VietNamNet Bridge – A lot of big names have appeared in the Vietnamese F&B (food and beverage) market, kicking start a new combat for the retail premises.


Fighting for retail premises

Subway has announced it would open 10 more shops in 2013, while Burger King 10, Lotteria and KFC 200, Domino Pizza five, Pepper Chicken 10, Texas Chicken four, Baskin Robbins 10 in Vietnam.

Starbucks, McDonald and 7-Eleven have found their partners to implement the plan to conquer the Vietnamese market in 2013.

The convergence of so many “big guys” in Vietnam is believed to trigger a new war to scramble for retail premises on advantageous positions in the commercial hubs of Vietnam.

In fact, the supply of retail premises has never been short in Vietnam. The problem is that the retail premises in the golden land areas in big cities like HCM City have become so expensive and unaffordable to many F&B brands.

Johnathan Hanh Nguyen, President of Trans Pacific Group, has noted that the revenue of a well-patronized fast food shop is not high enough to afford the rent for the retail premises on Dong Khoi and Le Loi roads in HCM City.

Analysts said that a fast food shop needs to find the retail premises with the rent of $30 per square meter or lower in order to make profit. Meanwhile, the rent of the premises in the central areas have soared to $100-200 per square meter.

Therefore, they think Burger King or Domino Pizza would have to look for the premises in other districts in the inner city.

Even if F&B brands have money, they would still find it difficult to have the premises on advantageous positions which can satisfy their requirements. In principle, an F&B shop needs to be located on an area of 200 square meters at minimum, in a crowded residential quarter or near schools.

The senior executive of Trans Pacific revealed that he considered hundreds of retail premises, but only 50 percent can satisfy some basic requirements and only 10 percent can meet almost the requirements.

Analysts have noted that F&B may not seek the premises at shopping malls, where the rents are always very high and the competition is always very stiff, because the premises here have been occupied by many well-known brands in the world.

Therefore, they think that F&B brands are very likely to set up shops outside on streets in advantageous areas.

In KFC’s case, the giant, though having big money, could not win in the battle for the retail premises. The KFC shop on Pham Thai Buong in district 7, which had been very prosperous, had to leave when the landlord took back the land to lease to another fast food brand, just because the landlord has a good relationship with the new investor.

Running sales promotion campaigns to exist

Fast food brands have never launched sales promotion campaigns so continuously and noisily, which, in the eye of analysts, showed that the competition among F&B brands has become fiercer than ever.

As soon as KFC offers a new dish, Lotteria would also introduce new menus, and vice versa. In December 2012 and January 2013, when Lotteria launched a sales promotion program, offering the price discount of 23-50 percent for five servings, KFC also ran a similar program under which the customers who bought two Smart Choice servings would get one Smart Choice.