7 December 2018
South East Asia’s Battle between Local and Foreign Fast Food Chains

Big fast food restaurants or eateries can always hamper the growth of small local outlets. Because of the success of big US chains and franchise such as McDonald’s and KFC (Kentucky Fried Chicken), the smaller enterprise offering local foods hardly has a chance to grow and compete with the mega-brands. For instance, McDonald’s and Burger King have more than 36,000 and 16,000 locations respectively across the globe. There is hardly a corner of the world where they are not a popular brand. However, statistics shows that South East Asia may be breaking the mould – or at least that local food stalls and organisations are managing to compete with the huge US rivals.

Asian fast food outlets are thriving

A study carried out by Nikkei Asian Review suggests that  restaurants and local café’s in the 6 major South East Asian nations are holding up well against their larger fast food rivals from the US and Europe. In fact, Vietnam is quite unique in that even though McDonald’s and Burger King were welcomed at first – they just didn’t catch on. Normally, whichever country these US  giants target, they thrive and prosper which in turn leads to a multitude of locations. However, in Vietnam there are still only just 17 locations for McDonald’s.

Why is McDonald’s failing in Vietnam?

To understand why McDonald’s, Burger king and KFC have not broken through as well as they may have wished, you need to understand the Vietnamese culture. One of the attractions of the big three is it is fast food. Great – if you are at work or in a rush, then a cheese burger is going to keep your hunger at bay. But the fact is Vietnam already has its own fast food outlets which offer popular native foods. Vietnam has a multitude of street vendors. Popular Vietnamese food can be served speedily and at a low price. The everyday fast food that the Vietnamese love can be obtained from their outlets and stalls at a much lower price than what they would pay for a “fries” meal.

It is also a fact that diplomatic relations between Vietnam and the US have not been good since the end of the Vietnam war with America. Trade only began again between the two countries in 1995.

Another cultural factor which makes it difficult for western  mega-brands to set up is the fact that eating is a sharing experience in Vietnam. Whereas local stalls and eateries provide this opportunity when buying, the western fast food outlets do not. On top of that, the preferred meat in Vietnam is chicken. This may suggest a reason as to why KFC is thriving a little better than McDonald’s and Burger King1.

fast food asia

The big names in other Asian countries:

Vietnam: Trung Nguyen Coffee

This is a coffee chain that is doing surprisingly well in Vietnam. Its expansion is largely due to the strategy of allowing existing cafes to sell its coffee beans free of charge. Although an expensive choice for consumers the beans are home-grown and the cafe also balances higher costs off by offering quality restaurant meals. It has now opened outlets in Singapore and Thailand.

Indonesia: Kebab Turki Baba Raffi

This kebab chains main attraction is it can sell the popular middle eastern dishes far cheaper than hamburgers. At the same time, some outlets mimic the look of US fast food outlets. However, as this is a franchise, small business owners can set up an outlet easily and cheaply by starting with a street kiosk or stall. This fast food chain is now operating in the Philippines, Malaysia and China.

Thailand: Café Amazon

This coffee and food outlet offer the same kind of products (but with more of a Thai cultural feel) as Starbucks but its big draw is it can offer them at 20-30 % lower cost.

Philippines: Jollibee Foods

This food chain sells western type food such as hamburgers and fried chicken. As far as locations are concerned it has almost double the amount of MacDonald’s restaurants.

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1https://www.cnbc.com/2018/09/13/mcdonalds-burger-king-vietnam-fast-food.html