McDonald’s opened it first store in Vietnam, Ho Chi Minh amid thumping techno music, face painting, live performers and lines of customers queued along velvet ropes. Hundreds were lined up prior to 8 a.m. to be among the first Vietnamese to sample the American fast food cuisine. The colorful 350-seat restaurant provided Big Macs, Chicken McNuggets, french fries and the McPork Sandwich along with a visit by Ronald McDonald himself. The American iconic fast-food chain now joins Starbucks, Burger King, KFC and Subway as U.S. food companies who have entered the Vietnam market.
The restaurant is being run by Henry Nguyen the son-in-law of the Vietnamese Prime Minister. Nguyen came to the U.S. and worked for McDonald’s during his teenage years. He received degrees from Harvard and Northwestern University before returning to Vietnam to run the offices of a venture capital funds company based in San Francisco.
Nguyen said it had been his dream to open a McDonald’s in Vietnam after returning over a decade ago. In July of 2013 he won the franchise and is seeing his dream realized. He feels that the McDonald’s is a sign of something bigger for Vietnam and McDonald’s. Vietnam has been a target market for McDonald’s for a long time but it took a while for supply chain logistics to be worked out. It is also a sign that Vietnam is continuing to emerge as a viable market for the world’s commodities.
For McDonald’s, Vietnam represents one of the last untapped markets in the world with nearly 90 million people and a growing economic middle class that can afford the cost of fast food which is more expensive than street vendor food. A McDonald’s value meal costs 85,000 Vietnamese Dong which is approximately $3.99. Across the street a traditional Pho house owned by Nguyen Thi Hang Nga a bowl sells for half the price of the McDonald’s value meal. Nga stated that McDonald’s may be tasty but it is expensive for an average Vietnamese worker. Industry experts say that chains like McDonald’s will typically market themselves as a lifestyle choice for the middle class and not necessarily an inexpensive choice for the poor.
According to Euromonitor International, a market research firm, the Vietnamese fast food market had a total revenue of $353 million in 2013. This was a 14.5 percent increase over the prior year. Growth numbers this substantial will get the attention of many large companies that will cater to the middle class market of Vietnam.
Although this is McDonald’s first store to open in Vietnam, KFC was first on the market in 1997. A few short years after U.S. and Vietnamese political relations were normalized. KFC is the largest brand with 135 stores. Burger King entered the market in 2011 and has expanded to 20 outlets. Starbucks entered in 2013 and more recently the streets of Ho Chi Minh, Hanoi, and Danang are home to Baskin-Robbins, Carl’s Jr., Popeye’s Louisiana Kitchen, and Dairy Queen.
The long wait for McDonald’s was likely rooted in supply chain and market research as they watched the market closely. Now with McDonald’s opening its first store in Vietnam a positive signal has been announced that more U.S. businesses will likely look closely at Vietnam as the next big market to break.
By Anthony Clark