The heat of the street food franchise race

149,000 points of sale, revenue of 46,900 billion VND per year... shows the great potential of the street food market in Vietnam as well as the opportunity to franchise to the world.

However, if Vietnamese enterprises do not quickly start developing brands and standard models and then franchising, foreign enterprises with strong financial potential will do so and profit.

The street food market is bringing in significant revenue. Illustration photo: VNA

This is the warning that Ms. Nguyen Phi Van, Chairwoman of the Board of Directors of Retail & Franchise Asia Company, an expert in franchising and retail, gave at a talk on the potential of the street food franchise model held in Ho Chi Minh City recently.

To prove her warning, Ms. Van cited data from market research companies. Currently, although there are 149,000 street food outlets in Vietnam (as of 2016), domestic brands only account for 0.59%, a very small proportion. In Hong Kong, domestic street food chains with brands account for 5%, in the Philippines it is 21%, in Taiwan it is 30%, in Singapore it is 10%. Notably, street food chains from many countries have franchised to the world. For example, Oldchangkee (Singapore) or Shinhlin (Taiwan).

Branded street food chains in Vietnam currently include Five Star (five-star chicken), Banh Mi Que, 1 minute 30 seconds or Gorthe Coffee.

Notably, Five Star, a kiosk chain specializing in fried chicken of CP Group (Thailand), currently holds the largest market share in the fast food market. Within 4 years, the market share of this chain increased from 26.5% (in 2013) to 71.3% (in 2016). Meanwhile, the remaining chains in the brands listed above are gradually decreasing, even disappearing.

And with the above context, looking at it positively, there is still a lot of room and potential for development in the street food market. The growth rate of this market is 2%, a very low rate due to the fact that Vietnamese consumers are insecure about food safety. However, with branded street food chains, the annual growth rate was recorded at 17.8% (in quantity) and 20% (in revenue) in the period 2011-2016.

However, to exploit this potential, Vietnamese businesses must "speed up" if they do not want to lose everything to foreign giants with rich financial potential, much business experience as well as management skills.

In this race, the biggest advantage that Vietnamese businesses currently have is the rising local trend, which means that consumers around the world currently favor products of local origin.

Therefore, purely Vietnamese products, with Vietnamese ingredients and traditional characteristics will have great opportunities. “Banh mi is a great example. But Vietnam also has many other street foods that have the potential to be franchised to the world. The problem is that there must be a purely Vietnamese story to tell,” Ms. Van emphasized.

And to be able to franchise Vietnamese street food products to the world, businesses must build a solid foundation, from products, models to technology applications, supply chains, legality... The more solid the foundation is, the further it will go.

According to Saigon Economics