Vietnam Food And Beverage Market Research Insights

The food and beverage sector has demonstrated strong growth in Vietnam. Every year we see new brands launching or coming from overseas. And new concepts are always emerging.

Continuing our partnership with Ho Chi Minh City-based market research firm Decision Lab, we summarize a few high-level trends of the food and beverage industry. From Ho Chi Minh City to Hanoi, we’ll deep dive into the numbers and see what consumer behaviors are emerging.

Some Key Facts About Food And Beverage In Vietnam

There are many different segments within out-of-home consumption for food and beverage. The two main segments are full-service restaurants and quick service restaurants. The first one corresponds to a more traditional sit down restaurant (either casual or fine) whereas the second corresponds to take out, coffee, and fast food. The two segments account for 72% (36% each) of the overall out-of-home consumption market.

The rest of the market share is split between street food (11%), convenience stores, canteens, bars and clubs (1%) and hotel venues.

Decision Lab also reveals that the typical out-of-home consumer is a male between the ages of 15 to 35 with a monthly salary of 7,500,000 VND to 30,000,000 VND.

Average Out-Of-Home Consumption Spending In Vietnam

The average spend in food and beverage made by a Vietnamese consumer depends on where the consumer lives. On average a Vietnamese consumer spent 470,000 VND per month in 2015 on out-of-home consumption. But there are many disparities.

Average per-person basket size transactions of three of the largest cities in Vietnam:

1.     Hanoi: 80,000 VND
2.     Ho Chi Minh City: 70,000 VND
3.     Da Nang: 65,000 VND

Average basket size transactions per segment within out-of-home consumption:

1.     Fine Dining (full-service restaurant): 265,000 VND
2.     Hotel : 216,000 VND
3.     Bar/Club: 193,000 VND
4.     Fast Casual (full-service restaurant): 84,000 VND
5.     Quick Service: 72,000 VND
6.     Convenience Store: 50,000 VND
7.     Canteen: 40,000 VND
8.     Street Food: 35,000 VND

The street food segment remains the most affordable to dine out. And even if Vietnam is known for its street food, today it represents only 11% of the total out-of-home food and beverage consumption in the country.

Western Food

35% of the Vietnamese out-of-home consumption share is from Western food. This recent growth is driven more by overseas chains and Western franchises that are establishing their brands in Vietnam. The Western restaurants are mainly located in District 1, attracting a strong presence of expats and travelers, and also higher average basket size transaction. It’s also worth pointing out that Western food is synonymous with family or special occasions. Family or special occasion dining represents 40% of total visits to Western food venues whereas family or special occasion dining accounts for only 15% of total visits to Asian food venues.

Cheese Mania in Vietnam

One of the benefactors of this Western food growth is the interest of cheese. Most Western plates have cheese: burgers, pizza, pasta, kebab, burritos, spicy fire chicken with cheese (Korean), and so on. We already can feel this influence within Vietnamese cuisine. You’ll be able to find dishes like baked oysters with cheese, rock salt cheese milk tea, and instant noodles with cheese.

Fast Food Chains In Vietnam

Since 2000, fast food chains have tried to conquer the Vietnamese market and most are doing fairly well. Most chains are, for the moment, coming from the US. And some arrived only a few years ago such as Subway (first appeared in 2010), Dunkin’ Donuts (2013) and McDonald’s (2014). But other overseas brands are on the way such as Korea. And of course, Vietnam is trying to develop its own chains. Wrap & Roll is a good example. Launched in 2006, the company appears to be the pioneer in healthy and traditional Vietnamese food. Private equity firms are taking notice. Mekong Capital recently participated in a private equity financing in Wrap & Roll, leading a $6.9m round.

Western Restaurants Also Need To Adapt

Even if eating Western food is more and more common in Vietnam, overseas chains and restaurants still struggle to attract some of the Vietnamese population. They can’t only bet on the fact that Vietnamese will adapt to them, restaurants need to adapt to local tastes. Some good examples are McDonald’s and their launch of Banh Mi since 2016 through the McCafé. KFC also features a few rice dishes on their menu.

Key Success Factors In Vietnam

Accessibility

The most important factor regarding accessibility is location. Depending on the type of food the restaurant serves, it must be in a location that is accessible by the target market. For Western food, it’s obvious that the best place to be in is District 1. But more than the district, some streets will give access, more or less, to the desired clientele.

Nowadays location is not everything. Accessibility also spans to deliveries, which are taking a larger share of the market. And online delivery is growing strongly, it now counts for half of all food deliveries in Vietnam. Having an online presence is becoming a strong factor for success. Websites such as vietnammm.com or marketoi.com contribute a lot to this growth.

Affordability

As we saw before, each food segment has its own average ticket size. The average expense in a street food restaurant will be 35,000 VND whereas it will be 265,000 VND in a fine dining restaurant. And in Vietnam, Western food is still way more expensive (x2.5) compared to Asian food.

Occasion

Asian restaurants are more focused on daily consumption whereas a Western restaurant will have clientele that come more for special occasions. As mentioned before, consumers tend to go to Western restaurants more often for family and special occasions.

One of the highest traffic meal hours in Vietnam is breakfast. It appears to be the most important meal for many Vietnamese. And most of them are dining out for breakfast. Breakfast at restaurants represents 20% more visits than lunch. More than that, breakfast is a great opportunity for restaurants because people tend to create a breakfast routine: many consumers visit the same breakfast outlet three to seven times a week.

How To Succeed In Vietnam

Different factors appear to be decisive in the Vietnamese food sector. The positioning of the restaurant based on whether it is an Asian or Western concept is the most important. It’ll help set the tone of the business in terms of affordability, availability and occasion. Some factors must be developed to differentiate from competition and create a competitive advantage. First, online ordering has become more common in Vietnam and should be launched as soon as the restaurant is opened. If a restaurant is a Western-food concept, it is still compelling to offer localized menu items to more easily appeal to the Vietnamese market. Breakfast is also a strong opportunity. As it is the largest share of out-of-home consumption, business owners should consider a morning offer to capture more clientele. Healthy food is also doing well in Vietnam. Vietnamese are more conscious about their health and are beginning to look at more closely what they eat. Healthy food and juice may be a possible opportunity in the long term.

Vietnamese Growth And Trade Agreements

By 2020 the country expects to reach an income per capita of 15,000,000 VND and the annual growth rate will remain around 6%. Food and beverage consumption is expected to keep pace with this growth.

Moreover, the Vietnamese government wants this sector to grow as sustainability as it can. The government has been aggressively pursuing free trade agreements with different countries and regional groups such as the ASEAN Free Trade Area, Japan-Viet Nam Economic Partnership Agreement, Chile-Viet Nam Free Trade Agreement and the Viet Nam-European Union Free Trade Agreement.

We gathered some general knowledge about the out-of-home consumption market in Vietnam. This data is not relevant for all restaurants.