McDonald’s operates in over 100 countries and has over 36000 locations. The fast food sector is worth more than half a trillion dollars, and it is growing. However, there is one country where fast food franchises have struggled to gain traction: Vietnam. In 2014, McDonald’s launched its first outlet in Vietnam, which now has 17 locations. Vietnam has a population of 90 million people. These figures fall far behind the two firms’ plan for business expansion in the Vietnam market.
In Vietnam, there is an entire culture of street cuisine that is a strong competitor for foreign fast-food businesses looking to enter the country. If you’re riding your bike and are hungry, simply park your bike off the road, and chances are there will be some food booths nearby. The entire process takes only a few minutes: you enter, order food, eat, and leave because the stall is conveniently located.
There’s also more variety than Burger King or McDonald’s can provide. For example, for something light, there’s tofu or sweet soup; for lunch or supper, chicken rice or noodle; and there’s a plethora of different cakes, juices, grilled meat, fruits, and so on along the streets that promise to satisfy virtually anyone’s palate. They’re also less expensive.
McDonald’s are expensive
A burger meal in Vietnam (burger + fries + coke) costs $3, while a roast pork banh mi (sandwich) costs $0.5 and in $1 you could get a whole Vietnamese lunch meal.
Although salaries are modest (most individuals make less than $500 per month), dining out is highly common; for example, most people have breakfast at a food stall on their way to work or school rather than at home.
So, burgers work out too expensive to sustain this culture of regular eating-out.
McDonald’s are not fast enough
Based on global standards, most American burger outlets have certain space and layout requirements and thus open in large supermarkets, tourist destinations, shopping complexes etc.
So, people have to park, go to a burger outlet, queue up for ordering and then wait for food.
On the other hand, almost every street in major cities has various street-food stands, where you can leave your bike right next to a food-stand and get your meal in under a minute.
E.g. for Pho, the vendor can pour the soup from a, big pot simmering over low heat, add solid ingredients and serve you in seconds.
McDonald’s are not meant for sharing
Vietnam had become an extremely impoverished country as a result of the Vietnam War, and even the wealthiest citizens couldn’t afford three meals a day; this accentuated the already-existing culture of food sharing.
People nowadays usually only have their own rice bowls, and meat or fish is removed from a community dish, dipped in common fish sauce, and then transferred to each person’s rice bowl.
McDonald’s Late entry
The Vietnamese economy opened in the mid-1980s, and food franchising was permitted by the mid-1990s; KFC (US), Jollibee (Philippines), and Lotteria (Japan) joined the market between 1997 and 2005, thus Burger King (2011) and McDonald’s (2014) were late entrants into an already crowded food industry.
KFC took seven years to establish ten locations and now has over 130; nonetheless, people flock there for a special-occasion experience and air conditioning to fight the heat; McDonald’s and Burger King may succeed one day, but their performance so far has been lackluster.
McDonald’s Relative products
Pricing isn’t a major factor in Burger King and McDonald’s failure in Vietnam. What matters most is the unique experience offered by fast-food restaurants and street food vendors. Vietnamese people like conversing and sharing their experiences. And eating is a way for them to fulfill both their biological and social needs.
Most fast food restaurants’ layouts, as well as the mechanical nature of how food is prepared and given there, provide little room for contact between customers and sellers, as well as among customers themselves. Whereas with street food, you can mix in with the locals and become a part of the community. You have the option of asking the vendor to alter the dish to your preferences. As you eat, you also talk, laugh, share food and watch people pass by on the street.
When talking about Vietnamese street food, one can’t be tolerated for not mentioning “banh mi”.
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