Consumer Attitudes and Economic Drivers

According to IMF, in 2018, Vietnam had the 2nd highest real GDP growth rate (7.1%) out of the ten ASEAN countries, following Cambodia (7.2%). This strong growth rate, according to Euromonitor International, may be due to rapid export growth, as well as increased domestic demand and foreign direct investment.

With 40 percent of people under the age of 25 in 2015, the Vietnamese population is young. In foodservice establishments, Vietnamese consumers are known to eat frequently, even when dining alone.

As education levels rise and the standard of living improves, Vietnamese consumers are increasingly interested in improving their diets ‘ health. As a result, food service establishments serving Japanese food have been successful because of Japanese cuisine’s freshness and perceived healthiness. Vietnamese consumers have also become more aware of cases where food service establishments have not exercised adequate food safety and hygiene practices due to increased media coverage.

Continued economic growth in Vietnam is expected to boost living standards and encourage consumers to respond to health and wellness concerns by directing their business to more reliable food service establishments.

Vietnam’s price-sensitive consumer population is driving a trend on group buying websites to buy food service vouchers. This trend and other technology-related trends, such as online and mobile ordering, are likely to continue throughout the forecast period (2016-2019), with the largest number of Internet users in Southeast Asia (16 million in 2013).

The overall foodservice environment

The Vietnamese foodservice industry in 2015 was valued at approximately US$ 21.3 billion, has grown since 2011 at a compound annual growth rate of 15.4%. During the forecast period (2016-2019), growth is expected to slow slightly, with sales expected to reach US$ 35.2 billion by 2019 with a compound annual growth rate of 13.2%. Full-service restaurants are the largest category within the foodservice industry, which is expected to remain the leading category by 2019.

However, from 2011 to 2015, home delivery chains increased in sales by about 550%. While it is expected to remain the smallest category, it is projected that home delivery will continue to experience the most growth over the next four years, reaching an anticipated US$ 65.6 million in sales by 2019. This growth may be due to the convenience of online ordering sites offered by home delivery establishments.

Vietnam’s foodservice establishments are largely owned independently, with a market share of 97% in 2014. However, from 2011 to 2015, establishments relating to restaurant chains experienced a higher annual compound growth rate of 25.8% compared to 13.3% for independent food service establishments.

New chained restaurants are expected to open and existing restaurants are expected to expand their number of outlets, increasing this category’s popularity throughout the forecast period (2016-2019) and representing an expected 4.3% of market share by 2019.

Although Vietnam’s inadequate infrastructure may be challenging due to port congestion and power shortages, foreign firms are often attracted to the geographic location of the country, low labor and operating costs, its participation in trade agreements, and its newly improved business environment. Recently, the government has removed foreign ownership limits, allowing foreign investors to take 100% stake in Vietnamese firms. As a result, with more international businesses, the food service market is becoming more competitive.