Vietnam Foodservice

Industry
2017, WHAT A YEAR INDEED!
Content

Decision Lab’s foodservice solutions

Overview of the Out of home market
Highlights of the market over the year
MARKET GROWTH
WINNERS AND LOSERS OF THE MARKET
SALES OUTLOOK
KEY TAKEAWAYS

How Convenience stores will disrupt the market

Value of a happy customer
NET PROMOTER SCORE
IMPLICATIONS
Foodservice
Solutions
Why is Decision Lab tracking
Foodservice consumption?

• Extensive and growing out-of-home consumption

• Entrance of global chains and mushrooming of new local F&B concepts

• Professionalization and inflow of capital for operators

• No existing gold standard in data: Need for creating common ground

between manufacturers and operators
Methodology

HOW WE TRACK OUT-OF-HOME

CONSUMPTION
We cover three main cities HA NOI.

40%

DA NANG

752,057 10%
ONLINE VIETNAMESE COMMUNITY MEMBERS

HO CHI MINH

Annual Sample: 50%

16,000
in HCMC, Hanoi, Danang are asked about what they ate
and drank out of home on the previous day
Our research methodology

24 hours recall Mobile-first survey Consumer focused Cost effective

The data is extrapolated HA NOI.

based on the GSO’s 5,082,561

population projection for
2015 DA NANG

771,223

11,974,172
Total HO CHI MINH

6,160,388
adult population
(Vietnamese aged 15 years old and above in
HCMC, Hanoi, Danang)
We monitor 7 Main Channels

FINE DINING FAST CASUAL

Average spend above Average spend under
VND110K per person). Fine VND110K per person & pre-
Dining is segmented by coded chains). Fast Casual is
cuisine type (Vietnamese, segmented by cuisine type
Japanese, Korean, Chinese, (Vietnamese, Japanese,
French, Mexican etc.. Korean, Chinese, French,
F U LL S E R V ICE Mexican etc.), Fast Casual
R E STAUR A NTS example chains: Kichi Kichi,
Gogi House, Vietnammm,
Pizza Hut, Mon Hue, Thai
Express etc..
We monitor 7 Main Channels

QS COFFEE QS SUSHI QS ICE CREAM

(Highlands Coffee, (Fanny, Baskin Robbins
QS VIETNAMESE
Starbucks etc.) etc.)
QS CHINESE
QS BURGER QS JUICE/SMOOTHIE
BAR
(McDonald’s, Burger King, QS THAI
Lotteria etc.) (Jamba Juice, Jungle Juice
Q U I C K S E R V ICE QS KOREAN etc.)
R E STAUR A NTS QS CHICKEN
QS PIZZA QS OTHER
(KFC, Jollibee etc.)
(Domino’s etc.)
QS
SANDWICHES/WRAPS/ QS BAKERY
KEBAB/BAKERY (Tous Les Jours, Bread Talk
(Subway, Tous Les Jours etc.)
etc.)
We monitor 7 Main Channels

STREET FOOD A LCO H O L CO N V E N I E N C E H OT E L S CANTEEN

P L AC E S S TO R E S Establishments
Food & Drink bought • Workplace
from: providing
Outlets that mainly Standard convenience • School
accommodation,
• Wet market serve alcohol: store such as Family
meals, and other • University
• Bar mart that also offers
• Street vendor services for travelers
snacks (some heated
• Mobile cart • Club and tourists.
up) to eat on- or off-
• Karaoke premise
How we help our clients

Attract Deliver Retain ROI

MARKETING OPERATIONS ACROSS ORG.
• Increase market • Optimize offerings • Enhance customer
shares • Drive spending per satisfaction
• Understand the head • Word of mouth
target consumers
• Drive Footfall

Average Average Net Promoter

KPIs Annual Spend/Eater Score
Visits/Capita
What a year!!!
So much expansion!

Highlands Coffee VinMart+ GGG

Highlands Coffee expanded to 180 VinMart+ opened 140 stores nation- Golden Gate Group opened over 70
stores nationwide from just 75 in wide in the span of 15 months. new stores in 2017. They now have
2015 210 restaurants nation-wide.
Malls for everyone!

The growth of malls

into 2nd and 3rd tier
cities, helping
restaurant brands
expand outside of
the key cities

Soiva Plaza, Vinh Yen City, Vinh Phuc AEON Mall Canary, Binh Duong Vincom Plaza, Buon Me Thuot
So much TEA!
New deals continue to pour into the
market

Tealive Ten Ren’s TEA Yutang

LOOB Holdings and partners invest 5 The Coffee House converted one of Golden Gate Group – The giant
Tealive shops in HCMC, expecting to its outlet into Ten Ren’s TEA. Ninh, restaurant operator- officially
grow to 100 outlets in 3 years. TCH’s CEO, expects Ten Ren’s Tea to entered Bubble tea market with
have 40 outlets by the end of 2018. Yutang, aiming to expand in 2018
Despite this, many chains failed or
shrunk

Burger King Gloria Jean’s The Kafé Subway

S H R U N K TO 1 3 C LO S E D D O W N C LO S E D D O W N S H R U N K TO 6
OUTLETS* OUTLETS*

*According to company’s official website

But really, how has the
market developed?
 AVERAGE EATER SPENDING/ VISIT (IN VND) AVERAGE ANNUAL VISITS / CAPITA
Vietnam
Foodservice HANOI TO TA L HANOI TO TA L
60,436 19%
60,661 18% 127 1%
147 2%
Monitor
HCMC HCMC
60,874 19% 161 3%

DA NANG DA NANG
60,103 4% 168 2%

KEY INDICATORS FOR Q3 14T 280M

2017 12T
11.0T 10.7T 11.0T
10.2T
10.9T
10.0T 10.0T 240M
9.0T 8.8T 8.8T 8.8T
10T 8.3T 8.2T 8.3T
7.7T
200M
8T

6T
186M 160M

4T 167M
149M 152M 148M 151M 149M
141M 140M 142M 140M 120M
2T 135M 130M 134M
125M
T 80M

Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep
Sales Visits
2016 2017
Highlights of the year
Vietnamese Convenience The increasing Gen Z is
eats out more, Store will value of a coming for us
though continue to happy
selectively disrupt the customer
market

Read more here

Did Vietnamese eat
out more during past
one year?
• Hanoi

Average daily visits

Men consumed
0.52
0.5 0.46
out of home
0.46 0.45
more
0.4 0.38
0.35
0.37
0.35 0.34
frequently
0.32
than women,
0.3
and even more
0.2 so during past
1 year
0.1

Q3 2016
Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q4 2016

Q1 2017

Q2 2017

Q3 2017
Male Female

Q: Please tell us your gender? n=18,099

24
• Hanoi

Average daily visits

0.6 Consumers in
0.51 both Hanoi
0.5
0.43 0.45
0.47 0.48 0.47 0.47
and HCMC
0.42
0.4 0.37
0.41 0.41
showed
0.35 0.35
0.33 0.34 increased out
0.3 of home visits.
0.2
The exception
happened in
0.1 Danang.
0
Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017

Q3 2016

Q4 2016

Q1 2017

Q2 2017

Q3 2017
HN HCMC Da Nang

Q: Where are you currently living? n=18,099

25
Overall, consumers did eat out more,
though just slightly, during past 1 year

AV G . A N N U A L V I S I T S P E R C A P I TA

144 147
Decision Lab Foodservice Monitor Data from Q3 2016 to Q3 2017 n = 18,099
The market, therefore, enjoyed
positive traffic growth

9%
IN Q3 2017 COMPARED TO Q3 2016

Decision Lab Foodservice Monitor Data from Q3 2016 to Q3 2017 n = 18,099

The extra visits did not
pour into all the
channels equally,
however.

Some won, other lost.

Consumers cut down on visits to certain channels,
while increased consumption in others
Total OOH visits by segments in Q3 2017 (million)

Comparing to Q3 2016, Mid and

•

Difference in visits by segments in Q3 2017 (million) High-end channels lost nearly 43M
visits.

HIGH-END:
81M
80M Alcohol places
Full service restaurants

39M Hotels
40M

-8M -34M MID-END:

0M Quick service restaurants

LOW-END:
-40M
Convenience stores
Total Visits Increase High-end Mid-end Low-end
Canteen
Decision Lab Foodservice Monitor Aggregate data from Q3 2016 to Q3 2017 n = 18,099 Street food
• Visits to low end channels in past 1 year (million)

Visits to low end channels in past 1 year (million)

100M
Lower priced
46% 87M channels have
80M 73M
become much
132%
24% 64M more popular
60M
60M
51M
during past 1
year
40M
31M

20M

0M
Street food Convenience store Canteen

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

Decision Lab Foodservice Monitor Aggregate data from Q3 2016 to Q3 2017 n = 18,099
Visits to Quick service restaurants in past 1 year (million)

-23%
Meanwhile,
mid-priced
150M
148M channels
continued on
114M
120M
its downward
90M trend, losing
customers
60M
quarter by
30M quarter
0M
Quick service restaurants

Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

Decision Lab Foodservice Monitor Aggregate data from Q3 2016 to Q3 2017 n = 18,099
Gallery slide - add a title

As business got rough,

outlets of various forms
and shapes threw
themselves, and their
customers, into a discount
tornado
2017 is indeed the year of Voucher
Revolution

30% off in all GGG “Buy 1, get 1 free” or “50%
restaurants every Monday. off” became a default deal
for grand openings.
Outlets use Teachers’ Day,
Women’s Day or Men’s
Day for deals such as “Free
for teachers”, “Discount for
ladies/gentlemen”, etc.
Chains and shops actively
engage their customers
with delivery, booking and
payment mobile apps.
Not just the fast food
chains, but the upper
end restaurants have
also joined the game

Restaurants and outlets tried to attract

consumers by showering them with vouchers, e-
vouchers, discount for pre-booking, happy hours,
collaboration with foodie apps, etc.
As more restaurants joined in this
Revolution, more consumers started
making use of voucher
V O U C H E R U S A G E I N F I N E D I N I N G R E S TA U R A N T S

8% 25%
Q3 2016 Q3 2017

Decision Lab Foodservice Monitor Data from Q3 2016 to Q3 2017 n = 18,099

As a result, average spending per
head per visit went down

60,661đ
18%

Decision Lab Foodservice Monitor Data from Q3 2016 to Q3 2017 n = 18,099

Sales went down despite growing
visits

TOTA L O O H M A R K E T

10% = 3.3 trillionđ

Decision Lab Foodservice Monitor Data from Q3 2016 to Q3 2017 n = 18,099

With the lost sales, we
can treat everyone in
Hanoi, Danang, HCMC
1 combo of

(Per day in one straight week)

So, what are the key takeaways?
It’s a mixed bag of opportunities and challenges

Vietnamese consumers has increased demand Consumers have also become very selective in
for Out of Home consumption their choice of outlets to visit

Voucher usage have become more popular as  Not all outlets can benefit from the increasing
outlets started to offer them more generously demand without significant effort to become
attractive and worthy of trial

Of concern is that voucher usage can be

detrimental to sales as it brings down average
spending per head

 To design a voucher/ promotional campaign that

can encourage group visit and an upgrade
experience can be the key to success
How will Convenience
stores disrupt the
market?
In 2015, total CVS
count in Vietnam was
1,350 outlets
nationwide
By 2020, there will be one convenience store per
17,815 Vietnamese citizens

0 500 1000 1500 2000 2500 3000

VinMart+ 200 730 2070

Circle K 73 185 292

Satrafood 32 140

B's Mart 95 71 134 2015 store count

New store count from 2015-now
Family Mart 39 102 859
New stores expected in 2018-2020
Shop&Go 103 16

Ministop 17 84 99

Co.op Smile 60

7-Eleven 10 90

Asia Confidential, Vietnam News, company websites / reports

To make it all the more intense, the
giants are getting in

SON KIM GROUP SEVEN SYSTEM VIETNAM KOOTORO SERVICES

GS RETAIL (KOREA) 7-ELEVEN, INC. (US-BASED) (US-BASED)
Vietnam convenience market is expected to have
strongest growth in Asia
• Asian convenience market growth forecast by country 2017-2021

Asian convenience market growth forecast by country 2017-2021

According to IGD, these
0% 10% 20% 30% 40% characteristics make the
Vietnam convenience markets in Vietnam,
37.4%
Philippines and Indonesia
Philippines 24.2% particularly ripe for growth:
Indonesia 15.8%

Malaysia 10.5% • Store expansion.

CAGR to 2021 • Local players are gaining a
India 10.3%
stronger foothold.
South Korea 8.4%
• Neighborhood mini-
China 7.1% supermarkets are becoming
Thailand 6.6% more popular.

Japan 5.5%

Source: IGD (International Grocery Research Organization)

As a result, the channel has increased
its share despite market fluctuations

MARKET SHARE IN VISITS

12% 14%
Q3 2016 Q3 2017

Decision Lab Foodservice Monitor Aggregate data from Q3 2016 to Q3 2017 n = 18,099
Visits to Convenience stores by GenZ (million)

40M 0.030
CVS not only
0.028
appealed the
0.025
35M
34M
0.025 general
30M 0.020 0.021
30M consumers, it
0.019 0.020
25M
26M
also succeeded
25M
20M 23M 0.015 in luring GenZ.
15M
0.010
10M
0.005
5M

0M 0.000
Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017

Absolute visits Avg daily visits/capita

Decision Lab Foodservice Monitor Aggregate data from Q3 2016 to Q3 2017 n = 18,099
CVS is disrupting the foodservice
market in fundamental way

HOW WE THINK IT IS HOW IT IS BECOMING

CVS is changing consumers’ attitude,
behavior and expectation

HOW WE IMAGINE CONSUMERS HOW CONSUMERS

BEHAVE THERE ACTUALLY BEHAVE
CVS was the most
successful channel in Consumption type in CVS - % visits

converting consumers 100%

to eat and drink in
past 1 year 80%
46%

71%
60%

40%

20%

0%
Q3 2016 Q3 2017

Eat only Drink only Eat & Drink

Decision Lab Foodservice Monitor Aggregate data from Q3 2016 to Q3 2017 n = 18,099
Implications
FOR RETAILERS
• Foodser vice should be
considered as potential
revenue and traffic
streams
• It’s also a way to reinforce
the consumer connection
• Effor ts to improve the
dine-in areas can go a
long way in creating
brand differentiation and
adding value to customer
F O R M A N U FA C T U R E R S
• CVS is the battle to win,
especially for Drinks
manufacturers who want to
secure loyalty early on with
young generations
• For food manufacturers, CVS
is not just about readily
packed take-away. Invention
on value dine-in meals is
crucial
FOR OPERATORS
• Accept the fact: CVS is
here to disrupt the market
and compete directly with
you
• Competing in this space
will require significant
investment and continuous
innovation.
• The continuous
engagement seen in a
good restaurant will
become more valuable
than ever.
What’s the actual
value of a happy
customer?
How likely is it that you would recommend
[outlet X] to your friend/family/colleague?
Net Promoter Score
NPS and growth

The only path to

profitable growth may
lie in a company’s ability
to get its loyal customers
to become, in effect, its
marketing department.”
FREDERICK F. REICHHELD,
BAIN & COMPANY
NPS of Out of Home market showed
positive sign

-7Q3 2016
0
Q3 2017
Biggest improvements happened in…

• Convenience stores

Convenience stores Quick service restaurant Full service restaurant

20 +21 19

15
10
10 +9

5 4
+10
1
0

-5 -3
-5
-10

Q3 2016 Q3 2017

Decision Lab Foodservice Monitor Aggregate data from Q3 2016 to Q3 2017 n = 18,099
The uplift in NPS was accompanied by
clear progress in some key areas

Full service Quick service Convenience

restaurants restaurants stores

CLEANLINESS OF OUTLET
SPEED OF SERVICE SPEED OF SERVICE
QUALITY OF
ATMOSPHERE ACCURACY OF ORDER
FOOD/DRINK
What can restaurants
do to improve NPS?
Analyze the key drivers for NPS in your
outlet
ANALYZING THE KEY DRIVERS FOR NPS EXAMPLE:
• Calculating the correlation between NPS and the attributes of Taste of
1
Customer Satisfaction Friendliness food/drink
0.8 of staff
• Understanding which attribute is strongly correlated to Speed of
0.6 Value for service
customer loyalty would allow Operators to make informed money
0.4

CORREL ATION TO NPS

decisions on how to improve its performance Cleanliness Quality of
0.2 food/drink
• The correlation coefficient (r value) could be interpreted from
0
a value range of -1.0 to +1.0
-0.2 0 1 2 3 4 5
• An r value close to 1 indicates a strong relationship between -0.4 Accuracy of
two variables & vice versa order
-0.6
CUSTOMER SATISFACTION
How to start making use of NPS?
Track it
consistently
• Implement NPS into your system
• Track it across stores/locations
• Use 1 question/translation and 1
scale
Choose a Make it a company-
benchmark/ wide effort
threshold • Marketing – Is marketing setting the
right expectations/ sending the right
• Use your segment’s NPS as a
message?
benchmark
• Operation – Are the offerings
providing value to the customers?
• Front-line customer service – Is the
team putting the customer first?
Reach out to us
44 FLOOR - BITEXCO FINANCIAL TOWER
2 HAI TRIEU, DISTRICT 1
HO CHI MINH CITY, VIETNAM

+84 28 3915 1919 | DECISION@DECISIONLAB.CO

WWW.DECISIONLAB.CO