sausage are also a part of the menu. Both KFC and Pizza Hut have been successful in Vietnam as they have balanced their core menu with relevant dishes for Vietnamese consumers.
How would you comment on the recent trend of international brands (for e.g. Starbucks with Dolce Misto, Burger King with rice, Pizza Hut with Vietnamese-taste pizza) to launch products specifically for the Vietnamese market?
International brands are increasingly becoming more open to the localization of their menu to cater to local markets. It’s no surprise that major franchise brands such as Starbucks, Burger King, Pizza Hut and KFC are all localizing their products to some extent. The challenge for foreign brands is to not over-localize, as this may make the brand appear more like a local brand instead of a highly-successful international brand.
What other challenges are there for international F&B brands when they enter the Vietnamese market?
There are many challenges for international brands. They include but are not limited to finding the best local partner, a thorough understanding of the target market, locating good real estate, solving major supply chain and logistics issues in a new and developing market, and helping the franchisee find great people to lead, train and work at the restaurants. The support to the local partner must not just be a visit to the local market when a new unit opens or once a quarter or once every six months. Support must be provided on a much more regular basis and ideally come from a regional support center and support team.
As an expert in franchising, what is your advice to those entering the Vietnamese market at this time?
At VF Franchise Consulting we work with many clients who wish to enter Vietnam and markets within Southeast Asia. There are no short cuts to success in these markets. In order to enter these markets successfully, preparation and knowledge are key and understanding the different dynamics of the targeted consumer, the competition (now and in the future), the cost structure and drivers, and the potential for profitability longer term. Also key is to have a regional support center and team in place to assist and guide franchisees. VF Consulting assists our clients in understanding these different dynamics and providing support services in Southeast Asia.
What are your thoughts on Vietnam’s franchising market?
Vietnam’s franchising market is developing in a similar many to comparable markets such as the Philippines, Thailand, and Indonesia. We see more foreign franchise brands entering the marketplace from not only the West but also from within Asia. We see even more locally-grown franchise systems continuing to take root and contributing to the evolving franchising industry over the next decade. A key advantage is that Vietnamese food and culture are well-liked internationally, and the opportunity for more Vietnamese brands to grow overseas is within reach for those that invest and prepare well for that growth.