I do not consider myself an expert in restaurant chains or fast food, but I have some personal experience and have researched this field in depth. Here are a few thoughts from my personal perspective.
Hoàng Tùng, CEO of Pizza Home, shares his experience in the food business.
1. “The kitchen of the world” need a strong brand
Recently, as major chains such as Burger King and The KAfe stumbled, numerous articles warned about the overheated chain business and offered many ‘recommendations.’
In fact, fast-food restaurant chains in particular and chain businesses in general are neither bogged down nor past their prime. Chain businesses are a global trend, and in our country they are only at the beginning.
During a visit to Vietnam, the father of modern Marketing, Professor Phillip Kotler, suggested a slogan for Vietnamese tourism: “Vietnam – The World's Kitchen.” This is an excellent idea.
However, beyond pride in Vietnamese cuisine's diversity, healthiness, and deliciousness, we must be practical: we need strong food brands if we truly want Vietnam to become “the world's kitchen.”
2. How do you build a brand in F&B?
How do you build a strong food brand? The answer: building a chain is one of the most effective paths to a strong food brand.
Some food brands operating franchises of major international brands are struggling, but in my view, the cause lies elsewhere, not in the chain operating model.
Beyond Burger King's difficulties, we have also seen many Vietnamese brands successfully develop chains recently. Prominent examples include Golden Gate and Red Sun restaurant brands, Highland Coffee, Cộng, Urban Station, and The Coffee House, not to mention Bánh Mỳ Minh Nhật, The Kafe, Phở Ông Hùng, Món Huế, and others…
3. F&B chains are Cultural Ambassadors
So the cause does not lie in the chain operating model. In fact, operating chains has long been a global trend, and we will inevitably develop along that path.
Building chains is one of the most effective routes to strong food and beverage brands.
The strongest international food brands all operate as chains. These food brands sometimes become ambassadors that introduce their national cultures to other countries extremely effectively.
We see the American spirit in McDonald’s or Burger King restaurants. We feel Korean culture when we step into Lotteria or BBQ Chicken. We think of Thailand when we eat at Thai Express, and so on…
4. Expand the chain through franchising
The wave of international food-brand franchising has grown vigorously over the past 10 years. This model underpinned the strength of the fast-food industry throughout the 20th century. Franchising inherently reduces risks considerably compared with a company building its own processes and developing a chain with an entirely new brand.
However, buying a franchise brings risks as well as advantages.
Namely:
– Buying franchise rights for 1 country is certainly not cheap;
– Pressure to open enough outlets to meet the franchise agreement; franchisees usually have to commit to opening a certain number of outlets within a specified number of months.
5. Risks in the F&B business
The F&B industry also faces other risks, such as:
– Rents in prime locations in Ho Chi Minh City and Hanoi are quite high.
– The lease term is short.
– Staff rarely regard restaurant service as a serious profession.
– Transporting some food ingredients from the parent company to Vietnam is very costly, making prices at some international fast-food chains in Vietnam too high for consumers’ needs.
These are issues any international fast-food franchise must face when operating in Vietnam.
However, there is another very obvious reason that many overlook, which I will explain in detail below.
6. A quality product is not enough…
Making a tastier product does not necessarily mean running a better business. Many people start food businesses after entering a packed restaurant, trying its food and finding it ordinary, believing they can cook better themselves.
And so you go home, nurture the idea, and open a restaurant. Then, in many cases, it quietly closes, accompanied by the complaint: why is “their” place so crowded while mine has no customers, even though my food tastes better and my place is cleaner?
If one day you discover a burger recipe better than McDonald’s BigMac, do not rush to think you have the weapon needed to build a brand like McDonald’s.
Making a tastier product does not necessarily mean running a better business. Making chicken wings tastier than KFC's is not difficult, but building an international brand like KFC, McDonald's or Burger King is extremely hard.
7. An overall process creates strength
Buying a franchise and introducing a new product into a new market such as Vietnam is not easy to make successful. However, franchising is a good approach suited to many aspiring business owners.
Put simply, many people like doing business but lack experience in managing systems, building brands, and making products. Buying a franchise from a good brand with strong management systems and training support gives franchisees a better chance of business success.
Of course, taking on a franchise does not always bear sweet fruit. But I think the difficulties some brands that have bought international franchises face in Vietnam mainly lie in the products.
8. Why do international giants fall?
So why, despite strong brands, abundant resources, and solid finances, is Burger King showing signs of slowing down, while McDonald’s seems unable to achieve the pace it announced when opening its first store in Vietnam?
Experts attribute it to “overexpansion of the chain,” “high rent,” and “inflexible processes.”
Is it because rents are high? Then why does Lotteria rent locations just as expensive as Burger King’s and still do well?
Is it because of ‘overexpansion’? Take a look at how many outlets Buger King has in total. Brands with the most stores, such as KFC, Pizza Hut and Highland, are still operating perfectly well. Where is their problem with ‘expansion’?
Or is the cause “inflexible processes”? In chain businesses, “rigorous” processes are vital, rather than “flexible” ones. Burger King is a multinational brand with thousands of outlets. Its processes are the envy of many chain businesses; they are its greatest strength, not a weakness.
9. My story: Catching the burger trend
In 2013, as signs that giant McDonald’s would enter Vietnam became increasingly clear, I launched the Maxi Burger brand. I sold burgers believing that when McDonald’s entered the Vietnamese market, it would “educate the market” and many people would develop a taste for burgers.
Products that suit people's tastes and eating habits remain the core and most important factor behind the success of a chain brand.
My brand focuses on making the largest burgers—one and a half times the size of Burger King's largest menu item—at the same price as Burger King's large burger. My tiny store is in Royal City shopping mall, right beside a huge Carl Jr’s outlet, 1 of the 5 largest burger brands in the United States.
After a few months, Carl Jr’s closed. After nearly 2 years, my burger brand also stopped operating in the shopping mall.
The lesson I learned is that no matter how strong the brand or standardized the chain's operations, the product remains the key factor. Even with giant McDonald’s entering the market, burgers are still not a favorite or everyday food for Vietnamese people.
Therefore, when purchasing power is insufficient and the market too small, brands whose core product is burgers, such as Burger King and McDonald’s, naturally face difficulties.
Products that suit people's tastes and eating habits remain the core and most important factor behind the success of a chain brand.
That is why burger chains have stalled while Vietnamese bánh mì chains are flourishing and growing at a phenomenal rate.
Collected.
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