The Vietnamese market remains an ideal destination for Japanese restaurant chains, as proved by the increasing number of Japanese companies looking for opportunities to expand to the country, particularly targeting the mid- and high-income segments.

Vietnamese customers show the growing demand for the world-famous Japanese cuisine. 

Japanese restaurants began to appear in Vietnam in the mid-1990s and grew rapidly in the 2006-2007 period, but by 2012 the market grew somewhat saturated, intensifying competition. In recent years, however, the restaurant sector gained newfound wings.

Japanese food is becoming a favourite of Vietnamese people. Riding along Kim Ma street in Hanoi, along which the largest South Korean and Japanese enclaves are located, one can find an abundance of choice in Japanese restaurants. Japanese cuisine does not only have traction among Japanese expats, and chains like Tokyo Deli, Yakimono, Sushi Rei, and Gyu Shige can be found dotted all around the streets of Hanoi, Ho Chi Minh City, and other large cities and provinces. 

The density of Japanese restaurants shows restaurateurs’ interest in the market, who are now one of the major gastronomic powerhouses besides Thai, South Korean, and local restaurants.

Last week, five companies from large cities of Japan participated in the Test Kitchen Vietnam 2019 food festival organised by the Japan External Trade Organization (JETRO) to introduce Japanese cuisine and look for investment opportunities in Vietnam.

Hironobu Kitagawa, chief representative of the JETRO Office in Hanoi, believed there is still great potential in opening Japanese restaurants in Vietnam as one of the main interests of Vietnamese tourists arriving to Japan is local cuisine. Besides, Japanese investment in Vietnam has been on the rise, and with it the number of Japanese visitors to Vietnam – as well as the accompanying services, including the restaurant sector, has also been increasing. 

The potential also comes from the increased spending on food. According to Vietnam Report JSC, a Hanoi-based market research and business assessment firm, the country’s annual food consumption value is estimated to make up 15 per cent of its GDP. In the first nine months of 2018, the consumption index grew by 10.2 per cent against the same period last year for processed food and drinks.

Japanese restaurant chains already present in the market are non-stop expanding operations. For instance, Gyu Shige BBQ Restaurant – a brand with 130 successful restaurants in Japan – officially entered Vietnam in 2016 with its first store based in Ho Chi Minh City. After the first year, Gyu Shige’s sales in Vietnam grew by nearly 50 per cent month-on-month, with over 70 per cent of customers returning. Thus it issued the target to set up a chain of 30 branches within three years and up to 50-70 branches within five years.

Kentaro Takada, Global Development director of Gyu Shige, said, “Vietnam has been an economic hotspot in Southeast Asia for a few years, attracting many investors. Unlike the fierce competition of the food industry in Thailand, we see many opportunities to develop and decided to choose Vietnam as our first overseas market.”

Benefiting from stand-out

The potential of the market is quite clearly, however, newcomers will have to face competition from heavyweights from South Korea and Thailand, who have established solid footholds in the market already. It is easy to see that each national cuisine has their advantages.

Notably, Thai food matches Vietnamese people’s palate very well, while South Korean food has become trendy as a by-product of music such as K-Pop and the movie industry. 

Japanese culture is famous for its elegance and sophistication, and unrivalled standards of quality of both the dishes and service – which obviously comes at a cost. Thus, Japanese restaurants target the mid- and high-income brackets. Meanwhile, the Vietnamese middle-class continues to grow, with a bigger focus on products with high quality, healthiness, and social status. This would means they are far more willing to open their wallets for high-end products.

“When Japanese companies open restaurants in Vietnam, they prefer to keep a direct hand in the management and expansion of the chain or in the selection of franchise partners, because they want to keep their brand’s soul unchanged, from knowhow to décor in every restaurant,” said Kitagawa from the JETRO Office.

However, in order to decrease the cost of ingredients, Japanese investors are beginning to look for local partners to ensure a supply satisfying Japanese standards, but at a far lower cost.

VIR