Why McDonald’s Flopped In Vietnam

Summary

Despite global success, McDonald's and Burger King struggle in Vietnam, where local food culture and street vendors dominate the market. With only 17 McDonald's and 13 Burger King locations, the chains face challenges like high competition, underestimation of local tastes, and cultural serving preferences. Fast-food chains account for a mere 1.3% of Vietnam's food outlets, with traffic to them dropping 31% from 2016 to 2018, while street vendors' visits surged 70%. Adapting menus to local tastes, as KFC and Pizza Hut have done, may offer a path forward.

Takeaways

• 🌐 Fast-food chains like Burger King and McDonald's are global with thousands of locations, but struggle in Vietnam.
• 🇻🇳 McDonald's and Burger King have a significantly smaller presence in Vietnam compared to other Asian markets, with only 17 and 13 stores respectively.
• 🎉 Initial hype around McDonald's launch in Vietnam in 2014 has since diminished, with growth not meeting expectations.
• 📉 Both chains had ambitious expansion plans for Vietnam, which have not been realized, with McDonald's planning 100 stores and Burger King 60, but falling far short.
• 🍔 Fast food in the US is popular for its convenience, but in Vietnam, local street food like pho and bahn mi is just as quick and cheaper.
• 🏢 Vietnamese consumers spend a large portion of their food budget at local vendors, with only 1% going to fast-food chains.
• 🇺🇸 The underestimation of local food culture and competition by international fast-food chains is a significant factor in their struggle.
• 🍗 KFC adapted its menu to local tastes in Vietnam, which has contributed to its success with 130 stores, unlike McDonald's and Burger King.
• 💰 High prices at McDonald's and Burger King make local street food a more attractive option for the average Vietnamese consumer.
• 👨‍👩‍👧‍👦 Vietnamese dining culture often involves family-style sharing, which doesn't align well with individual fast-food meals like burgers.
• 📊 Despite efforts to adapt menus, McDonald's and Burger King face a challenging future in Vietnam as fast-food popularity declines and street food visits surge.

Q & A

How many locations does Burger King have worldwide?

Burger King has more than 16,000 locations in over 100 nations.

What is the number of McDonald's locations globally?

McDonald's has over 36,000 locations worldwide.

Why did McDonald's and Burger King face challenges in the Vietnamese market?

They faced challenges due to stiff competition from local vendors, cultural preferences for sharing meals, and high prices compared to local options.

How many stores did McDonald's plan to open in Vietnam within 10 years after its launch in 2014?

McDonald's planned to open a hundred stores in Vietnam within 10 years.

What was Burger King's investment in Vietnam in 2012, and what was the goal for the number of restaurants by 2016?

Burger King invested 40 million dollars in Vietnam in 2012 with the goal of opening 60 restaurants by 2016.

What percentage of Vietnamese consumers' food spending goes to local vendors, street stalls, and kiosks?

78% of Vietnamese consumers' food spending goes to local vendors, street stalls, and kiosks.

How does the number of local food vendors and kiosks compare to fast-food chains in Vietnam?

There are over 430,000 local vendors and food kiosks compared to just over 7,000 outlets for fast-food chains.

What was the impact of the severed diplomatic ties between the US and Vietnam on fast-food chains?

The severed diplomatic ties between the US and Vietnam after the war in 1973 delayed the entry of American fast-food chains into the Vietnamese market until the countries reestablished trade relations in 1995.

How did KFC adapt its menu to better fit local tastes in Vietnam?

KFC introduced the KFC chicken rice and the KFC shrimp burger to cater to Vietnamese customers' preferences.

What is the market share of McDonald's and Burger King combined in the total share of foreign fast-food chains in Vietnam?

McDonald's and Burger King make up 2.8% of the total share of foreign fast-food chains in Vietnam.

How have McDonald's and Burger King attempted to adapt to the Vietnamese market?

They have made efforts to adapt their menus to reflect cultural influences of Vietnamese cuisines, such as offering grilled pork rice with egg and fish rice combo.