Sector Trend Analysis – Foodservice profile – Vietnam

Note: This report includes forecasting data that is based on baseline historical data.

Executive summary

The Vietnamese foodservice market was the eighth largest in the Asia-Pacific region in 2020, with total retail value of sales amounting to US$18.1 billion.

The Vietnamese economy was adversely affected by the coronavirus pandemic in 2020, and the foodservice sector saw sales contract sharply.

The Vietnamese population is relatively young, and the country's highest average income earners were those aged 40-44. This relatively young base of high-income earners is expected to drive innovation and growth, as the economy recovers. The Vietnamese foodservice market is expected to grow at a CAGR of 14.0% from 2021-2025, reaching a value of US$38.2 billion by 2025. That said, there remains uncertainty over the economic recovery of Vietnam, and the potential for future outbreaks of coronavirus.

The Vietnamese foodservice market is dominated by independent retailers, who held a 94.1% market share in 2020. Full-service restaurants were the largest category of consumer foodservice outlet in 2020, with US$12.5 billion in sales in 2020. Of full-service restaurants, Asian full-service restaurants held a 97.0% market share in 2020.

In general, chained outlets faired better than their independent counterparts, however independent outlets are expected to continue to dominate the market.

Bars and pubs were hit particularly hard by the pandemic, seeing the retail value of sales fall by 40.4% from 2019-2020.

 

Consumer profile and trend

In 2020, Vietnam experienced a slowdown in economic growth due to the onset of the coronavirus pandemic. However, GDP still registered positive growth, rising 2.6% in 2020. This growth rate was higher than any Asian country other than China, driven by the manufacturing sector and the avoidance of a sustained lockdown. Vietnamese economic growth is expected to pickup to 5.5% in 2022 and grow at a CAGR of 5.5% from 2021-2040. Vietnamese exports are expected to continue growing during this period. In 2020, Vietnam experienced a modest rate of inflation, with inflation expected to pick up to a CAGR of 4% by 2024, driven by rising oil prices. There is speculation current Vietnamese monetary policy may cause inflation to increase.

The 40-44-year-old age band had the highest average incomes in 2021 and are expected to retain this through to 2040. 40-44-year-olds are also prominent in the top-income band of individuals with annual gross income over US$250,000. The relative youth of Vietnam's top earners is set to create opportunities for digital innovation and connectivity in Vietnam. Economic growth is anticipated to greatly expand the middle class, and social class B is expected to expand fastest of all social classes through to 2040. The proportion of the population living in poverty has been in decline in recent years, falling to 5.9% in 2020.

Consumer spending is expected to grow rapidly over 2021-2040, as incomes and discretionary spending rise. Food and non-alcoholic beverages made up most of consumer expenditure in 2020 and are expected to continue to do so through to 2040.

Nevertheless, economic gains are to be distributed unevenly, with social class E expected to still account for 36% of those aged 15+ in 2040. Although poverty has been in declining in rural areas, the fastest growing consumer market remains the urbanised Southeast.

The success of Vietnam's relatively young high-income earners exerts a strong influence on the Vietnamese consumer market. The consumption habits of Vietnamese youth are heavily influenced by exposure to Western culture and social media. Westernization and urbanization are spurring an increased interest in convenience. Vietnamese consumer spending on food and fashion is particularly subject to the influence of social media. Consumers have been showing an increasing interest in health and wellness, an interest further stimulated by the pandemic. Consumer demand for health and wellness related products is set to increase, although consumers are also becoming skeptical of unsubstantiated claims made by products that are marketed as healthy.

The Asia Pacific consumer foodservice market

The Asia Pacific consumer foodservice market is enormous and growing quickly. From 2016 to 2019, the retail value of foodservice sales grew at a compound annual growth rate (CAGR) of 5.6%, rising from US$1.1 trillion in 2016 to US$ 1.3 trillion in 2019. This progress was subsequently reversed by the pandemic, as sales fell 21.9% to US$1.0 trillion in 2020. The market was forecast to partially recover to US$1.2 trillion in 2021.

Vietnam was the eighth largest consumer foodservice market in Asia Pacific in 2020, with retail value sales of US$18.1 billion, accounting for 1.8% of the total retail foodservice market for the Asia pacific region. This ranked behind China at US$599.1 billion, Japan at US$158.2 billion, the Republic of Korea with US$71.5 billion, India with US$32.1 billion, Indonesia with US$24.3 billion, Taiwan with US$23.1 billion, and Thailand with US$22.9 billion. Of the top 8 Asia Pacific foodservice markets, Vietnam's grew the second fastest from 2016-2019, with a CAGR of 7.3%, behind India's CAGR of 8.9%. In 2020, Vietnam's foodservice market fell sharply by 27.3%. Vietnam's foodservice market is expected to partially recover in 2021, growing 25.3%, placing it 9.1% below its 2019 value. The market is then expected to grow quickly at a CAGR of 14.0% from 2021-2025, well ahead of the regional average CAGR of 8.2% and behind India's CAGR of 15.8% and Indonesia's CAGR of 15.4%.

Retail value sales of top five Asia Pacific consumer foodservice markets, in US$ millions, historic and forecast, fixed 2020 exchange rate
Country 2016 2019 2020 CAGR* % 2016-2019 2021 2025 CAGR* % 2021-2025
Asia Pacific Total 1,093,424.8 1,287,374.2 1,005,142.9 5.6 1,194,548.7 1,639,184.8 8.2
China 603,303.0 735,387.8 599,132.4 6.8 714,308.2 979,410.1 8.2
Japan 206,250.7 206,714.0 158,206.0 0.1 183,947.4 209,755.1 3.3
Republic of Korea 70,995.9 83,960.8 71,504.1 5.8 81,420.3 104,555.3 6.5
India 42,698.5 55,127.5 32,097.4 8.9 44,436.4 79,876.5 15.8
Indonesia 32,530.9 39,492.6 24,307.5 6.7 27,684.2 49,026.1 15.4
Taiwan 21,921.6 24,092.9 23,143.5 3.2 24,902.4 28,424.8 3.4
Thailand 26,632.9 30,211.2 22,920.2 4.3 25,949.1 36,072.4 8.6
Vietnam 20,114.4 24,834.2 18,064.1 7.3 22,631.1 38,192.8 14.0

Source: Euromonitor International, 2021

*CAGR: Compound Annual Growth Rate

Vietnam's consumer foodservice market

As Vietnam has enjoyed steadily rising consumer incomes and fast economic growth, the consumer foodservice market had been enjoying rapid growth. The Vietnamese foodservice sector, however, contracted sharply in 2020, falling to US$18.1 billion, slightly below its 2015 value of US$18.6 billion. The early days of the pandemic saw widespread panic and disruption as consumers began avoiding public areas such as restaurants. Restaurants further found restrictions on their ability to remain open imposed by the government, along with bars, cafés, bars, stalls, and kiosks.Footnote 1 The wider economy a serious hit in 2020, reducing consumer demand.

The government implemented restrictions on international travellers from all countries on 25 March 2020, hitting foodservice retailers in tourism hotspots particularly hard. Many outlets had no option but to close, some permanently. Foodservice retailers have attempted to pivot to home delivery. Online ordering has witnessed massive growth, having previously not had a significant presence in the Vietnamese market.

The Vietnamese foodservice market faces uncertainty in the immediate future, mostly tied to the progression of the ongoing pandemic. Assuming Vietnam can avoid the return of stringent restrictions, the sector was forecast to return to pre-pandemic levels by 2022. The tourism sector, however, will not recover in the near future. Tourism constituted a vital component of the Vietnamese economy prior to the pandemic, and without tourists to cater to the foodservice sector will see its growth limited.

Over the next few years, the growth of the Vietnamese food sector is expected to be explosive. Vietnam's foodservice sector is expected to reach US$38.2 billion by 2025, more than double its 2020 value, provided restrictions, both domestic and international, are eventually removed. Eat-in services are expected to once again be the main drivers of the sector's expansion, as Vietnamese consumers return to old practices. Although restaurants and dining-in are expected to become popular among Vietnamese consumers again, the gains made by home delivery and at-home ordering are not expected to be reversed. Indeed, as Vietnamese consumers become more acquainted with the convenience of ordering online, growth is expected to continue.

In 2019, independent foodservice outlets had an overwhelming 96.0% share of the Vietnamese market, however independent outlets suffered more severely than chained outlets by the pandemic. Independent outlets are generally more dependent on foot traffic, and many were forced to close as consumers started spending more time at home. Chained foodservice retailers saw the volume of their sales fall back to 2018 levels, while independent foodservice retailers were hit harder, seeing all growth since 2015 wiped out. Nevertheless, many independent retailers managed to survive the pandemic, often developing a presence online or by utilizing third-party delivery platforms. In 2020, the share of the Vietnamese market made up by independent retailers fell to 94.1% and is expected to reach 95.1% in 2025.

Full-service restaurants were valued at US$12.5 billion in 2020, making up 69.2% of the Vietnamese foodservice market, and are expected to experience the fastest growth of all categories from 2021-2025. Full-service markets are expected to reach US$ 28.4 billion by 2025, growing at a CAGR of 15.2%, and accounting for 74.4% of the market. Cafés were valued at US$3.1 billion in 2020, making up 17.0% of the market, and are expected to grow by a CAGR of 10.5% from 2021 to 2025, reaching US$5.3 billion in 2025 and accounting for 13.8% of the market. Street stalls and kiosks saw retail sales of US$1.9 billion in 2020, accounting for 10.7% of the market. This sector is expected to grow at a CAGR of 10.0% from 2021-2025, reaching US$3.4 billion in 2025 and accounting for 8.8% of the market. Limited -service restaurants had sales worth US$0.6 billion in 2020 worth 3.2% of the total market, and sales are expected to grow at a CAGR of 13.5% from 2021-2025, reaching US$1.1 billion by 2025, and making up 3.0% of the market. Full-service restaurants already dominate the market and are expected to see the fastest growth from 2021-2025, however all sectors are expected to see double-digit CAGRs over the same period.

Retail value sales of Vietnam's consumer foodservice by category, in US$ millions, historic and forecast, fixed 2020 exchange rate
Category 2016 2020 CAGR* % 2016-2020 2021 2025 CAGR* % 2021-2025
Total Foodservice by Type 20,114.4 18,064.1 −2.7 22,631.1 38,192.8 14.0
Independent Foodservice 19,254.8 17,005.7 −3.1 21,455.7 36,305.1 14.1
Chained Foodservice 859.6 1,058.4 5.3 1,175.4 1,887.7 12.6
Full-Service Restaurants 14,113.7 12,495.5 −3.0 16,117.0 28,421.9 15.2
Cafés/Bars 3,350.5 3,067.9 −2.2 3,538.9 5,282.8 10.5
Street Stalls/Kiosks 2,018.6 1,931.6 −1.1 2,301.6 3,371.9 10.0
Limited-Service Restaurants 631.6 569.1 −2.6 673.6 1,116.3 13.5

Source: Euromonitor International, 2021

*CAGR: Compound Annual Growth Rate

Vietnamese consumers often strongly value the quality of service they receive, rather than simply the quality of the food. Vietnamese consumers are also relatively unlikely to value a brand name. This in part explains why so little of the foodservice market is controlled by chains, and why independent food retailers are so dominant.

Consumer foodservice by type

Full-service restaurants

Full-service restaurants are the largest foodservice category in Vietnam, with independent restaurants accounting for 95.0% of the market. Full-service restaurants saw their operations significantly disrupted by the pandemic, as the government temporarily mandated the closure of many restaurants, and then implemented capacity limits. Chained outlets felt the blow less keenly and benefitted from easier access to financing and have had an easier time coping with the costs of shifting to an online or delivery-based business model. Some have used the pandemic as an opportunity to lay the groundwork for future expansion, taking advantage of reduced property prices. Full-service retailers were also more able to offer price deals and promotions, as the competition for meal delivery became increasingly intense. Although independent retailers overall are expected to remain dominant, many individual retailers have faced difficulty remaining afloat. However, both independent and chained restaurants are expected to see strong growth in the coming years.

The Vietnamese full-service restaurant scene is dominated by Asian style restaurants. Although Western style outlets have been seeing steady growth, their market share remains small. Pizza restaurants saw particularly fast growth in the years before the pandemic, however growth is expected to be slower than the market is a whole in the years following the pandemic.

In 2020, Asian full-service restaurants made up 97.0% of the market, being worth US$12.1 billion, and are expected to grow at a CAGR of 15.3% from 2021 to 2025, reaching US$27.6 billion, at which point their market share will be 97.2%. European full-service restaurants had sales of US$0.1 billion in 2020, making up 1.0% of the market. They are expected to grow the fastest of any of the categories from 2021-2025, and are the only sector set to grow faster than Asian full-service restaurants. From 2021-2025, they will grow at a CAGR of 15.8%, reaching US$0.3 billion in 2025, at which time they will account for 1.0% of the market. Pizza full-service markets were valued US$0.1billion in 2020 and made up 0.9% of the market for that year. From 2021-2025 they are expected to grow at a CAGR of 13.9%, and in 2025 will be worth US$0.2billion, equivalent to 0.8% of the market. North American full-service restaurants are the sector which is set to see the slowest growth from 2021-2025. In 2020, North American full-service restaurants were worth US$0.1 billion, or 0.5% of the market. They are expected to grow at a CAGR of 12.7% from 2021-2025 and will be worth US$0.1billion in 2025, equivalent 0.5% of the market. Other full-service restaurants were worth US$0.1 billion in 2020 and are expected to grow at a CAGR of 14.2% from 2021-2025, being valued at US$0.1billion in 2025, and making up 0.5% of the market.

Retail value sales of Vietnam's full-service restaurants by type, in US$ millions, historic and forecast, fixed 2020 exchange rate
Type 2016 2020 CAGR* % 2016-2020 2021 2025 CAGR* % 2021-2025
Full-Service Restaurants 14,113.7 12,495.5 −3.0 16,117.0 28,421.9 15.2
Asian Full-Service Restaurants 13,698.3 12,119.0 −3.0 15,644.4 27,612.0 15.3
European Full-Service Restaurants 168.8 127.6 −6.8 165.1 297.2 15.8
Pizza Full-Service Restaurants 81.1 117.6 9.7 138.7 233.6 13.9
North American Full-Service Restaurants 102.6 66.4 −10.3 89.4 144.2 12.7
Other Full-Service Restaurants 62.8 65.0 0.9 79.4 134.9 14.2

Source: Euromonitor International, 2021

*CAGR: Compound Annual Growth Rate

In 2020, among full-service restaurants Kichi Kichi and Gogi House were the largest brands in Vietnam, each accounting for roughly 0.3% of the market. Each grew significantly from 2016-2020, a period during which the sector contracted. Kichi Kichi saw its retail sales nealy double from US$22.5 million in 2016 to US$39.7 million, while Gogi House more than doubled from US$17.3 million to US$ 38.1 million. Kichi Kichi grew at a CAGR of 15.3%, while Gogi House grew at 21.8%. Both brands are owned by the same company, Golden Gate Trade & Services JSC, which together with its various other brands has a total market share of 0.7%, which has grown from 0.3% in 2016. Other noteworthy brands include Pizza Hut, the Pizza Co, and Pizza 4P's. Pizza hut's retail sales grew at a CAGR of 3.3% from 2016-2020, The Pizza Co grew at a CAGR of 37.8%, while Pizza 4P's grew at 24.6%.

Retail value sales of Vietnam's top full-service restaurant companies and brands, market share %, historic
Brand Company 2016 2017 2018 2019 2020 CAGR* % 2016-2020
Full-service restaurant brand total Full-service restaurant company total 100.0 100.0 100.0 100.0 100.0 0.0
Others Others 99.0 98.7 98.8 98.8 98.6 −0.1
Kichi Kichi (Golden Gate Trade & Services JSC) Golden Gate Trade & Services JSC 0.2 0.2 0.2 0.2 0.3 10.7
GoGi House (Golden Gate Trade & Services JSC) Golden Gate Trade & Services JSC 0.1 0.2 0.2 0.2 0.3 31.6
Pizza Hut (Yum! Brands Inc) Yum! Brands Inc 0.2 0.2 0.2 0.2 0.2 0.0
The Pizza Co (Minor International PCL) Minor International PCL 0.0 0.1 0.1 0.1 0.2 N/A
Pizza 4P's (Pizza 4P's Corp) Pizza 4P's Corp 0.0 0.1 0.1 0.1 0.1 N/A
King BBQ (Redsun ITI Corp Vietnam) Redsun ITI Corp Vietnam 0.1 0.1 0.1 0.1 0.1 0.0
Sumo BBQ (Golden Gate Trade & Services JSC) Golden Gate Trade & Services JSC 0.1 0.1 0.1 0.1 0.1 0.0

Source: Euromonitor International, 2021

*CAGR: Compound Annual Growth Rate

Cafés / Bars

Cafés and bars are the second largest sector in Vietnamese foodservice. Valued at US$3.1 billion in 2020, US$1.4 billion is attributable to cafés, US$1.0 billion to specialist coffee and tea shops, US$0.6 billion to bars and pubs, while juice and smoothie bars valued at US$0.1 billion. The impact of coronavirus across this sector was varied, with bars and pubs being hit the hardest, and specialist tea and coffee shops seeing only a modest contraction in sales.

In 2020, retail sales for bars and pubs fell by 40.4% vis-à-vis their 2019 levels. Over the course of the pandemic, bars and pubs were often subject to more strict lockdown conditions than other outlets and saw restrictions on operating capacity. Moreover, bars and pubs' recreational nature meant they faced a serious drop in consumer demand. Consumers, seeking to limit spending amid the general economic downturn, became less likely to spend significant amounts of money while at bars. This problem was not faced to the same degree by restaurants and other food outlets. Meanwhile, as the pandemic has caused many Vietnamese consumers to think more about their health, some opted to reduce alcohol intake. Bars and pubs are expected to grow at a CAGR of 10.2% from 2021-2025.

Specialist coffee and tea shops, on the other hand, fared much better. This category saw a contraction in sales of only 5.4% and was forecast to fully reverse this decline in 2021. This sector was able to assure consumers about the quality of their hygiene protocols, while also pivoting to home delivery. These outlets have been able to attract a wide variety of demographics with varied menu options and are growing in popularity among younger consumers. Specialist coffee and tea shops have been able to stay on top of recent trends, such as Phuc Long, which introduced a line of yoghurt-based drinks that proved popular. These outlets have also become popular locations to work or socialize. Their popularity among younger consumers is expected to drive further growth. From 2021-2025, specialist coffee and tea shops expected to grow fastest of all types of full-service restaurants, growing at a CAGR of 12.5%.

Many chained coffee shops have been carrying out ambitious expansions, with chains such as Highlands Coffee, the Coffee House, Phuc Long, and Starbucks opening new outlets in 2020.

Retail value sales of Vietnam's cafés/bars restaurants by type, in US$ millions, historic and forecast, fixed 2020 exchange rate
Category 2016 2020 CAGR* % 2016-2020 2021 2025 CAGR* % 2021-2025
Cafés/Bars 3,350.5 3,067.9 −2.2 3,538.9 5,282.8 10.5
Cafés 1,585.9 1,356.3 −3.8 1,544.9 2,202.8 9.3
Specialist Coffee and Tea Shops 865.1 1,004.7 3.8 1,150.0 1,841.9 12.5
Bars/Pubs 812.3 619.1 −6.6 744.1 1,098.9 10.2
Juice/Smoothie Bars 87.2 87.8 0.2 100.0 139.2 8.6

Source: Euromonitor International, 2021

*CAGR: Compound Annual Growth Rate

Highlands coffee, owned by the Jollibee Foods Corp, has risen to become the largest player in the cafés/bars category, with its market share rising by a CAGR of 32.6% from 2017-2020, and actual sales growing by a CAGR of 24.9% over the same period. In 2020, the brand accounted for 3.5% of the overall market, with sales equivalent to US$ 106.1 million. The Coffee House, owned by Coffee House Vietnam Co Ltd, has also seen strong growth, with its market share rising from 0.3% in 2016 to 1.3% in 2020, making it the second largest brand in the market. The Coffee House's actual sales are now valued at US$39.9 million and have grown by a CAGR of 36.5% over the historic period. Phuc Long, owned by Phuc Long Coffee & Tea Co Ltd, has grown from 0.2% to 1.2% of the market over the same period, with sales growing by a CAGR 45.1%. Starbucks, owned by Starbucks Corp, has grown from 0.4% of the market to 1.2%, with the retail value of sales growing by a CAGR of 25.5% over the historic period.

Retail value sales of Vietnam's top cafés/bars restaurants companies and brands, market share %, historic
Brand Company 2016 2017 2018 2019 2020 CAGR* % 2016-2020
Cafés/Bars restaurant brand total Cafés/Bars restaurant company total 100.0 100.0 100.0 100.0 100.0 0.0
Others Others 91.7 93.1 94.8 94.2 92.0 0.1
Highlands Coffee (Jollibee Foods Corp) Jollibee Foods Corp 1.5 1.9 2.4 3.5 32.6 (2017-2020)
The Coffee House (Coffee House Vietnam Co Ltd) Coffee House Vietnam Co Ltd 0.3 0.5 0.8 0.9 1.3 44.3
Phuc Long (Phuc Long Coffee & Tea Co Ltd) Phuc Long Coffee & Tea Co Ltd 0.2 0.4 0.5 0.8 1.2 56.5
Starbucks (Starbucks Corp) Starbucks Corp 0.4 0.5 0.7 0.8 1.2 31.6
Trung Nguyen Legend (Trung Nguyen Legend Corp) Trung Nguyen Legend Corp 0.4 0.4 0.6 22.5 (2018-2020)
Vuvuzela Beer Club (Golden Gate Trade & Services JSC) Golden Gate Trade & Services JSC 0.7 0.8 0.9 0.5 0.2 −26.9
Highlands Coffee (Viet Thai International JSC) Viet Thai International JSC 1.1 N/A
The Coffee Bean & Tea Leaf (International Coffee & Tea LLC) International Coffee & Tea LLC 0.1 0.1 0.1 N/A
Trung Nguyen (Trung Nguyen Corp) Trung Nguyen Corp 5.1 2.8 N/A
Trung Nguyen Legend (Trung Nguyen Corp) Trung Nguyen Corp 0.3 0.3 N/A

Source: Euromonitor International, 2021

*CAGR: Compound Annual Growth Rate

N/A: Not available

Street Stalls/Kiosks

In 2020, street stalls and kiosks were the third largest foodservice category in Vietnam, with 1.9 billion in sales. The sector is utterly dominated by independent outlets, which collectively held a 98.5% market share in 2020. Stalls and kiosks experienced a sharp but relatively modest decline in sales due to the pandemic, with sales dropping 12.2% from 2019-2020, compared with a foodservice-wide drop of 27.3%. The sector was forecast to grow by 19.1% from 2020-2021, more than reversing its pandemic decline. The sector is then expected to grow by a CAGR of 10.0% from 2021-2025, reaching a value of US$3.4 billion in 2025, somewhat underperforming the foodservice market, which is expected to grow by a CAGR of 14.0% over the same period.

Street stalls and kiosks were adversely affected by reduced foot traffic, and their perception as having poor hygiene standards. However, kiosks also offered affordability to Vietnamese consumers, which Vietnamese consumers valued in the context of a widespread economic downturn. Taking advantage of third-party delivery services, many kiosks started transitioning their businesses online, staying afloat through home delivery. Stalls and kiosks have also benefitted from their dispersal. While bars are concentrated in urban areas, which have left them exposed to reduced traffic and expensive overheads, kiosks are located in rural areas as well. Kiosks, moreover, face extremely low overhead.

Chained kiosks are expected to see fast growth from 2021-2025, growing by a CAGR of 16.2%. This is far faster than the 9.9% independent operators are forecast to grow at. However, chained outlets will still make up an extremely small portion of the market in 2025, accounting for just 1.9% of all sales. There is concern that the experience of Covid19 may make Vietnamese consumers more suspicious of stalls and kiosks, for reasons relating to hygiene.

Retail value sales of Vietnam's street stalls/kiosk restaurants by type, in US$ millions, historic and forecast, fixed 2020 exchange rate
Type 2016 2020 CAGR* % 2016-2020 2021 2025 CAGR* % 2021-2025
Street Stalls/Kiosks 2,018.6 1,931.6 −1.1 2,301.6 3,371.9 10.0
Independent Street Stalls/Kiosks 1,988.1 1,903.1 −1.1 2,266.3 3,307.6 9.9
Chained Street Stalls/Kiosks 30.5 28.4 −1.8 35.3 64.3 16.2

Source: Euromonitor International, 2021

*CAGR: Compound Annual Growth Rate

The Vietnamese stall/kiosk scene is heavily dominated by independent outlets. However, of the chained outlets that exists, Charoen Pokphand Group, and its brand 5 Star Chicken, enjoy a clear lead. In 2020, they accounted for 1.1% of the market, with sales of US$20.5 million, equivalent to 72.2% of retail sales for chained stalls/kiosks. The brand saw its market share rise slightly from 1.0% in 2016 to 1.1% in 2020, while actual sales fell from US$22.1 million to US$20.5 million. Other brands include 1 Minute 30 Seconds, owned by Dai Phat Food Co Ltd, and Branh Mi Que, belonging to BMQ Food Co Ltd. Each brand accounted for 0.1% of the total market.

Retail value sales of Vietnam's top street stalls/kiosk restaurant companies and brands, market share %, historic
Brand Company 2016 2017 2018 2019 2020 CAGR* % 2016-2020
Street stalls/kiosks restaurant brand total Street stalls/kiosks restaurant company total 100.0 100.0 100.0 100.0 100.0 0.0
Others Others 98.6 98.6 98.5 98.5 98.7 0.0
5 Star Chicken (Charoen Pokphand Group) Charoen Pokphand Group 1.0 1.1 1.2 1.2 1.1 2.4
1 Minute 30 Seconds (Dai Phat Food Co Ltd) Dai Phat Food Co Ltd 0.1 0.1 0.1 0.1 0.1 0.0
Banh Mi Que (BMQ Food Co Ltd) BMQ Food Co Ltd 0.2 0.1 0.1 0.1 0.1 −15.9

Source: Euromonitor International, 2021

*CAGR: Compound Annual Growth Rate

Limited-service restaurants

In 2020, limited-service restaurants were Vietnam's smallest foodservice category, with the retail value of sales amounting to US$569.1 million in 2020. The sector is forecast to grow at a CAGR of 13.5% from 2021-2025, reaching US$1,116.3 million in 2025. The sector's retail value declined by 27.1% in 2020, almost exactly in line with the foodservice sector as a whole. Limited-service restaurants are expected to return to 2019 levels by the end of 2022.

Much like the rest of the foodservice sector, limited-service restaurants were impacted by lockdown restrictions. However, many limited-service restaurants already had a framework for home-delivery in place, with home-delivery having accounted for 25% of sales prior to the pandemic. Consequently, the transition to home delivery was smoother for some limited-service restaurants, although many independent restaurants were still forced to close. Home delivery was already gaining popularity in Vietnam prior to the pandemic and is expected to continue to do so after the pandemic ends.

Ice-cream restaurants were hit particularly hard, as many consumers started limiting spending to essentials in the context of an economic downturn. Others pivoted to purchasing cheaper ice-cream from grocery retailers. Meanwhile, the lack of tourists further harmed sales. Overall, ice-cream limited-service restaurants saw sales fall by 34.8%. As recently as 2018, ice-cream retailers had been the leading type of limited-service restaurant, however they are now an increasingly distant second. Moreover, this ice-cream limited-service restaurants are expected to grow the slowest of all categories from 2021-2025, at a CAGR of 9.3%.

Asian limited-service restaurants have now become the largest category, with US$172.5 million in sales in 2020. The category is expected to grow at a CAGR of 14.0% from 2021-2025, reaching US$362.4 million by 2025. Chicken limited-service restaurants are expected to grow the second fastest of any of the categories, growing by a CAGR of 18.0% from 2021-2025. Bakery products are expected to grow by a CAGR of 13.1% from 2021-2025, and to account for US$70.8 million in sales by 2025. Convenience stores limited-service restaurants have been seeing strong growth, growing by a CAGR of 13.2% from 2016-2020, by far the fastest of any type of limited-service restaurant. Growth is expected to take place at a CAGR of 17.0% from 2021-2025. Pizza limited-service restaurants are expected to grow the fastest from 2021-2025, with a CAGR of 18.8%, although they will remain relatively small in 2025 with total retail sales of US$37.8 million.

Retail value sales of Vietnam's limited-service restaurants by type, in US$ millions, historic and forecast, fixed 2020 exchange rate
Type 2016 2020 CAGR* % 2016-2020 2021 2025 CAGR* % 2021-2025
Limited-Service Restaurants by Type 631.6 569.1 −2.6 673.6 1,116.3 13.5
Asian Limited-Service Restaurants 201.9 172.5 −3.9 214.3 362.4 14.0
Ice Cream Limited-Service Restaurants 214.1 153.4 −8.0 175.7 250.3 9.3
Chicken Limited-Service Restaurants 87.8 103.4 4.2 120.1 232.8 18.0
Burger Limited-Service Restaurants 69.6 67.6 −0.7 80.4 123.4 11.3
Bakery Products Limited-Service Restaurants 34.6 37.4 2.0 43.2 70.8 13.1
Convenience Stores Limited-Service Restaurants 11.1 18.2 13.2 20.7 38.8 17.0
Pizza Limited-Service Restaurants 12.4 16.7 7.7 19.0 37.8 18.8

Source: Euromonitor International, 2021

*CAGR: Compound Annual Growth Rate

The limited-service restaurants category is notable for how much less fragmented it is than other Vietnamese foodservice categories. The largest brand, Lotteria, owned by Lotte group, had an 8.9% market share in 2020, equal to its market share in 2020. KFC, owned by Yum! Brands Inc, was close behind with a market share of 8.5%, down slightly from the 8.6% it enjoyed in 2016. Jolibee, owned by Jollibee Foods Corp, came in at third with a market share of 5.6%, up from 2.1% in 2016. Jolibee grew at a CAGR of 27.8% from 2016-2020. McDonald's, owned by McDonald's Corp, had a 2.7% market share, which has grown at a CAGR of 15.8% from 2016-2020. Domino's Pizza, owned by Domino's Pizza Inc, was the fourth largest player, with a market share of 2.5%, which grew at a CAGR of 5.7% from 2016-2020.

Retail value sales of Vietnam's top limited-service restaurants companies and brands, market share %, historic
Brand Company 2016 2017 2018 2019 2020 CAGR* % 2016-2020
Limited-service restaurant brand total Limited-service restaurant company total 100.0 100.0 100.0 100.0 100.0 0.0
Others Others 72.0 70.2 70.0 68.6 67.5 −1.6
Lotteria (Lotte Group) Lotte Group 8.9 9.6 9.3 9.3 8.9 0.0
KFC (Yum! Brands Inc) Yum! Brands Inc 8.6 8.7 8.7 8.3 8.5 −0.3
Jollibee (Jollibee Foods Corp) Jollibee Foods Corp 2.1 2.6 3.5 4.8 5.6 27.8
McDonald's (McDonald's Corp) McDonald's Corp 1.5 1.8 1.9 2.4 2.7 15.8
Domino's Pizza (Domino's Pizza Inc) Domino's Pizza Inc 2.0 2.2 2.0 2.3 2.5 5.7
Tous Les Jours (CJ Foodville Corp) CJ Foodville Corp 1.4 1.6 1.7 1.7 1.7 5.0
Popeyes (Restaurant Brands International Inc) Restaurant Brands International Inc 0.4 0.5 0.7 0.8 26.0
Dairy Queen (International Dairy Queen Inc) International Dairy Queen Inc 0.9 0.9 0.6 0.6 0.7 −6.1
Yellow Cab Pizza (Max's Group Inc) Max's Group Inc 0.1 0.3 0.4 0.4 58.7
Baskin-Robbins (Dunkin' Brands Group Inc) Dunkin' Brands Group Inc 0.8 0.8 0.6 0.4 0.3 −21.7
Swensen's (CoolBrands International Inc) CoolBrands International Inc 0.2 0.2 0.3 0.3 0.3 10.7
Burger King (Restaurant Brands International Inc) Restaurant Brands International Inc 0.4 0.3 0.2 0.1 0.1 −29.3
Bud's (Dean Foods Co) Dean Foods Co 0.4 0.4 0.3 0.1 0.1 −29.3

*CAGR: Compound Annual Growth Rate

Vietnam's consumer foodservice outlets and transactions

In 2020, Vietnam had 314,344 total consumer foodservice outlets, an increase of 9,685 from 2016, having grown at a CAGR of 0.8%. in 2020, the total number of outlets fell by 11,042, a fall of 3.4%. From 2021-2025, the number of consumer foodservice outlets in Vietnam is forecast to grow by a CAGR of 3.2%. In 2020, the number of foodservice transactions was 10.9 billion. The number of consumer foodservice transactions in Vietnam declined by a CAGR of −3.1% from 2016-2020. From 2016-2019, transactions were growing at a CAGR of 3.1%, however fell by 19.7% in 2020. In 2021, the number of outlets is expected to have recovered, exceeding 2019 numbers. The number of transactions, however, is not expected to do so until 2022.

In 2020, street stalls/kiosks, despite being only the third most valuable sector, had the greatest number of outlets at 143 thousand. They had the second highest number of transactions, at 2.5 million. Full-service restaurants had the second largest number of outlets, at 128 thousand, and the most transactions, at 6.9 million. Cafés and bars placed third, with 33 thousand outlets and 1.1 million transactions. Limited-service restaurants had 10 thousand outlets and 0.4 million transactions. Cafés and bars are expected to grow the fastest both in terms of outlets and transactions. Outlets are expected to grow at a CAGR of 4.7% from 2021-2025, while transactions are expected to grow at a CAGR of 6.9%.

Vietnam's consumer foodservice outlets[1] and transactions[2] by category, historic and forecast
Category Outlets and transactions 2016 2020 CAGR* % 2016-2020 2021 2025 CAGR* % 2021-2025
Total Consumer Foodservice by Type Outlets 304,659 314,344 0.8 327,022 371,363 3.2
000 transactions 12,373,581.3 10,907,223.8 −3.1 12,509,782.4 15,793,830.0 6.0
Full-Service Restaurants Outlets 116,826 128,346 2.4 133,485 149,465 2.9
000 transactions 7,906,790.3 6,882,406.2 −3.4 8,118,933.3 10,341,257.7 6.2
Cafés/Bars Outlets 29,389 33,145 3.1 34,606 41,600 4.7
000 transactions 1,141,790.8 1,141,696.1 0.0 1,256,137.5 1,639,862.6 6.9
Street Stalls/Kiosks Outlets 149,156 142,891 −1.1 148,664 168,247 3.1
000 transactions 2,894,927.7 2,519,334.9 −3.4 2,722,086.5 3,280,044.4 4.8
Limited-Service Restaurants Outlets 9,288 9,962 1.8 10,267 12,051 4.1
000 transactions 430,072.6 363,786.6 −4.1 412,625.2 532,665.3 6.6

Source: Euromonitor International, 2021

1: The number of eating establishments.

2: (definition according to Euromonitor International) Transaction data corresponds to the number of meals/snacks purchased or number of receipts issued by the outlet.

*CAGR: Compound Annual Growth Rate

Vietnam's consumer foodservice sales per transactions and sales per outlet

From 2016 to 2020, Vietnam saw sales per transactions increase by a CAGR of 1.5% from US$1.6 in 2016 to US$1.7 in 2020, having declined by a CAGR of −9.5% from 2019 to 2020. Sales per transactions are expected to grow by a CAGR of 7.5% from 2021 to 2025, reaching US$2.4 in 2025. Sales per outlet grew at a CAGR of −3.4% from 2016 to 2020, (−24.7% from 2019-2020), and are expected to grow by a CAGR of 10.4% from 2021-2025. Sales per outlet were US$57,466.0 in 2020 and are expected to grow to US$102,844 by 2025.

In 2020 cafés/bars had the largest sales per transaction (US$2.7), followed by full-service restaurants (US$1.8), limited-service restaurants (US$1.6) and street stalls/kiosks (US$0.8). Full-service restaurants saw the largest sales per outlet (US$97,357.9) followed by cafés/bars (US$92,560.0), limited-service restaurants (US$57127.1), and street stalls/kiosks (US$13,518.0). Cafés/bars, full-service restaurants, and limited-service restaurants all saw a decline in sales per outlet from 2016, while street stalls/kiosks saw their sales per outlet remain flat over the period.

Vietnam's consumer foodservice sales per transactions (US$) and sales per outlet (US$) by category, historic and forecast, fixed 2020 exchange rate
Category Sales per Transaction and Outlet 2016 2020 CAGR* % 2016-2020 2021 2025 CAGR* % 2021-2025
Total Consumer Foodservice by Type Sales per transactions 1.6 1.7 1.5 1.8 2.4 7.5
Sales per outlet 66,022.7 57,466.0 −3.4 69,203.6 102,844.9 10.4
Cafés/Bars Sales per transactions 2.9 2.7 −1.8 2.8 3.2 3.4
Sales per outlet 114,005.2 92,560.0 −5.1 102,262.6 126,990.4 5.6
Full-Service Restaurants Sales per transactions 1.8 1.8 0.0 2.0 2.7 7.8
Sales per outlet 120,809.5 97,357.9 −5.3 120,740.2 190,157.6 12.0
Limited-Service Restaurants Sales per transactions 1.5 1.6 1.6 1.6 2.1 7.0
Sales per outlet 68,001.7 57,127.1 −4.3 65,608.3 92,631.3 9.0
Street Stalls/Kiosks Sales per transactions 0.7 0.8 3.4 0.8 1.0 5.7
Sales per outlet 13,533.5 13,518.0 0.0 15,481.9 20,041.4 6.7

Source: Euromonitor International, 2021

*CAGR: Compound Annual Growth Rate

Eat-in, home delivery versus takeaway foodservice channels

Vietnam's consumer foodservice retail values sales fell to US$18.1 billion (year-over-year exchange rates) in 2020, falling from US 21.2 billion (year-over-year exchange rates) in 2016. From 2016-2020, the value of Vietnam's consumer foodservice market grew at a CAGR of −4.0%. The market is expected to reach US$31.6 billion (year-over-year exchange rates) in 2025, growing by a CAGR of 9.6% from 2021-2025.

In 2019, eat-in dwarfed home delivery and takeaway in terms of retail value, although both home delivery and takeaway were growing. The advent of coronavirus has seen home delivery and take away grow at accelerated rates. While eat-in declined by a CAGR of −5.2% across the sector from 2016-2020, home delivery grew at a CAGR of 7.5%, while takeaway exhibited a more modest decline, falling by a CAGR of −1.3%. Home delivery has seen particularly sharp growth for street stalls/kiosks, where prior to the pandemic it had a negligible presence. From 2018-2020, retail values of home delivery for street stalls/kiosks rose from US$0.5 million (year-over-year exchange rates) to US$95.6 million (year-over-year exchange rates), a CAGR of 1,282.8%. Home delivery has also seen explosive growth for cafés/bars, with value rising from US$3.5 million (year-over-year exchange rates) in 2016 to US$107.4 million in 2020, a CAGR of 135.4%. In the period from 2021-2025, home delivery is expected to see particularly fast growth for cafés/bars, growing at a CAGR of 26.5%, and for limited-service restaurants, growing at a CAGR of 17.9%.

Retail value sales of Vietnam's consumer foodservice by channel: eat-in, home delivery vs takeaway, in US$ millions, historic and forecast, year-over-year exchange rates
Category Channel 2016 2020 CAGR* % 2016-2020 2021 2025 CAGR* % 2021-2025
Total Consumer Foodservice by Type 21,259.5 18,064.1 −4.0 21,855.5 31,589.4 9.6
Consumer Foodservice by Type Eat-in 17,684.7 14,304.0 −5.2 17,174.7 24,117.2 8.9
Home Delivery 942.0 1,257.5 7.5 1,608.0 2,889.1 15.8
Takeaway 2,632.5 2,502.2 −1.3 3,072.3 4,581.8 10.5
Full-Service Restaurants Total 14,917.1 12,495.5 −4.3 15,564.6 23,507.9 10.9
Full-Service Restaurants Eat-in 12,276.8 9,934.0 −5.2 12,311.6 18,218.6 10.3
Home Delivery 895.0 999.6 2.8 1,291.9 2,233.2 14.7
Takeaway 1,745.3 1,561.9 −2.7 1,961.1 3,056.0 11.7
Limited-Service Restaurants Total 667.6 569.1 −3.9 650.5 923.3 9.2
Limited-Service Restaurants Eat-in 537.7 431.0 −5.4 488.9 656.6 7.7
Home Delivery 43.4 54.9 6.1 65.2 125.9 17.9
Takeaway 86.2 82.9 −1.0 95.8 139.4 9.8
Street Stalls/Kiosks Total 2,133.5 1,931.6 −2.5 2,222.7 2,788.9 5.8
Street Stalls/Kiosks Eat-in 1,536.1 1,224.0 −5.5 1,383.7 1,637.3 4.3
Home Delivery   95.6 1282.8 (2018-2020) 114.2 180.4 12.1
Takeaway 597.4 612.0 0.6 724.8 971.3 7.6
Cafés/Bars Total 3,541.3 3,067.9 −3.5 3,417.7 4,369.4 6.3
Cafés/Bars Eat-in 3,334.1 2,715.1 −5.0 2,990.4 3,604.8 4.8
Home Delivery 3.5 107.4 135.4 136.7 349.6 26.5
Takeaway 203.6 245.4 4.8 290.5 415.1 9.3

Source: Euromonitor International, 2021

*CAGR: Compound Annual Growth Rate

Offline versus online ordering of consumer foodservice in Vietnam

In 2020, the vast majority of Vietnamese foodservice was ordered offline rather than online, with offline representing a 93.2% share of the market, while online orders accounted for 6.8% of the market. Online orders have grown significantly from 2016, where they only accounted for 0.1% of the market, meaning online orders grew by a CAGR of 187.2% from 2016-2020. In 2016, online ordering had a notable presence only for limited-service restaurants, with which it had a 1.7% market share. In 2020, online ordering remained most important for limited-service restaurants, accounting for 12.0% of their business. Limited-service restaurants will still see the highest proportion of online sales in 2025, despite the proportion falling to 10.2%.

From 2021-2025, online ordering is expected to continue to increase its market share by a CAGR of 5.1%, reaching 8.8% of the market by 2025. All sectors other than limited-service restaurants are expected to have an equal or higher proportion of online sales than they had in 2020 by 2025. Street stalls are expected to see share of online orders remain the same over the period, while full-service restaurants are expected to see the market share grow by a CAGR of 2.8%, reaching 9.5% of the market by 2025. Cafés/bars are expected to see the fastest growth in online sales from 2021-2025, with the share of online orders increasing from 3.0% to 7.0%, growing at a CAGR of 23.6% over the period.

Vietnam's consumer foodservice: offline versus online ordering, market share %, historic and forecast
Category Offline vs Online 2016 2020 CAGR* % 2016-2020 2021 2025 CAGR* % 2021-2025
Consumer Foodservice by Type Total 100 100 0.0 100 100 0.0
Consumer Foodservice by Type Offline 99.9 93.2 −1.7 92.8 91.2 −0.4
Online 0.1 6.8 187.2 7.2 8.8 5.1
Cafés/Bars Total 100 100 0.0 100 100 0.0
Cafés/Bars Offline 99.9 98.0 −0.5 97.0 93.0 −1.0
Online 0.1 2.0 111.5 3.0 7.0 23.6
Full-Service Restaurants Total 100 100 0.0 100 100 0.0
Full-Service Restaurants Offline 99.9 92.0 −2.9 91.5 90.5 −0.3
Online 0.1 8.0 199.1 8.5 9.5 2.8
Limited-Service Restaurants Total 100 100 0.0 100 100 0.0
Limited-Service Restaurants Offline 98.3 88.0 −2.7 91.0 89.8 −0.3
Online 1.7 12.0 63.0 9.0 10.2 3.2
Street Stalls/Kiosks Total 100 100 0.0 100 100 0.0
Street Stalls/Kiosks Offline 100.0 95.0 −1.3 96.0 95.0 −0.3
Online   5.0 308.2 (2018-2020) 4.0 5.0 5.7

Source: Euromonitor International, 2021

*CAGR: Compound Annual Growth Rate

Conclusion

Vietnam's consumer foodservice market had been growing steadily in the years leading up to 2020, reaching US$24.8 billion in 2019, as the economy and disposable incomes have grown. The advent of the coronavirus pandemic saw much growth in the consumer foodservice market reversed. The economy suffered, reducing consumers' willingness to spend, while consumers also became less willing to eat out and gather in public. The foodservice sector essentially saw all its gains since 2015 wiped out, with the retail value of sales falling by a CAGR of 27.3%. Bars and pubs were particularly hard hit, seeing retail sales decline by 40.4% from 2019.

Vietnam's consumer foodservice market faces continued uncertainty surrounding coronavirus, however, if coronavirus is contained, the market is expected to make a strong recovery. The retail value of sales in the consumer foodservice market is expected to increase by a CAGR of 14.0% from 2021-2025, with growth driven largely by Vietnam's young class of high-income earners. The market is expected to reach US$38.2 billion in annual retail sales by 2025, with online orders making up 8.8% of the market.

Vietnam's foodservice market is dominated by independent outlets, and that is expected to continue, with independent accounting for 95.1% of retail sales in 2025. One area where chained operators have a significant presence is in that of specialist coffee and tea shops, accounting for 49.7% of sales in 2020. This sector was not hit as hard by covid and is expected to see strong growth in the coming years. These shops are popular among younger consumers, and according to Euromonitor, Vietnam is home to a "bourgeoning coffee culture."Footnote 1 The largest category of foodservice outlet, however, will remain full-service restaurants in 2025, a category which will continue to be dominated by Asian full-service restaurants. Western foods have been gaining popularity among younger Vietnamese consumers but remain relatively niche. In the aftermath of coronavirus, it is expected that Vietnamese consumers will be more concerned with health and hygiene, and that it will be important for foodservice outlets to make clear the hygiene practices of their establishment.

Canadian exporters to Vietnam are encouraged to work to ensure they in compliance with Vietnam's often complex regularity to environment, such as ensuring products are not in violation of Vietnam's strict labeling requirements, and to seek out local partners.Footnote 2 There is considerable opportunity for Canadian exporters to grow their market presence in Vietnam, particularly in light of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, which was signed by Canada, Vietnam, and 8 other countries, on 8 March 2018.

For more information

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Resources

  • Euromonitor International. Consumer Foodservice in Vietnam, March 2021
  • Euromonitor International. Income and Expenditure: Vietnam, October 2021
  • Euromonitor International. Street Stalls/Kiosks in Vietnam, March 2021
  • Euromonitor International. Full-Service Restaurants in Vietnam, March 2021
  • Euromonitor International. Cafés/Bars in Vietnam, March 2021
  • Euromonitor International. Limited-Service Restaurants in Vietnam, March 2021
  • Euromonitor International. PEST Analysis: Vietnam, May 2021
  • B.C. Ministry of Agriculture. Market Guide for B.C. Agrifood and Seafood Exporters.

Sector Trend Analysis – Foodservice profile – Vietnam
Global Analysis Report

Prepared by: Brendan Dwyer, Student (Co-op)

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